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Real Estate Teams - Some good, some bad and some real ugly

Real Estate Teams - Some good, some bad and some real ugly

I will preface this article with a couple of facts:

  • I used to be a Team Leader. I like to think I ran a very fair, open and honest setup. In the end, my calling was to be a leader in the form of a Broker, not a Team Leader

  • This is not about partners, small groups with assistants etc. I’m talking good-sized teams here.

Real estate teams are a relatively new phenomenon in the history of the real estate industry, but if you pick up a home book or magazine these days it’s difficult to find an agent not advertising themselves as a team, group, squad, gaggle of realtors or some other grandiose word that makes them sound bigger than they actually are.

According to the National Association of Realtors (NAR) 19% of agents now identify themselves as working on a team with this number on the rise. So what’s the story with teams? Is this good for the industry? Is this good for the consumer? As it turns out, I have some thoughts, so let’s get into it.

The Good (or at least the idea)

First off, let me start by saying that teams can work. There are some very successful teams out there that function like well-oiled machines and provide both opportunity and training for the team members and a superior level of service for their clients. However, I would argue this level of success tends to be the exception rather than the rule. Strong teams come from strong leadership, but these days, teams have become a vanity metric with ego being the main driving force.

Here are some of the common benefits often cited by proponents of teams:

  • teams can pool resources saving on marketing and operational expenses

  • new agents can gain experience and mentor from team leaders

  • leads for new agents

  • better work-life balance for team members

  • different strengths of team members provide more niche services for clients

I can’t help but notice here that all of these except the last only help the Realtor and not the client. Who do we think wins here, is it what’s best for the Realtor or what’s best for the client? Maybe we should ask Zillow, they seem to have figured out that if it works well for the client - it will work for the Realtors. 

Even the last one on the list I have to question a little.  I find rarely outside of big markets do Realtors niche down to the level that will result in a superior level of service for the client. Teams just don’t produce enough leads to permit all of their Realtors to specialize. The result is, chasing of any lead they can get their hands on rather than passing off to another team member who may be better suited to the particular client or situation.  

It’s a major issue often overlooked when starting a team - you need consistent and real leads and you need a whole lot of them.  I always chuckle when I see new ‘teams’ pop up and go on a heavy marketing blitz. The numbers don’t lie and when I run them, I see the Team Leader sells barely enough homes to support themselves. You need the business first, then carefully add the team. Without the business locked in you are running on empty promises and a revolving door of team members is a guarantee.

Feels like I took a good and made it bad there, but the point is - Well-built and well-managed teams do work. Or at least for the person at the top of the food chain, see below and then below that.

The Bad

Let us focus solely on the consumer for this section. Here are some of the common criticisms of teams from a consumer standpoint:

  • client experience is disjointed and there is confusion around exactly who does what

  • lack of personalized service - a one size fits all mentality with teams

  • lack of communication - bounced around between team members for answers

  • think you're hiring the team leader only to be passed off to a less experienced member

The truth is the consumer is just plain confused by teams. They don’t really understand how they work, and unfortunately, teams don’t do the best job of clearly explaining their processes up front. In most cases, the team leader (the closer or the self-proclaimed ‘rainmaker’) shows up to get the paperwork signed, shakes some hands, kisses the baby and POOF! He or she is gone, only to return for that sold sign pic leaning on their BMW. 

The consumer is left wondering what the hell happened to captain big shot and why they are stuck dealing with junior?  It’s called the by-product of the volume game. It’s also no secret that when you are playing the volume game it’s very difficult to deliver that personal, customized experience that is required to navigate each individual client’s needs and unique situation. Teams are often famous for throwing around words like “systems” or “models”, but the point that gets missed is that the real estate transaction is not linear. Each client is different, each situation is different and each property is different, so it is damn near impossible to create a machine that simply replicates each and every transaction and resulting in a positive outcome. Many have tried, and the unfortunate result is the consumer is left feeling like they were simply a number or a small piece on the real estate assembly line. 

Does it work? Sure, for now. Will it bring a steady stream of referral and repeat business for the entirety of your career. That’s a hard ‘no’. Poorly managed teams are stuck in business development mode forever. Real estate Groundhog Day.

The Real Ugly

The ugly side of teams really has to do with the team members. Those excited and pumped up new Realtors who don’t have industry experience yet. Brokers and Team Leaders hunt them down and sell them on why they have to join a team. I don’t like it, but it is certainly happening more and more. 

There are many, but here are some of the more common complaints from Realtors who have spent time as a team member:

  • newbies do all the grunt work

  • ridiculous splits - the only person making money is the team leader

  • can’t keep good talent - constant turn-over of agents.

  • business building forever, an inconsistent business model 

  • teams keep your leads/database and all of the glory

Unfortunately, many of these teams are set up as little pyramids. Little Amway’s with the only person making a decent living being the one at the top of the food chain - the Team Leader.  Now, not all teams operate this way, some have very fair splits and offer lots of opportunity to their team members - but for the most part the ones I have seen target new and unsuspecting agents, force them to do all the grunt work, and say thank you by taking the lion’s share of the commission - sometimes upwards of 75%. 

I believe that any true leader must get in the trenches with your soldiers. If you expect them to be cold calling and door knocking every day, then you better be right there doing it alongside them. Dissension among the ranks is guaranteed without it. 

Most teams even steal personal glory. 

Imagine a hockey team where no matter which team member battles their butt off and scores the goal, it always gets credited on the score sheet to the captain. Padding their stats because it makes great marketing. Problem is, no ‘team;’ actually functions like this outside of real estate ‘teams’.

Let’s talk quality for a moment.

Real estate is actually one of the few careers out there that really rewards hard-work and persistence on an individual level. Very few outside influences can affect your success as you can yourself. It’s one of the things that make our industry so great. Any new Realtor with promise won’t spend more than a few months on a team before they realize this ‘environment of opportunity’ is actually holding them back from building their own individual brands. It doesn’t last and hopefully, the split is at least amicable. 

It becomes very difficult for teams to keep serious talent and the result is they end up scrambling through the Brokerage roster to attract less-promising prospects. Those are the ones that will stick around. 

It’s no wonder consumers are upset when they get passed off to the team member, they thought they were hiring #1, not number #1,234 in the city.

As a slight aside, a little tip - If you do decide to leave a team, read the fine print they are often ripe with non-compete clauses, commission holdbacks, and forfeiture of your entire client database. It’s called the fear card - stay here, or else …

Many Brokers and every Team Leader will suggest that joining a team is a great way for a new agent to gain a wealth of experience in a short amount of time. And I don’t disagree, however, most teams are designed for the new team member to do the work no one else wants to do. The grunt work of a large organization designed on that new business model like cold calling, door knocking and chasing around endless go-nowhere Internet leads. That wasn’t why anyone in history decided to get into real estate as a career. 

Another important factor to consider is that often team members only perform one aspect of the real estate transaction. Transactions are often run like assembly lines with every team member have more individualized roles. The result is actually the reverse of what was sold to a team member when they were recruited as these team members rarely get to see and touch a real estate transaction start to finish. They become specialists who only handle their little piece of the puzzle and the team leaders, well they love it this way. It keeps the team intact.  

“You don’t want to go out there into the frightening world of real estate - it’s expensive, time-consuming, you don’t have the expertise, so you are actually much better to stay here in the comfort and safety of our team.” And there is that fear card, well played.

The rise of the team

I don’t think it’s a coincidence that the rise of teams has paralleled the erosion of the traditional brokerage model. As most traditional Brokerage margins continue to get thinner, the first thing to go is training and education. Without a proper training platform, Brokers have turned to the idea of joining teams where new Realtors can learn from “top agents” in their office instead of the actual Brokers. Too many traditional Brokers are making the lazy play and simply pushing teams as a significant recruiting tool. 

Giant teams who you can learn from and they also happen to have so many leads they don’t know what to do with them all. It’s pretty clever to get people in the door, but I argue it is not nearly enough to keep them around. The truth is, these Brokers are passing the buck, avoiding the required change to their business models and simply deferring the problem to a later date.

So let’s summarize this bad boy. Yes, some teams do add value to the equation of both their team members and their clients, but this is rare. For most, the proliferation of teams has not been from a client-centric mentality, but from lazy Brokers and ego-driven Team Leaders looking to avoid doing the things that they no longer want to do. It’s upside down and there is plenty of evidence in every market to back that up.

Teams work if they are built right, led with fairness and equality and more than anything - remember that the best experience for the client should always dictate the practices of how a team functions. I just haven’t seen too many teams that are built that way.

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