Everybody has an opinion on real estate teams. Some agents are for them because they view it as an opportunity to delegate tasks they don’t enjoy doing while simultaneously putting more money in the bank by having more labor available to help them grow the business. Others have a different opinion — they tend to be “anti-team” because they enjoy the independence that comes with being a real-estate agent and don’t look forward to having to manage other people.
That being said, there’s a lot of pressure in real estate to form teams — most franchises and many brokers will push you to build a team because it ultimately increases their profit, and odds are you’re being sold on a myriad array of benefits that having a team can provide for you. Building a team isn’t for everybody, but if you get into it with realistic expectations and good planning beforehand, it can help you to build profitability and grow your real estate business.
When it comes to teams, Julie and I believe that small is better, and profit is best. The goal of having a real estate team isn’t power, awards or industry accolades. At the end of the day, the sole benefit of having a team should be money in your bank account. With that in mind, we recently presented the points below on our “Real Estate Coaching Radio” program to help you build a team in the most profitable way possible.
Building A Profitable Real Estate Team
1. Always lead with revenue.
Build after you have profit and after you have savings — not the other way around. For a long time, the belief was that you build the team, and the transactions will magically follow. That’s proven to be bad advice because when you’re adding overhead before revenue it leads to trouble. Follow the 30/30/30/10 rule: 30 percent to taxes, 30 percent to overhead, 30 percent to savings, 10 percent slush fund, that’s your walking-around money.
2. Always pay yourself first.
Peel off 10, 20 and, ideally, 30 percent of your top line revenue, and put into your savings account. This money is the net commission that you receive from every transaction. Take a minimum of 10 percent off the top, and put it in savings (and leave it in your savings). Remember, the point of a real estate team is to make more money for the owner — to increase your net worth. That’s why you take on the risks and liability. We also highly recommend reinvesting the money that you’re saving because naturally that lets your money work for you, which further helps build your net worth.
3. Master the basics.
Master the core skills of your business before you can delegate that task to someone else. In other words, before you go out and hire a buyer’s agent, make sure that you’ve mastered everything that goes into that skill set, such as using a buyer presentation or buyer agency agreements, before you bring somebody on board to do it for you. The same goes for prospecting — if you’ve never done it, then what makes you think you can delegate it and get consistent results. You might get lucky, but usually not.
4. Delegate, don’t abdicate.
You can’t just hire people to take over your responsibilities, walk away from them and expect that you’ll continue to get results. You need to stay involved with the business and oversee the work being done in your business so you can stay on top of what’s making you money. If you think that building a team will save you time, then realize that you’ll likely be reallocating that saved time into other areas.
5. Trust but verify.
This point is related to delegation: if you’ve hired good, quality people then trust them, but once again, stay involved with what’s going on in your business to verify that everything is being done. One of the best ways to check that things are being handled properly is by the numbers because numbers don’t lie. If you’ve given leads to your team, then find out what happened on those calls; don’t just take it on faith that they were all handled for you.
6. Have you reached and been able to maintain your “real estate magic number” for at least 60 days?
The magic number is the number of listings that you need to have at all times to achieve your financial goals and keep your business afloat. Meeting and maintaining the number of listings required for your magic number is about proving to yourself that you have the stability in your business to be able to add more staff, such as a buyer’s agent.
7. Have your systems in place.
Before you start hiring people, systematize business to ensure that you can generate, prequalify, convert and close business. You want to have a system that you can train your team in using and one that they can use without having to stop and ask questions every five minutes about the how and why for every procedure. Now often what happens is the reverse: an agent starts building a team, and they try to systematize everything as they go along. That’s just an invitation for trouble, though, so get the following items together beforehand, and save yourself the headache.
- Lead generation system
- Prequalification system (The last thing you delegate.)
- Listing system including PLP and Complete Home Seller’s Guide
- Client care system (someone to take care of sellers while listed)
- Closing system
- You need to have staff agreements/ contracts completed. Non-Solicitation, expectations, how they win and lose, etc.
- Staffing system. How will you recruit, hire and train?
8. Have your sub-systems in place.
This point is similar to our previous point. Have your signs, voice mail, website, business cards in place. We call these “moments of truth” — a term that we learned from Howard Brinton. In essence, it means that anytime someone comes in contact with your business, they should have a professional, consistent experience. Always remember that first impressions are powerful, and you want to put your best foot forward with tools that represent you in a consistent, professional manner. Your team will need and use these tools as well, so make sure they’re in place beforehand.
9. Learn from others.
Real estate is not a new industry, which means that you have a wealth of information available to help you learn from successful entrepreneurs who have come before you and built successful real estate teams and profitable businesses. Some of the books on the list below are real estate specific, and others are business-related. Remember, your real estate business is a business, so developing your business knowledge helps you in a multitude of ways.
Did you have success in building your team using methods other than these? Please share and continue the conversation in the comments section below.
Tim and Julie Harris have over 20 years’ experience in real estate. Learn more about their real estate coaching and training programs at timandjulieharris.com, or tune in to Real Estate Coaching Radio every weekday at realestatecoachingradio.com.