Today, we're talking about something near and dear to my heart; how to build a real estate team. I've run a few different real estate teams — one when I had an independent brokerage. A reset of that more traditional model team when I joined eXp Realty in 2017. Now I'm on my third team iteration, which is a more expansion focused, team.
I plan to share everything that I've learned along that path — and so it'll be a lot of stuff here in only a short time.
In five years of building a real estate team, you learn the things to do and the things not to do. And that, of course, what we'll be talking about.
What is a Real Estate Team
Some of the questions that I want to answer, first off, is what is a real estate team. Right, like there's a lot of people, especially in this time where a real estate team can mean multiple different things. There are all sorts of different setups and ways that somebody might be a team leader or might not be, it's confusing.
I'll define a real estate team kind of in my opinion. And then should you join a real estate team? I get a lot of agents with that question about if they should join a real estate team. If they're a newer agent or even a seasoned agent, there's merit to why you may want to consider joining a real estate team, and we'll talk about what you'd want to look out for there. And then should I start a real estate team? That's another good question.
When Should I Start a Real Estate Team
A lot of people don't know if they should start one when they should start one, so we're going to be talking all about that. And then what systems do I need to build a real estate team? So a lot of times people, they make the decision they want to start a real estate team, but then it's like well where do I start, right.
We'll get into that, talking about like what you should do once you start to build a real estate team. And then I'm going to talk about all the things that I would not do, the lessons that I've learned running a real estate team and just giving you my advice as to what I've seen throughout that time and what I wouldn't do because of that. And then finally, just general observations about real estate teams, things that I would do, things that I'd be aware of, is kind of what we're going to be talking about today.
I'm going to try and wrap this one up about a half-hour or so so that way we can get some discussion in at the end, but until that time, I've got all the mics muted for now. I'm just going to kind of go through the things that I'm seeing and then at the end as I say, I'll open it up, people can talk, ask questions.
The term, "team," can mean a lot of things these days, right? A real estate team as to how I see it is just a group of people working together to accomplish a common goal, which is selling more homes in this case.
Selling more homes might mean that you have multiple salespeople or it just might be you. A lot of people think immediately, having a team, means having buyers agents or having agents that are selling along aside you.
Quite honestly, that's not the case. The way I look at it, I consider myself a team leader even though I don't have a single buyer's agent. I have a transaction assistant that helps me with all my paperwork. Also, I have a showing assistant that helps me show homes when I'm not available. Those are the only two people that I pay on my team at this time.
I don't have any full-time buyers agents. I have in the past, but even still, I would consider my current team a real estate team. You've got people whether you're paying them as staff or whether you're paying them like as kind of like a per-transaction type of a thing, that is a real estate team.
So you know, right from the start, that should help kind of answer one of the next questions, which is should I build a real estate team. We'll get to that future. But I wanted to at least define a real estate team off at the beginning, right. So now we at least know what that is.
Should I Join a Real Estate Team
Before we get into should I build real estate team, I want to talk about should I join a real estate team, because I think a lot of the people probably watching this call, that's probably where most people are at. They're probably newer agents, kind of, either you're struggling, or you're just starting, you don't even know what to expect, and you're wondering, oh man, how do I get this real estate thing going.
And so I want to speak to you guys first and give you my thoughts as being a team leader and if you should be looking to join a team or do your own thing. And so, kind of what I'm, the way I look at that if you should join a group or not, is I say that it depends on your prior experience and your network of people, right.
So if you previously had a sales career and kept an extensive database of past clients and people that you network with, I would say you probably don't necessarily need a team.
I think that one of the advantages of having a team is that you can get plugged in right away to incoming leads and deals that you're going to be in front of right away. But honestly, if you have come from a prior deal as I'll give my previous experience is I made new home sales for five years ever before, before ever getting into general real estate. And because of that, I had sold roughly 40 to 50 homes a year for the new home builder and luckily, one of the best things that I ever did was I kept a separate database of those people that I had sold homes to.
Like I had their emails, their phone numbers, their names, all their home addresses, all that kind of stuff in an Excel spreadsheet. And so when I got into general real estate, that was the first thing that I went back to, and I started letting them know, like "hey, I'm in general real estate now. "I can help you and all of your friends and family. "I'm gonna give great service."
But I can help them anywhere, not just in this one single neighborhood at this one single price point. But anybody, anywhere in san antonio or the surrounding areas. And so, I was able to get going, build traction right away. Like, right out of the gate within the first 30, 60, 90 days I already had clients that I was working with, I already had closings coming up on the books.
And I think for most people, if you have that sort of opportunity there where you already got like a list of people, you're going to go out there and just tell the world about you, you getting into general real estate, then I think that you probably don't necessarily need a real estate team right away. Now if you're starting your sales career, right, and maybe you're starting your sales career in real estate, right, those are two tough things, right.
Like you just got, starting in real estate is hard enough as it is, and then if you're just a brand new salesperson, that's a hard enough thing as it is too, and trying to do both of those, learn both of those, and get clients and leads and all this kind of stuff, those are the types of people that I would think you may want to investigate looking for an excellent real estate team out of the box.
And the thing is, I mean, that's not an easy task to do either. Just finding teams that are willing to take on agents, that's something you have to do actively. You have to be out there talking to other agents, trying to find names of team leaders that are looking to hire or just looking to grow their team. And then you want to talk to quite a few of them.
I would recommend you look at three, four, five team leaders and, because you may not be a fit for them and they might not be a fit for you, right, just depending on what you're hearing from them. I would definitely say you want to look towards a team leader that has experience, that's been a team leader for a few years or at least a couple years and shows that they're growing year over year, because there's a lot of team leaders out there that are quote-unquote team leaders, but they're just figuring it out too.
I mean, I think we're all figuring it out all the time. But at the same point, if they're brand new and trying to figure it out, that's a hard thing to go along with when you're trying to start selling houses right away. And that could end up just making or breaking your entire real estate experience.
If you can't sell a house in three to four months, you end up getting out of the business and thinking that it's not for you when really, it could have just been that particular team you joined. So make sure that's just as important as deciding to come into real estate and making that jump is if you are going to join a team, you investigate multiple teams and make sure that you find the right fit for you.
So let's see, all right, now here's the other one. So I would consider it if you were starting real estate or in a new market. So that's the other thing like if you just moved to whatever market you're in, you don't know a whole lot of people, that could also be a good chance for you to do that. The other thing, the other reason why joining a team, especially a successful one, is essential as a new agent is you start to see what systems are necessary for a real estate business.
If you join a team and they truly have it going on, they should have systems in place where if and when you decide you don't want to be on a team, you at least know what was successful in that team environment and you can take that along with you down the road. So the other thing I've put here is if you are genuinely self-accountable, then I would recommend just starting with calling expired and for sale by owners and doing open houses on the weekend.
So that's the other big part of it like if you, and this is, you have to get real internal and sincere with yourself and figure out like what you're good at, what you're not good at, and it's not bad. If you're not self-accountable to yourself, then realize that's something you don't naturally do well, and so you need to put accountability in your life, and one way that might be possible is joining a team.
Another way that that might be possible is joining coaching or getting, paying for weekly where you're in front of somebody and they're checking your account and all of your metrics that you should be doing. If you need that accountability, then joining a team could be the free or the cheaper way of doing it, right.
But then if you're a go-getter and you wanna like invest in yourself, not have to pay a 50/50 split or more on everything, it may be cheaper actually to spend $1500 a month on coaching or $2000 a month on coaching. That's just that balance you have to take on. Like what risk am I willing to take as a new agent? Most new agents don't have $1500 that they can invest in their business monthly for a coach, right. I know when I was a new agent, that sounded crazy to me that I would spend that much money.
But when you think about it, if you end up joining a team and you're paying a 50/50 split, that ends up costing you a lot more in the long run. But it's just that kind of; you have to talk about it to yourself, how much money do you have saved up, how willing are you to do these things yourself and be dedicated to it. If you're not, if you're testing the waters, then you know, maybe you do need to get on a team.
But if you're going to really make this a solid effort and go after real estate, and you want to not be on a team, and you think that you either have the self-accountability, or you can find somebody to hold you accountable, then again, there's plenty of ways that you can just start with calling expired, for sale by owners, getting listings that way. And then, of course, doing open houses on the weekend and doing open houses in the right direction.
That's the one thing, too, I will say it is like I've got a whole video on how to do the right open houses, what to look for versus just doing opening houses on your listings or doing them when somebody asks you to do one. You need to go out there and be proactive when you're doing open houses. If you do that, if you pick the right ones to do them on, you can get 15, 20, 25 people through each one each weekend and that's a great way to get the business going.
But you have to be self-accountable. You have to go out there and make that commitment that you're going to do that. So all right, so anyway, I think that's enough about should you join a real estate team.
The next thing that I want to talk about is should I build a real estate team. So and again, I'll go back to my definition of what a real estate team is. I think everybody should start a real estate team, right, right from the get-go in the way that I defined it.
Now, this is the way that I think that a real estate team should be built out; that's probably a better question, in my opinion, is how should you build a real estate team. And the way that I look at is I think immediately, all agents, they should have somebody doing their transaction paperwork. So somebody should hire, every agent should hire a per-transaction transaction coordinator immediately and find a good one.
Hiring a Transaction Manager
Like that, I wished that I had the person that I had done my transactions now when I first started in the business. The amount of time that you'll save and the level of support and you know, experience that your clients have when you have somebody dedicated toward that when they're good at what they do, it will make you look like a professional, it will keep you out of the weeds and prospecting and doing the things that you need to do to grow your real estate business versus, in the beginning, a lot of times I would almost use doing transaction paperwork stuff as kind of a crutch.
Like if I didn't want to do work that day or if I was just whatever, I would like do all my paperwork stuff, I'd get it so organized and like I would do all these things, so I didn't have to like make prospecting calls which is something I don't really like to do.
I would find anything else to get me out of doing that type of work. And when I took the paperwork side out of it now, it's like I don't even think about doing that kind of stuff. So it's just, it keeps me focused, having that transaction coordinator. And for them, you can, most of them charge 300, 350, $400 per transaction and I'll tell you right away that's immediately worth it. I would pay twice that.
I don't know if she's watching this call, but either way, I mean the money you pay for that is well worth it in my opinion, and that would be the first person you would hire onto your team. You have to look at them like even though they're not as a full-time salaried person of yours yet, they're part of your team.
So they're a part of your team just as much as if you have a lender, a lender is a part of your organization that you're going to work with every single day, all the time. So you know, lender, title company, inspector, home warranty rep. Like all these people are part of your team. And these are the people that you want to make sure that you have a vast network with early on.
So the transaction coordinator immediately, showing assistant directly. I think that's when you're a new agent; there's going to be times where you're not going to be available, and I believe that as one of the things that I like the most about having a team was the fact that I could give the best level of service to my clients.
Hiring a Showing Assistant
And so, when I decided not to have buyers agents anymore, the one thing that I realized is I didn't want the level of experience for my clients to go down in any way and I was able to accomplish that by having showing assistants so that way if I'm not available, I travel pretty often, I get busy pretty often, I didn't want my clients not to be able to see homes or something like that because of it.
And so having a showing assistant for me, that I pay like per time that they go out and show properties has been a fantastic thing for me. And so, and the way that I have that set up is I have it set up to where any tour that my showing assistant does, they earn $25 for the journey plus $10 for every single time that they show a house. So like, for instance, if it's a one house tour, they earn $35.
If they show five houses, which is most common, they usually are showing three, four, five houses; they're earning, if they did five, they're earning $75. Five times 10, plus 25, so $75 for that. And you can change that around however you want.
You can do more, $40 per tour and $15 per house, whatever it is you think are fair, but quite honestly, I mean, I think that that is good for you to have in your back pocket. And I don't use them all that often, right. But when I need to, I have that available. You may even need two, right. But they're not anybody you're hiring.
Most of these people are agents. They're doing their own business anyways, and so you're just asking them like "hey, from time to time, "would you be willing to go show houses for me "on an as-needed basis?" And that's again; it doesn't cost you anything. The whole premise you're going to see behind real estate teams that I've learned over time, and this is not just for myself personally, but this is also from talking to a bunch of team leaders, is you have to keep your overhead extremely low.
That is one trap that so many team leaders fall into is just taking on so much overhead, taking on so much risk and there's no return on it. It's funny because I remember feeling guilty when I went to a real estate team and was charging buyers agents 50/50. I'm like man, I'm 50% of their commission.
But it's almost so much reversed now because I see it from the other side and if you understand how many expenses a team leader usually has, 50/50, I mean, that's like the bare minimum. We'll talk about why that is. But anyway, so I expect the biggest thing that you're going to keep seeing, the recurring idea is that you have to keep your overhead extremely low.
All right, so now we're going to get into when you start to hire people, like full-time people and what do you pay them and all of that kind of stuff. And so, my first hire, if you're an agent and you're looking you've gone past like okay, I've got a transaction coordinator helping me, I've got showing assistant help whenever I need it, and now you're consistently selling above 40 homes a year. Just say you sold 30 homes the year before, then you only sold 40 homes this year and now like in the first three months of the year, you've sold eight or 12 houses, you're kind of on pace for that 40 homes again or more, right.
Like maybe you're going to do 50 or 60 or whatever it is, but once you're going to be for sure above 40 homes per year, I would say at that point you would hire your full-time assistant. That's when you take somebody, hire them, train them as first off they're going to take over the transaction coordinator position.
And so that's going to save you money. Because I mean you figure if you're paying a transaction coordinator $350 times 40 deals, that's $14,000 a year. So immediately, you're going to take that off that transaction coordinator's plate and hire that full-time assistant which I would recommend you hiring that assistant and paying them probably closer to that 35 to $40,000 a year range.
That should be their starting salary if you're looking to hire a full-time assistant. And so, that might sound expensive, but at the same point, you're saving 14 grand just from not having to do the transaction coordination. So they're going to do the transaction coordination for you plus all sorts of other things, right.
Like marketing stuff that you're going to need to get back to your database, they're going to do all sorts of like reach outs, setting up planned events. Like maybe you're doing a monthly happy hour, perhaps you do a Christmas party.
All that type of stuff plus, I mean, if you can find somebody that's licensed, that's even better in my opinion. I would also pay a little bit more if I could find somebody that has their real estate license just because then in a pinch if you ever needed them to do something that required a license, you've already got that flexibility.
So they don't have to be, but as I said, definitely you could have enough things for them to do. If you're an agent selling 40, 50, 60 homes a year, there will be enough things for that full-time assistant to do that they wouldn't have to have a license and they would still be busy.
But if they have a license, it just gives you that additional flexibility, which is kind of cute. Okay, so then you've got a full-time assistant. The next person, in my opinion, is once you've now scaled up like you've got a full-time assistant. Hopefully, you hired that assistant so you can grow more.
Like it's going to put you more into the prospecting activities generating more deals for yourself. So now you should be doing more than 40 homes per year, and I'd say once you get to around 60 homes per year, which is five homes per month, then that would be now finally when you start to think of needing to get a full-time buyers agent.
There's a lot of agents that can do 60 homes, 100 homes even, that's the highest that I'd see, on their right like with a team, just not buyers agents. They can do it with some leverage, especially if they're very listing focused, they can do closer to 100. Now if you're buyer-focused, probably not so much.
But again, like you shouldn't even be discussing hiring a full-time buyers agent where you're going to be paying them 50/50, be responsible for all of their lead generation and getting them leads and stuff until you are consistently doing 60 homes per year pretty quickly, like pretty always.
You don't worry that there's going to be deals to come. Like you have a system in place whether it's through whatever marketing avenues you're doing or whether it's through all referral based, whatever that might be, you've got a system to where you get above 60 homes per year.
Then, you want to pick up your full-time buyers agent and again, that's going to be the person that I recommend you only pay them 50/50 or less. I know some that are 40/60, 50/50, but don't get into the trap thinking you've got to pay them more, 60/40, 70/30 because I will tell you, at that point, it doesn't become worth it to have a buyers agent.
What Systems Do Real Estate Teams Need
Anyways, and we'll get kind of more into that. All right, now what systems do I need to build a real estate team? So this is, it's going to sound very simple and understandable, and quite honestly that's how it needs to be, but honestly, you need something to track and hold accountable your team.
So like whether that is your transaction coordinator. You want to have a system to track that, and that's easy, right. That can just be getting some feedback at the end of a transaction from your clients, right. And, "Hey, what did you think on this file" survey, a five out of five, a 10 out of 10.
Like, get some survey or feedback system so that way you can check to make sure that your transaction coordinator is an asset to your real estate team. And then the same thing for like your showing assistants or in this case, say you get to the part where you're getting buyers agents, now you want to, for one, track like if they're doing a good job but then for two, record if they're even doing their job.
You need to make sure that on any lead that you get them, that it's tracked so you can find out like what is their conversion ratio, are they converting deals at the same clip that you typically would and when I talk about that, that all comes around like tracking right. So you have to have your tracking system for yourself before you even start bringing other people into it.
So you need to know what your numbers are, right. Like how many leads do you generate per week? How many leads have you generated per month? Out of those deals, or out of those leads, how many did you get to sign a buyers rep? How many did you get to sign a listing agreement? And then out of those buyers reps, how many ended up buying and closing?
You need to have those numbers down for what you're doing so that way if like say for instance in this case, you get a buyers agent, so that way you can kind of offload some of those duties and focus more on listings, if you start giving them the same deals you would have taken doing the buyer deals, you need to make sure that they're converting them at or around the same percentage that you were.
And so, and then you need to make sure that not only are they closing them, but they are also giving them the same amount of service or the same level of service as you would. So that's where you want to make sure that you follow up with your clients, check how the process went, all that good stuff.
So like those would be tracking accountability, you can do that in a spreadsheet, you can do it with a crm system, all sorts of ways, but the bottom line I'm like that is probably the essential thing as far as a system that you need for a team.
The other thing it's just a system thing, but you need some checklist of your sales process. You need something that you can give that buyers agent so that way they know that they need to do X, Y, and Z on every single transaction just the way you would have done it. So that's pretty easy, right.
You can do all sorts of different things. Trello, you can have, again, another spreadsheet. Whatever it is you need to have, but you need to have some checklist. And then as far as training goes, what I usually recommend is that don't think that you're going to hire a buyers agent and like offload all of these deals right away.
Really, I think you hire the buyers agent, you have them shadow you for three, four months, just you still doing all the same stuff you would do normally but now you have somebody that's tagging along with you for three to four months and them just kind of find out what you're doing.
Which kind of gets into the whole idea and we'll talk about this once we get into the things I would not do is you don't want to grow too fast. Right, like you need to be hiring maybe one person at a time and pour into that person because, again, if you scale up too quickly, it's going to create a lot of stress on your part and it probably is not going to end up working out in the long run.
And then next, the other system that I would say you need to build a real estate team if you don't already have it as a real estate agent is you've got to have to be able to track your financials. And when I talk about that, I'm talking about a monthly profit and loss statement. You need to know what your profit and loss are, even just as an individual agent. You need to know that.
You need to have good numbers as to like how much money you're making, how much money you're spending, and then how much money you're keeping at the end of it all. Those three things, right. And then when you have a team, it's no different. If you have a buyers agent, you need to make sure that how much you're making, how much you're spending, and then how much you're keeping at the end is not going down.
Which, I'll be honest with you, right away it probably will go down a little bit, you have almost to expect that. As you start to scale up, typically, it's not like you scale up and immediately begin to see increases. You can, but usually, that's not the case. Often you kind of dip down a little bit either because you have to start now doing different things.
You got a train a little bit more; you have to come up with more systems that you didn't initially have. And so you're a little bit more distracted. And then that person that you just hired, they're probably not up to 100% performance right away and so like, you're not going to get those initial boosts.
But, if you're tracking it, at least you won't get too far out of whack. I can tell you; I made a post probably about two weeks ago now about where I was even just a year ago with my real estate team, and it was all because I got away from tracking numbers and financials and I was going off of like gut feelings for things.
And we had a plan, but I didn't go back and check to see if we were like actually hitting our plan very often. And so, we got away from the way that things needed to be run and what will happen when you don't have clarity in your business.
Again, tracking and accountability, a CRM for kind of like performance things of your team and then, of course, run it all through your financials and making sure that your monthly profits and loss are going in the right direction. So all right, now we're going to get into things that I would not do.
So first off, I would not buy leads and turn that into like a team-based thing. So a lot of agents, they kind of get this wrong impression that you know what, like I'm not selling 60 homes a year myself right now, maybe you're selling 15 or 20 and you're like "but you know what, if I buy a bunch "of leads, I can start up a team right away. "We're gonna be profitable."
Honest to God, I would never do that in my life again. I know a lot of team leaders that get into that, and it's almost like a trap, in my opinion. I think that you have to show the production first and grow your team organically from that. So you scale it from your organic growth.
You don't try and buy the stuff and think that the team is going to start producing and creating a ton of money. I have not talked to a single team leader that has been effectively doing that. Now, you know, they can sell a lot of houses for sure, but to be, to also be profitable and all that, it's very few and far between. I mean, I'd say it's like the 1% right. So are there team leaders that are watching this that are out there doing it? Probably, right, but the vast majority of the ones that I talk to, that is not how they make money, right.
Calculating The Numbers
Like they're successful real estate agents, and that's kind of it. The other thing that I would not do, mainly 'cause if you're still a real estate team leader which you'll most likely still be selling at this point, you're still selling real estate, is a lot of times you kind of, let's say you're selling 60 or 70% of the homes on the team and so you're staying profitable, like you're making money, but in the long run, you're actually, if you really look at the financials, the team side of it would be losing you money.
Like a lot of times, if you're not solid on the numbers, it's easy to confuse selling real estate as an individual agent and carrying the team, so to speak, to where you think that having the team is a profitable thing. I find a lot of team leaders fall into that trap.
They're selling the vast majority of the transactions but if you actually took out just what the team costs and what the team is making you, then you're actually negative on a monthly basis and I think that that's something to really make sure that you're clear on because you know what that incremental benefit of having a team is adding to your bottom line.
You know, like now, it's like if I knew that I was making 250 or $300,000 a year as an individual agent, and then I have a team now all of a sudden, but I'm still making 120 a year, you might think like if you didn't know that you were making 250 or 300 before, you might consider making 120 is good. You're like "oh yeah, we're profitable, the team is growing" but realistically if you kind of factor that into what you could have made as an individual agent without all the overhead and giving a 50% split away to an agent all the time, could be making you.
I think that that's something you have to be very clear on. So all right, don't scale too quickly. Grow your team organically and stay profitable and take on less risk. That's just, again, we are going into an uncertain time, especially now where the real estate market, a lot of are seeing kind of a slowdown, or we're not sure where it's going to be. It's been going up for, what, ten years now, and you know, or close to it, eight, nine years.
And it's cyclical. You got ups and downs in real estate, and so far, it's been up for the last eight years, and usually, it's like five to six to seven years before you see a change. And so we're on borrowed time, I would say. That's not to say that the market's going to go down like it did in '08, '09 all that kind of stuff.
But it could slow down. If you have more overhead, you're exposed a lot worse. So again, just staying profitable, taking on less risk right now, growing organically. Those are all things that I think that a real estate team leader should focus on. So all right, also other things that I would not do specifically to buyers agents.
Don't pay buyers agents different splits for different transaction types. A lot of times team leaders think "oh, I'm gonna give "them this much for deals they generate. "I'm gonna give them this much for deals that I generate." And I can honestly tell you that that is not something that I would encourage.
I think that you, you take on the wrong mentality, right, like if they're on your team, right, like they should be supporting the team and helping the team in the same way regardless of it it's a deal they come up with or not because I mean, you are providing a lot of those deals most of the time, even if they're on your team.
You're probably providing more than half of their deals. And so realistically, to have something where they make more on their own is not fair to you as the team leader. It just makes their motivation maybe a little bit different. They might not want to work a deal that you give them if they know they're making less money compared to what they can do on their own.
It just creates all sorts of separation there, and I wouldn't recommend it. I wouldn't pay buyers agents more than 50/50. Again, there's a lot of overhead. You may not realize it, especially if you're starting a team right away, but you can, the one thing that I will say is you can't ever go back and charge more down the road.
If you were paying them 70/30 and now all of a sudden tell them you're going to pay them 50/50, it will not happen. They will leave your team right away. I've learned that lesson very clear. And so, even the best agents, best friends of mine, like that is not going to happen. Now you can give them more eventually if they prove out that they can be an asset to your team, if you start them on 40/60, you can make them 50/50 if they've learned the business if they're doing well.
You can almost encourage their growth that way. But you definitely can't go the other way. So don't make that mistake upfront of paying them too much because regardless of what your pitch is down the road of why you would need to charge the right amount, it won't matter, they will end up leaving.
So again, that's just my take on it. I would not hire part-time agents as buyer agents. For me, that's a big no-no. I only want full-time people. I want people that I don't have to worry about if they have other things planned, maybe they can go with me at that time or shadow me at that time, or they can help clients at a particular time.
They have to be full time for me even to consider them if they're going to be a buyers agent. And that's the other thing too I wouldn't hire any brand new real estate agents as a buyer agent unless they had prior real estate sales experience. And what I mean by that is in the real estate industry. Like they could have come from a title, they could have come from a mortgage, they could come from new construction.
But if they're again, even just coming from a sales job, I would not probably take that person on, especially in the beginning as your first buyer's agent. Just because I think that almost, it's almost like a mindset, I would actually rather have somebody that has been in real estate for six months to a year and maybe wasn't finding the success that they wanted but you could tell that they were still hungry and they want it so wrong to like be successful in real estate, like those would be the people that I'd be looking for because if they're just coming straight into it, they're gonna be kind of like have that grass is greener mentality that they think that they come straight onto your team as a brand new agent, that things are natural and that you might, you know, they don't necessarily, the 50/50 split or whatever you're charging, 60/40, like they may not need they don't need that help because they don't know any different.
They don't know what it takes to be a successful real estate agent right off the bat, right. And so whereas if they're coming in from another real estate industry background, they know that it's tough to be real estate agent and they appreciate, especially if they've been a real estate agent for six months or 12 months and hadn't been as successful as they want, they know that it's tough, they know that they need your help and they're willing to do more than you ask of them.
Don't Lose Touch With Clients
And so, that's just kind of my take on that. All right, so here's the other big one. Don't become out of touch with your clients just because you have a team. So now you have a team, you got agents that are helping all your buyers out, you've got a transaction coordinator. Like at the end of the day, that client needs to stay yours. I mean, yeah maybe that buyer agent serviced the client, they helped show them houses and all that, but you can not break that connection of you helping that person.
Because your business and your ability to grow your team and grow your real estate sales business are directly impacted by your ability to get referrals down the road and generate multiple deals, and so, if you are out of touch with that client, well now you're helping that agent build their business which is excellent, right, like you can still help them.
I'm not saying to help agents, but you need to make sure that the team is benefiting from it as well in a big way. So like even if down the road, that agent left your team, you have the relationship with the client, right, like you have not lost that.
That is indeed the power of it. If you think of your team, you can not forget that. You have to lead with that. So again, that's where like having events and happy hours, calling them, those clients, consistently, letting them know that you are the team leader. They may have had an experience with one of your agents, but at the end of the day, you are the team leader, you're their go-to if they ever come back and buy another house, if they ever have a referral or anything like that, you want them to make sure they're calling you because you're the one keeping that relationship with them going.
Keep Expenses Low
So don't forget that because that is going to be what fuels your growth as a team. And if you don't do that, you won't grow. It's just not, or you won't grow as quickly, for sure. So all right. Don't take on any additional overhead unless necessary. And a lot of people think like the required word can mean a lot of different things. But in my opinion, I mean, I don't believe that the team right off the bat should have an office. I don't think there's a point to it.
I think there's a lot of ways that you can go around having an actual brick and mortar office that you're paying monthly for. You can meet me at Zoom. Most of the time, again, they're going to be shadowing you, so you're going to be riding along in the car with you. You can do meetings at your lender's office; you can do meetings at your title company's office — all sorts of ways for you to keep that overhead low.
Yeah, it might seem cute to have an office, but I tell you, it's not necessary, not right off the bat. Now if you've got a team of four, five buyers agents, you're selling 300 homes a year, 250 homes a year, something like that, now maybe you can look into it. But again, right off the bat, definitely not necessary, in my opinion.
No exorbitant lead generation costs. So again, and this goes back to being organic. You don't want to grow your team by buying the leads because I'll tell you, the margins are so thin on a real estate team as it is that if you're buying leads, it can for sure be what makes you be able to grow and stay profitable for what versus what it won't. And so, again, you want to keep lead generation costs at a very minimum, and that's why, as I say, you want to grow this thing organically.
Now, if you're already spending money on like facebook ads or whatever like that was what helped you grow, then keep doing that. I'm not saying to invest in your business, but what I'm saying is you don't go out there and hire a buyers agent and think okay, well now I got a buyers agent, I need to go and spend two or three grand on Facebook ads every month or $1000 on Facebook if that's not what you were doing previously.
You don't want to all the sudden think that now you have to feed this buyers agent, so you have to spend money on lead generation. It should have been an organic thing. So like they're going to take off of your plate deals that you would have had already, right. You've already got some system where deals are coming in, and they're going to take over those deals, you might invest a little bit more into whatever it was that you were doing to get you to that point.
So if your referral and SOI-based, maybe you're going to spend more time and more money on prospecting to those people, which is going to be what helps you grow. But I wouldn't just go out there and start spending all sorts of money to try and feed this agent that you had not done previously.
So all right, and yeah, I wouldn't sign up for a ton of new systems, that's the other thing that team leaders fall into the trap of is the shiny object syndrome. It's like you go out there and you see all these things that talk to like "okay, growing your team, "you need this tool, you need that tool, "you need this system, you need that system."
Like, honestly, I told you the systems that you need. And really, all it is, it's no different than how you're growing your real estate business as it is to 40 or 60 homes per year. It's going to be just more prospecting; it's going to be doing more things that got you there.
But it's not going to be like all these new systems that are going to take your team to the next level so don't get, fall into that trap. And also, ISAs, I think this is funny. We had an ISA, we hired ISA, like out-sourced ISAs and honest to God, if you don't, if you maybe had like five buyers agents, you're doing 250 deals a year, something like that than perhaps you can look into like an ISA, but honestly, before that point in time, you and your team should have the ability to call and connect with the leads.
I don't think that an ISA, again, it's just an additional expense and that's where, back, I went completely wrong. I mean, I got so bogged down in overhead that it just wasn't, you know, you could look at my expenses, and it was just crazy that I would have ever even done that. I mean, we're spending $2500 a month for an ISA. We were paying $4000 a month for Facebook lead ads.
And we were doing that; we had an office, $3000 a month. We had all the stuff that I'm saying not to do, and when you looked at it, yes my team and I were probably selling 90 homes a year, but I was selling 45 to 50 of those on my own. And so my team was selling another 45 to 40 of those, maybe 35 somewhere in that range.
Which if you look at that, that's about like three deals a month that we were consistently closing. And you look at that, what I made, let's just say our average commission was 6000 bucks, so it's $18,000 we were making in additional commission per month but then I'm splitting that 50/50, so I'm making $9000, but I've got well over 20 grand in overhead to run that team. And so that's where you can get pretty negative pretty quickly. So keep that in mind.
All right, finally, we're going to get to observations, and then we're going to open it up. So first off, early on, when you build a real estate team, you are either buying more time freedom or revenue, but it's not both.
I think people need to be very aware of that. When you start a team, it's not like you're, because a lot of people, they get caught up in the wanting to scale and leverage, those are kind of buzzwords for teams. And like leverage and scaling, but if you think about it, the reason why you would hire a buyers agent, let's say buyers agent, in this case, is, so that way you can do more prospecting and getting more listings and getting more buyer leads for your buyer agents work.
But you're not working less. If you do work less, you will earn less money. You're paying for your time freedom. And that's fine if that's what you need. Maybe you're like hey, you're making 250 a year, and you're like I'm comfortable making 150 a year if I can have my time back. Then that's fine if you go into it knowing that that's what's going to happen if you don't work harder yourself when you're scaling. But you're not going to get both. Especially not in the beginning. Maybe in the long run if you build a truly great team, can it be a kind of more like a passive income kind of a thing, but I will tell you, it's tough to get it to be passive.
You are so involved, especially in the early stages. And when I say early stages, that's five years minimum in my opinion just from what I know, team leaders I've talked to. So that's my observation, number one. And then yeah, observation number two, hiring is so important for team building. Don't rush it.
How To Hire For Your Real Estate Team
Picking the right people and hiring the right people is so, so, so important. And a lot of times when you're just starting a team, you almost kind of take what you can get. That's ultimately the wrong strategy and wrong approach to getting somebody. You want to make sure that person is the absolute right fit, and that's where growing organically, growing slow is the better option in my opinion than growing completely fast, just trying to like throw things together and thinking that the right way, not in my opinion.
Again, you want to make sure that hey, you're always looking, like you have an eye out there, especially when you're in that 50 deals a year, 60 deals a year, you know that you're going to need somebody but you don't necessarily like have to get somebody right away, so you're just like looking for opportunities that kind of present themselves.
You go to the title company, and the title company talks about a great agent that just started. Maybe you're talking to your lender, and they're working with a hungry new agent, but they just closed their first deal with them a little bit ago or whatever, like you're looking for those types of things for an in to be able to pick somebody up onto your team. You don't want to grow just for the sake of growing.
You want it to be organic in my opinion and don't rush the hire, make sure they're a good fit for your team, they're going to be the right hard worker, you're not going to have to baby them. And so anyway, all right. And then here's the last thing.
My third observation is probably one of the most important things that I will say is that consistency is even more important as a team leader than it is as an individual agent. So already as a single agent, compatibility is the key.
Like we all know that if you're not consistent as an individual agent, it's tough to have success in real estate and you take that to the very next level when you become a team leader. And if you're not consistent as an agent, it's going to be tough for you as a team leader. And so make sure that you are the person that either you're naturally consistent or you have systems in place to be sure that you're compatible.
Maybe you have the right accountability, perhaps you have a no-fail system that won't let you be consistent, but either way, if you're not compatible as an individual agent, you're gonna be really struggling as a team leader because you, for one, need to be consistent as a team leader just because that's going to propel your business and keep it going, but now you also have people that depend on your consistency. You have agents; you have people that need you to be consistent so that way they can be consistent; that way, they stay plugged in; that way, they do the right things.
And so, again, making sure consistency is still a very, very big part of your business as a team leader. So cool, all right guys, that was it. Those were my observations and everything. I'm going to open up the lines here. Let me open this up here.
Let me know; I got a lot of stuff in the chat here so I'm going to read through some of this stuff here and I'd love if you guys have questions, feel free to unmute your mic, chime in. If you've just got feedback or anything that you thought about from this call, feel free to chime in on that as well.
Real Estate Team Questions And Answers
All right, Dr. Fabian, hire slow and fire fast, that's right. When do you present the showing assistant to the client? Yeah, so, Mario, great question. So as far as that goes, I tell my clients all the time, the first time that I meet with them, that I work as a part of a team, that I've got a transaction coordinator and that I've got a showing assistant and I might not present them to them.
Like sometimes I have clients that I help that don't ever get touched by the showing assistant but I tell them upfront in the first meeting that hey, from time to time, if I'm not available, your interests are the most important thing to me and so if I'm not available, I do have somebody or multiple people that I can have shown you homes in my absence.
So I make it very clear that that exists. And so that way when it comes up that I'm busy or whatever, if I'm out of state or on a trip, that I say "okay, remember we talked about Tim? "He's gonna be able to help you."
And boom, I sent Tim over there and so it's not a super surprise. Does your transaction coordinator need a license? Yes, Russ. I don't know if they do like it if you're asking like does the state of Texas require it. I'm pretty sure they do. I mean, they're talking to your clients about real estate stuff, but for sure, I want my transaction coordinator to be licensed and so anybody that I'm hiring on a per-transaction basis, most of the time they're going to need their license.
And again, that's where having your first full-time assistant be licensed I think is extremely important because still, I'm sure there's going to be things either in that transaction process that it's kind of like maybe a gray area or perhaps even they can't do it if they're doing some of the things you're going to need them to do.
But yeah, for having a transaction, an assistant be licensed, I would say yes, mine is, so I don't even think twice about that. All right, let's see here. Do you ray daily? Not exactly, let's see, daily towards what? Not exactly sure what you're talking about there. Oh, showings.
Do you pay showing agents daily? No, not daily. I pay them per time that they show homes. So again, if they, I pay them per tour plus whatever amount of homes that they show.
So again, I have it set up to where I pay them $25 per tour plus $10 per house. So if it's a four house tour, they're getting paid $65. If it is a one-house tour, they're getting paid $35. And sometimes, most of the time, I'm kind of, if it's like a one house tour, I feel bad or whatever, we might change things up, but in general, that's kind of the structure that it's set up for. I want to be fair to the person. I want them to want to show houses for me, right. So like you want them to be excited, not be like aw, I'm not getting any money from it. If that's the case, if you have the right agent, that you feel good with them working with your clients, like pay them more.
Pay them $40 per deal plus 15, $20 per house; whatever it is you need to pay that person to have them be excited about it and give your clients excellent service in your absence; it's worth it for sure. But if it's like say a new agent that's new to real estate and they're just happy to go out and show houses so they can get experience, I'm sure they're so glad to show four houses and make $75 and get some experience showing homes. So it just depends on what the scenario is.
All right, let's see. What else do we get here? All right. Russ, Keith gave a great suggestion. It looks to read "SOI Real Estate Agent's Sphere of Influence" by Brian Icenhower. I've not heard of that book, Russ, but I might have to go check that out. So Russ gave a book suggestion. I know a lot of people like book suggestions, there you go. All right, let me go over to Facebook here. Okay, good, thanks for sharing Russ.
Let's see what have I missed on Facebook. Let me go to my page. All right, guys. And feel free to chime in. If you're on Zoom right now, feel free to share if you've got questions, feedback. What are your thoughts? Did I miss the mark on anything?
There we go. Okay, we got a question on Facebook. Says do you use a DISC profile when you are hiring or gut instinct? No, Teresa, I do use a DISC profile.
It's a great thing to point out to have a disc profile done for everybody you hire. And so I mean, the transaction manager, you might not, right, but like definitely once you get into like full-time assistant, and once you get into a buyers agent, you want to make sure you're getting a DISC profile on them and basically what I'm looking for on the DISC profile for a showing assistant or a buyers agent is somebody that's usually like an IS, something like that.
Like they're influential, but they're also likable to be social and kind of like be somebody that people are going to like, right. So that's somebody that I'm looking for. I'm not usually looking for D personality. Like those are typically gonna be the people you might butt heads with 'cause if you're a team leader, most of the time a lot of team leaders are D, DI or whatever, I'm not saying you have to be, but again, knowing your DISC profile is vital because then you can start to create, build out your team to complement what your strengths and weaknesses are.
And so like for instance, if you're a team leader and you're a DI like myself, I'm looking for an assistant that's an SC, somebody that's organized, that's not going to let things fall through the cracks. So anyways, assistants, I'm looking for an SC for me and showing, buyers agents, I'm looking for an IS, typically. And again, that's what I look for. I'm not saying that's a hard and fast rule. I mean, of course, when you interview that person, but it does play a big, big part in my way of thinking. So if they're not the right fit, I'm very, very skeptical, if they're not the right fit on the DISC profile, I'm pretty skeptical of that person.
They have to prove me wrong when I go to hire. All right, let's see, Josh Williamson, yep, I've been there. Oh yeah, a lot of people. Jason Fipps says, "yeah, I lost 80 K year one", yep. It's guys, I'm telling you, it's not a get rich quick thing for sure, you gotta be committed to the cause, you gotta be ready for a lot of ups and downs, you gotta always be prepared to learn, be willing to learn from your mistakes, learn from other people. But that being said, it's not a bad thing.
It's fun to work as a team, right. You're not there as a lone wolf, so that's fun to win with other people. I would say that's probably the thing that I enjoy the most about having a team is being able to win with other people. Like yeah, we might lose too, but being there with other people I think is probably the best part about having a team.