I’ve run three different real estate teams in five years, one when I had an independent brokerage and two when I joined eXp Realty. In this post, we’ll discuss everything you need to know about how to build a real estate team.
How To Start a Real Estate Team and Make Money
How to Join a Real Estate Team
The best way to join a team is to talk to other agents and find names of team leaders that are looking to add to their group.
Once you’ve found some team leaders, talk to at least three to five of them to see if their team model is right for you.
Look for a team leader that has at least a few years of experience, and a team that shows signs of growing year over year.
Should You Join a Real Estate Team?
If you have past experience in the industry and kept a database on your sphere of influence, then you don’t necessarily need to join a team.
On the other hand, if you’re just starting your real estate career or are working in a new real estate market, you may want to consider joining a team. This way, you will become familiar with the area and have a steady stream of incoming leads.
Joining a team can also give new agents more experience in the industry, accountability, teach them about good team structure, and help them learn what systems are necessary for a successful real estate business.
Who Should You Add to Your Real Estate Team?
Every Realtor should have somebody doing their transaction paperwork. For this reason, the first step in how to build a real estate team is to hire a transaction coordinator. You should hire one immediately, no matter your experience level.
You’ll be able to focus on lead generation and growing your business, and the level of support your clients receive from a dedicated transaction manager will make you look like a professional. You’ll also save money because they can be hired on a per transaction basis.
In the real estate industry, a showing assistant is just as important as a transaction manager. If you travel or get busy with other tasks, a showing assistant can ensure your clients still see the homes they’re interested in.
A showing assistant is typically another real estate professional who can show houses for you on an as-needed basis.
Full Time Employees
Once you get to the point you’re selling over 40 homes a year, you can start considering hiring a full-time administrative assistant to replace your transaction coordinator.
Having a salaried assistant who performs the duties of the transaction coordinator in addition to other tasks will save you money in the long run rather than paying on a per transaction basis.
Ideally, you should pay your full-time assistant a starting salary of around $35,000 to $40,000 a year.
If you can find an assistant with their own real estate license, it’s worth paying a bit more. However, it’s not a requirement. An assistant with a license helps in a pinch if you ever need them to help you with a task that requires one.
Don’t hire a full-time sales agent until you’re consistently and reliably doing 60 homes or more each year. This is because you’ll be responsible for splitting commission with them and getting them leads, so you’ll want to make sure your business is stable.
You should pay a full-time buyer’s agent a 50/50 split or less. When deciding on a commission split, factor in your overhead expenses and make sure you’ll have enough leftover in profit.
How to Run a Successful Real Estate Team
Know Your Conversion Ratio
Develop systems for yourself first before you start bringing others into your business. To do this, you need to know how many leads you are generating and how many deals you are closing.
For example, how many leads you generate per week and per month. Then, out of those leads, how many did you get to sign a buyer’s representation agreement? How many did you get to sign a listing agreement?
Out of those who signed an agreement, how many actually ended up buying and closing?
You need to know these numbers to calculate how much you can offload to your buyer’s agents. Then, you must keep track of whether or not they are converting deals at the same rate as you were on your own.
Most importantly, you need to ensure your agents are giving the same level of customer service as you do. For this reason, following up with your clients is crucial. This can be as simple as sending a survey to them at the end of a transaction to learn what their experience was like.
Streamline Your Sales Process
Having a buyer checklist of your sales process to give your buyer’s agents is a great way to keep things the way you like it. Go over this checklist with your agents so they know how to do every transaction the way you like to do it.
To help train them, you can have the new agent shadow you for at least three to four months.
Track Your Financials
The key to how to build a real estate team is to track your financials. This means keeping a monthly profit and loss statement.
You need to know how much money you’re making, spending, and how much you have leftover in profit. When you have a buyer’s agent under you, it’s even more important to keep track of these numbers.
At first, you’ll likely see your profits go down a bit when you start your team. This is because you have to invest in training and potentially creating new systems you didn’t have before.
In addition, the new buyer’s agent will probably not have the same performance level right out of the gate. But once they get the hang of things, you’ll see your profits start to go up.
What to Avoid When Building a Real Estate Team
Don’t Forget to Track Your Goals
You should constantly be tracking your progress. If you just go off your instinct and don’t actually check to make sure you are reaching your goals, it can have disastrous consequences for your team’s success. Have a plan and then keep track of how well you are following it.
Don’t Purchase Leads
Avoid buying a large amount of leads and using that to start a team. Many agents assume this will immediately make them profitable, when in fact it is usually the opposite.
While you might sell houses, that doesn’t necessarily mean you’ll be profitable after your expenses. You should already have a system where deals are coming in, and the buyer’s agent should take over those deals. This will allow your team to grow organically.
So, if you’re already spending money on Facebook ads or another platform that helped you grow, then keep following that lead generation strategy if it’s bringing you success.
Don’t Mistake Carrying the Team for Profit
Don’t fall into the trap of selling the bulk of homes on your team and mistaking that as staying profitable. If you don’t know your numbers, it’s easy to confuse selling real estate as an individual agent with having a profitable team.
For example, say you’re selling the vast majority of the transactions on your team. But if you factor in the cost of the team and what the other agents are bringing in, then you could actually be negative on a monthly basis.
For this reason, you need to have a solid understanding of your numbers because your team should be adding to your bottom line, not subtracting from it or keeping it the same.
Don’t Have a Complicated Commission Split
Don’t pay your buyer’s agents a different commission split for deals they find on their own. This type of setup, where the agent makes more money on their own, is not fair to you as the team leader.
It also potentially makes their motivation different. For example, they might not want to work a deal you give them if they know they’ll make less money compared to a deal they bring in on their own. Again, the best setup is a 50/50 split if you want to keep up with overhead expenses.
Keep in mind that the commission split structure is not something you can change down the road, unless you are giving your agents an increased split.
At some point, increasing the split is a good idea to encourage growth in your team. This is why you should start with a lower amount first that you can afford.
Don’t Rush Hiring
Often when you’re just starting a team, you can end up taking what you can get for the sake of growing fast. But this is a mistake.
Instead, take it slow and hire one person at a time. Make sure they are the absolute right fit, and train them well. You also want someone who has the right mindset.
Look for someone who is hungry for success and maybe hasn’t found it on their own yet. These people will be motivated to make your team successful. Look for someone who knows how tough the industry is and is willing to accept your help.
Avoid hiring a part-time real estate agent because they won’t be as fully dedicated to the team as a full-time agent. In addition, you shouldn’t hire a brand new agent unless they have at least six months of prior real estate sales experience.
Don’t Lose Touch With Clients
Even if a buyer specialist on your team serviced the client, you cannot neglect your own relationship with them.
The client 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 or have a referral.
Growing your team and real estate business is directly impacted by your ability to get referrals. So if that other buyer’s agent leaves your team someday, you’ll still have a relationship with the client that can benefit your business.
Don’t Take on Too Many Expenses
Don’t take on any additional overhead expenses unless strictly necessary. For example, you probably don’t need to pay rent for an office when you’re just starting. And as mentioned above, keep lead generation costs at a minimum and grow your team organically.
Also, don’t purchase new tools or systems, because they won’t make your team successful. Instead, the key to success will be continuing the same strategies you were already doing, and adding in relevant tools as needed down the road.
Don’t Forget to Stay Consistent
Lastly, consistency is key when it comes to how to build a real estate team. In fact, it’s even more important as a team leader than it is as an individual real estate agent. As a team leader, when you are consistent, that helps your agents stay consistent as well. So make sure that you’re either naturally consistent or have systems in place to help you.
Final Thoughts on How To Build a Real Estate Team
When you build a real estate team, you are either buying more time, or more revenue. However, you cannot get both. The goal of hiring buyers agents is to do more prospecting and get more leads, not to work less.
If you’re happy with your earnings and wanted to gain more time, this will mean sacrificing your team’s revenue. For this reason, evaluate what you want to get out of your team and where you see your real estate business going in the future.
Do you have a real estate team? What have you learned as a team leader? Let me know in the comments below!
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