10 Advantages of Real Estate Teams
The concept of real estate teams has been around for more than 30 years. Teams have become more common and influential in the real estate industry in the last five years with the expansion of lead-generation systems and strategies inside brokerages themselves. There are key reasons why:
Increased skill improvement
As a newer agent, if you join an existing team you will gain more experience in real estate sales more quickly. A good team will provide you listing inventory to hold open houses, create online buyer leads, and gain more listing opportunities as well. Because you have more leads and lead-creation opportunities, you will build your sales skills, time management, and negotiating skills faster through real application of those skills with actual buyers and sellers. The learning curve for a newer agent is very steep and can be even steeper if you don’t have leads to work. The best way to build your skills is through sales opportunities or practice opportunities.
Lone wolf syndrome
Sales can be a lonely business, especially when you are an independent contractor salesperson. There is limited camaraderie in the real estate business. Because most agents work remotely from a home office or Starbucks, the agents of today don’t come into the office 9–5. When you join or build a team, creating a culture of camaraderie is important. Agents are joining teams to be part of something bigger than themselves — to work in a community of other people to accomplish the vision of the business that aligns with their personal vision. People enjoy and want to be part of a community. A team can create that community and caring atmosphere.
Because prospective buyers and sellers have access to real estate information and properties 24/7, the agent of today is on the treadmill of always being connected to their phone, email, text, and business 24/7 as well. The typical agent has family time interrupted with inquiries at all hours. There is no substitute for speed to lead. Your response time in today’s world to a lead will determine more than 68 percent of your success.
Failing to get back to an online lead until the next day will dramatically lower your conversion rate. You don’t want to waste leads by being non-responsive, but you, like anyone else, need down time to recharge your batteries. A team can help lead coverage opportunities, whether you are the team leader or team member.
Quality of life
A team leader can achieve a better quality of life because of the leverage of other people and the coverage they have from the team. A team leader can create their own schedule and know that their clients and prospects will be serviced while they are not working. This is especially true during vacation time.
Most agents who are not part of a team end up working their phone, email, and text message while they’re on the beach trying to relax. It’s hard for an agent who is not part of a team to shut down work and really relax with the family. Giving your family the 100 percent attention they deserve is one of the biggest challenges for most agents not part of a team.
Stability of income
One of the challenging areas for agents is the feast-or-famine nature of their real estate business. They have a couple stellar income months, followed by a month or two of low or no income. The cycles of income make it difficult for most agents to control cash flow, spending, investment, and savings. The outcome is overspending in the good months and limited funds left for the lower months.
A team of other sales producers can smooth out the income swings that can happen in real estate sales. When your personal production is having a lower level month, one of your team members could be having a really strong month. Because you are the team leader, you are getting a piece of their production. If you have a number of sales-producing team members, your income will likely be more consistent from month to month.
Leverage is a hot topic in the real estate industry. How do you leverage your business to create more revenue from your effort, capital, and time? The greatest leverage in real estate is listings. You can create leverage by securing a listing, and all the other agents in your MLS have access to sell that listing. You are employing all agents without pay until they bring you a valid buyer and offer.
The second-best leverage is to have your own sales team working to sell that listing or use it to create buyers to sell other properties. That is human leverage: the ability for sales to be made without your effort or limited effort by you. A team leader who has more leads than they can personally work can create a strong leverage position. This increases sales and reduces expenses on a per-sale basis. That creates more net profit on each sale.
The key to success in business is doing more of what you are good at. Then delegate other activities to people with a higher level of competency in your weak areas. In teams, you can build in transaction coordinator and listing coordinator positions. These are the administrative areas in real estate sales: buyer’s agents, listing agents, and even inside sales associates. Having people who specialize in working with buyers and sellers can yield better results. The inside sales position creates and nurtures leads through prospecting and lead follow-up.
Coaching and training others
For any profession, being able to do it well is one thing. Being able to communicate and teach it is a whole different level. It’s rewarding and gratifying to help and teach others how you created your success and how they might achieve theirs. There is no greater reward than helping a team member craft and achieve the life they desire for themselves and their family. To have the honor of a front row seat in someone else’s success show is truly the greatest.
Increased income and increased leads
If you require a team member to work to create leads themselves as well as work the leads you give them, you both will increase their income and sales.
Use the 1/3, 1/3, 1/3 Principle. One third of the leads and sales come from opportunities that you create for them — from past clients and the sphere of influence out of your database that you turn over to them, and from your online leads that they follow up on. Another third of their sales comes from their prospecting efforts to lead opportunities, such as working your listing inventory holding open houses. They work to use the team inventory to create leads apart from the ones you create online. The final third comes from working their past clients or sphere of influence. This creates a right balance between your efforts to create business for them as part of the team and their right effort to create income for the benefit of themselves and the team.
Because most agents’ business is so personal to them, it can be difficult for them to sell. A team can be better set up, like a dentist, doctor, or attorney practice, where the book of business is transferred through sale at retirement of the principal or one of the partners. The purpose of any business is to create a strategy, system, or process that can be replicated by others. This in turn enables the owner to step away or sell the business. By creating a team, you move the business beyond just yourself to become a future saleable asset.