Most agents dream of the day they’re ready to make their first hire.
But those who have done it know this is where the real fun begins.
(And by ‘fun’ we mean, not only bigger revenue, but all the high-level challenges and leadership headaches that come with it.)
We’ve mined through the leading industry resources, collecting frontline advice from brokers, agents and coaches with a combined total of over 220 years in the game, to bring you 7 simple steps that will help you build the real estate team you’ve been dreaming of (and avoid some of the most common pitfalls along the way).
Step 1: Get Your House in Order
“The foundation of building a profitable real estate team is to have your own house in order first.” — Jan O’Brien, RealEstateTeamBuilder.com
Every great play starts with a game plan.
Your very first step when building a real estate team is to set your revenue goals and work backward to determine how many leads and team members you’ll need in order to meet them. As team leader, your real role is Chief Lead Generator, so make sure your systems are in fighting shape and able to easily handle an increase in the number of leads coming in.
According to Co-Founder, WBNL Enterprises and Business & Real Estate Coach, Jan O’Brien, these are the key real estate systems to set up:
· Team Real Estate Business Plan and Goals
· Vision, Purpose, and Brand
· Marketing and Advertising
· Database and Referral System
· Listing and Farming System
· Buyer, Escrow, and Transaction Management System
· Lead Generation and Follow-up Systems
· Internet and Social Media Marketing
· Financial, Productivity, Profitability Reports, and Forecasts
Step 2: Know Who to Hire, When
“When you find yourself too busy to grow your business (i.e. doing your own searches), that is when you know it is time to expand and build a killer real estate team.” — Darell Handler, Handler Real Estate Services
Despite the mountains of advice against it, many agents still start adding buyer’s agents before they have their core business systems in place.
But buyer’s agents should always be rainmakers, not admin whizzes. Your real estate systems need to be running like a Swiss clock so that when your high-octane agents come on board, they can simply plug in and keep moving—without getting bogged down by clunky workflows.
If you haven’t found time to get your house in order, you can knock out two crucial steps in one go by hiring your admin first.
Agents who consistently close upwards of 30 deals a year should have no trouble affording full time admin help. But if you’re drowning in paperwork and convinced you’ll have the transactions in the near future, there are some flexible (and affordable) remote options as well, including MyOutDesk and Virtual Assistant Staffing.
Now that you’ve got the paperwork off your plate and your systems are raring to go, you’re ready to offload some of these leads to an ace buyer specialist.
This buyer agent’s top priority is to make sure no lead slips through the crack. You’ll want to provide them with a ready-made rock solid lead cultivation strategy and be ready to hold them accountable for list maintenance and follow ups.
Your buyer agent should be able to handle a max of 4 transactions per month. When it looks like you might exceed that number (do a little dance), then get ready to bring on your second agent or ISA.
Example of a high-performance team structure, from Ben Kinney’s Real Estate Team of the Future.
Inside Sales Agent
Once you’ve got your dedicated buyer agent, you’re free to get out there and generate a ton more listings. Things are going to get busy on both sides, fast. At this point, your team will be extremely tempted to focus solely on the hot leads and short-term deals.
Now’s the perfect time to bring in your first ISA. A great ISA can double your GCI simply by taking over the tasks agents don’t want to do, namely: Making phone calls.
Mitch Ribak (a.k.a. The Grandfather of Lead Conversion) is the founder of InsideSalesAgents.com and former broker owner at Tropical Realty Beachside in Melbourne, FL. Mitch has used ISAs to achieve $127 million in annual transaction volume and increase conversion rates by 450%.
But be warned: Fast, consistent follow up WILL bring in more leads, and more contracts. You, your systems, and your agents need to be ready to hit the ground running.
As business owner, it’s on you to make sure you’ve always got the right number of listings.
You need to keep your team busy year-round, while proving you’ve got what it takes to consistently uplevel the number of transactions month after month.
When you’ve reached the peak for the number of listings you can handle yourself (e.g., if you’re generating seller leads from the hotel business center on your family “vacation.”), it’s time to hire help in the form of either a listings agent/specialist or transaction coordinator.
You can also opt to hire a VA as your transaction coordinator. Tools like Brown & Brown or Administer You typically have a fee range of $300-$700 per transaction, and are an efficient, affordable alternative to hiring in-house.
Each time you hit a new revenue goal, it’s time to evaluate your team and consider bringing on more help.
There’s a number of ways you can grow your team, including; marketing directors, showing assistants, and even personal assistants. How you choose to structure your team will depend entirely on your goals for your life, and your business.
One of the most widely recommended resources on the subject is without a doubt Gary Keller’s bestseller, The Millionaire Real Estate Agent. Even agents who aren’t fans of the KW model confess to loving and profiting from the lessons in this book. What readers love most is that the teachings can be applied to teams of all sizes. But if you just want some quick-action Cliff’s notes, check out Lori Ballen’s personal story of how she built her own rockstar real estate team, using the MREA model.
Step 3: Do Your Math
“As a rule of thumb, if you’re running an efficient team, your expenses will run 15%.” — Bernice Ross, CEO, RealEstateCoach.com
Bernice Ross is one of Inman’s top 25 best real estate coaches, with over 30 years experience selling real estate.
Bernice says, “Many agent teams are undercapitalized. A primary reason is that they pay other agents at the full rate rather than their split AFTER expenses.”
If you’re going to put in the time and energy required to build an awesome real estate team, make sure you get the math right from the very beginning. The last thing you want is to look up one day and realize you’re a business owner who makes $10 per hour.
Choosing a Team Compensation Model
Your team compensation model can make or break your real estate business. Tristan Ahumada, CEO of Labcoat Agents warns against rushing into it.
Tristan recommends writing down everything you offer to your team and then outlining all of those items. According to Tristan, the biggest mistake most agents make is giving away too much, too soon.
“They give away too much up front and they don’t have a solid model they stick by. No consistency. Sometimes they give away too much because they really want one agent to join the team.”
Knowing exactly what you offer to each and every member of your team will help you resist the temptation to make costly mistakes and enable you to effectively communicate your value prop when hiring — which can make all the difference in whether or not your team members feel like they’re getting a fair shake.
For example, a buyer’s agent might be thrilled to take a 40% spilt if they can see clearly all the hard work you’ll be doing to market the business, generate new leads, and take the admin off their plate so they can sell more, and make more.
Employee vs. Independent Contractor
Before you decide the exact breakdown of your splits, you must decide whether to use an employee or independent contractor model. And this will always depend on what you expect from each member of your team.
Here are some key questions to consider:
- Does this role require the team member to work specific hours?
- Does it require them to use specific software (e.g. your CRM) and procedures?
- Does it require them to be in the office or at an open house at a specific time?
If yes, you’re looking at an employee model.
(For the official checklist, check out the IRS’s guidelines here.)
Many agents make the mistake of misclassifying an employee as an independent contractor, which can result in devastating labor lawsuits and IRS penalties. A scenario that, according to Bernice, happens all too often.
“Agent teams are a ticking time bomb in terms of the labor laws. There is nothing in the real estate laws that allows one independent contractor to supervise another independent contractor. It’s a gray area for the managing broker, but not for the agents who run teams. Their managing broker is responsible for supervising every individual who works out of that office. To give you an idea about the potential fines, it cost Zip Realty $600,000 to settle for four agents who claimed they weren’t compensated at minimum wage.”
And the damages didn’t stop at $600k. The California Labor commission stepped in and found “systemic violations” of the independent contractor law, leading them to pursue a $9 million penalty. Zip Realty ultimately settled at $5 million, plus back tax penalties. Bernice also pointed to the 2012 Barasani case, in which a single agent brought litigation against Coldwell Banker who ultimately settled for $4.5 million.
“Agent teams are a ticking time bomb in terms of the labor laws. There is nothing in the real estate laws that allows one independent contractor to supervise another independent contractor. It’s a gray area for the managing broker, but not for the agents who run teams.”
So if you’re going to maintain a brick-and-mortar office, think about who you want to see there every day. Those are the team members who must be hired as employees rather than independent contractors.
When to Use the Virtual Assistant Model
The virtual assistant model can serve as a happy medium for many positions within a modern real estate team. And this model comes with some great benefits. With a virtual assistant, there’s never any debate over whether you issue a 1099 instead of a W-2. VA’s always fall under 1099, and you never have to worry about withholding taxes, social security, or providing workers’ comp.
Plus, many VA’s charge as little as $10 per hour, and unlike a salaried employee, you only pay for what you use. As the name suggests, the VA model can be a great choice for any position where the team member can work remotely.
A virtual assistant is a natural fit for any admin or research role, including data entry, scheduling appointments, buyer and seller lead research, listings research, or even personal tasks. But they can also assist with taking some of the marketing tasks, such as graphic design work or social media updates, off your plate and free up a ton of your time so you and your agents can focus on money-making activities.
How to Calculate Commission Splits
Due to the legal risks of misclassifying employees as independent contractors, many agents are shifting to a salary + commission/bonus model. According to Bernice, “As a very general rule of thumb, expenses usually run about 15% of gross commission income. Consequently, you can pay your employee buyer or seller agent a salary of $30,000 per year plus a 42.5 percent split on any amount over $30,000 in commissions to the agent.”
But most experts agree that the classic 50-50 model also works well. Your number will largely depend on your business and leadership philosophy. For example, according to Tristan, a 60/40 split (60/buyer agent, 40/team leader) can work out well, while real estate coach Travis Robertson recommends the opposite (40/buyer agent, 60/team leader).
Las Vegas, mega agent Lori Ballen has yet another unique way of doing it. Here’s how Lori does it, as explained in her epic blog post on team compensation:
“I can tell you that when I hire a new team member, I ask them to give me three numbers.
Their MUST-make-to-survive number
Their will-be-content number
Their Yippy Skippy, I’m-never-leaving number.
During the first 100 days, they generally start at the MUST survive number. After they complete their 100 days of training, they move to their content number and earn into the Yippy Skippy number. If I’m recruiting high level talent, I may start them at the second number.”
Your decision on how to split commissions will ultimately depend on your unique business objectives, the market you’re in, and the experience of each member of your team. No matter which compensation model you choose, be sure to keep it simple, profitable and motivational for your team members.
And remember, whether it’s commissions or bonuses, ALWAYS calculate your splits on net revenue — not gross.
Source: Another example of commissions splits from Kris Anderson, Your Premium Team
Real Estate Team Sample Agreement Templates
Always make sure you consult with a legal professional before asking your new team member to sign on the dotted line.
If you’re not sure which type of employee model to use, or what legal questions you need to consider, it’s a good idea to take a look at some of the most common contracts used by other realtors. To make it easy, we’ve compiled a quick list for you here.
Independent contractor sales agent agreement, Best Choice Realty
Independent contractor agent team agreement, Coldwell Banker
Independent contractor agreement – team member and assistant, The Agent Trainer
Contract For Sales Agent/Buyer Agents/Staff/Assistants, The Brenda Bianchi Team
Blank partnership agreement, The Lones Group
Step 4: Don’t Forget the Little Things
“We’ve found that the “little things” are often the most important aspects to our clients and these “little things” are also what sticks in their minds after the transaction is closed, leading to referrals and great reviews.” — Joe Arsenio, Open Listings
One of the most common mistakes when you start to grow is overlooking the little things that fueled your growth in the first place.
Director of Residential Sales and agent at Open Listings, Joe Arsenio was facing an extreme increase in volume when they decided to grow their team.
“When I reached 20 escrows and maintained being between 20-30 escrows at all times for a couple of weeks, I knew it was time to bring on more team members. My partner agents were in the same boat as well. We were all getting more acceptances than we were closing (escrows are typically 30 days and therefore closings are month out) and yet the leads kept flowing in at increasing rate. We needed to hire more agents to make sure we did not slip up on our top notch service,” says Joe.
Joe and his team hired more showing agents, internal customer service representatives, and transaction coordinators to make sure they were able to uphold excellent service, all the way through.
According to Joe, the #1 most important “little thing” is quick communication. Whether it’s a response to a first time inquiry, or managing the escrow process, Joe and his teams aim to respond to all inquiries within 1 hour, if not immediately—even if it’s just to acknowledge the issue and let the buyer know it’s being addressed. “Being organized and responsive means the world to a buyer,” he says.
While we’re on the topic, little things also go a long way with your team. We love this shot of a Tuesday Lunch and Learn at Keller Williams Capital Realty.
Train Your Team to Go Above and Beyond
Joe and his team always over communicate.
“Go above and beyond with answering a question. Be proactive with your responses so that your client does not have to figure out the right questions to ask. More details and information will make your client feel comfortable that you’ve got their back,” he recommends.
Joe also advises agents and their teams to drop the jargon. Clients don’t understand the real estate process, and that’s why they hired you. He encourages his teams to speak to clients and prospects like they would speak to a friend, “Tone down the sales pitch and turn up the humanity. The goal is for the client to feel comfortable and happy at the end of the transaction.”
Step 5: Hire Right
“I had the systems in place to mold the necessary skill set and market knowledge, but personality is something you just can’t teach.” — Jake Tasharski, Center Coast Realty
When you’re moving at 100 mph from appointment to appointment, it can be incredibly tempting to hire the first set of hands that comes along. But beware, bad hires cost time and money.
When Chicago broker, Jake Tasharski, set out to hire his first rainmaker, he knew culture and personality would be the priority. He wanted someone he could trust to represent his brand and emulate the experience his clients have with him.
And he made sure he had a rock solid plan for onboarding. Jake brought on his first agent, Sarah Troy, during the offseason and had her shadow him every day for the first couple of months on the job. Buy the time busy season rolled around, she was able to completely cover his rental business, and assist with showings.
And the best part is, they “mesh” well. Just look at those smiles.
Everything You Need to Know About Team Dynamics
Most agents agree great team dynamics are crucial, but not everyone goes the extra mile to figure out exactly how their team ticks.
Here’s a quick rundown of the leading personality assessment tools to help you choose the one that’s right for you.
This four-trait personality assessment is by far the most widely used team building tool in the real estate industry (and with over 1 million people using it every year, it might be the most popular, period). DiSC’s biggest strength is its simplicity.
Each team member is asked to rate their own propensity toward each of the following characteristics:
Dominance – direct, strong-willed and forceful
Influence – sociable, talkative and lively
Steadiness – gentle, accommodating and soft-hearted
Conscientiousness – private, analytical and logical
Based on their DiSC profile, team members and leaders can determine the best way to interact with each other.
For example, a high D will be most motivated when you exhibit your passion about a goal or target. Whereas someone with a high C, will want the nitty gritty details on how and why that goal was created. Of course, it’s possible for someone to be high on both D and C, and for those team members, you’ll want to appeal to both their desire for enthusiasm, and their love of details.
Here’s a nice image illustrating some of the key traits important for members of a real estate team, according to CleanSlate. Ultimately, your team can have any combo of these traits. What matters most is that you engage with them in the way that works best for them.
Myers-Briggs Type Indicator (MBTI) is just as widely used and respected at DiSC. The main difference is DiSC assesses how people behave externally, whereas the MBTI is more geared toward the internal, such as how people think, feel and make decisions.
MBTI is longer than DiSC, with 16 four-letter personality types:
Extraversion (E)/ Introversion (I) – Extraverted types learn best by talking and interacting with others. Introverted types prefer quiet reflection and privacy.
Sensing (S)/ Intuition (I) – Sensing types enjoy a learning environment where the material is presented in a detailed, sequential manner. Intuitive types prefer a learning atmosphere where an emphasis is placed on meaning and associations.
Thinking (T)/ Feeling (F) – Thinking types desire objective truth and logical principles and are natural at deductive reasoning. Feeling types place an emphasis on issues and causes that can be personalized while they consider other people’s motives.
Judging (J)/ Perceiving (P) – Judging types will thrive when information is organized and structured, and they will be motivated to complete assignments in order to gain closure. Perceiving types will flourish in a flexible learning environment in which they are stimulated by new and exciting ideas.
MBTI is great if you want to understand the finer details about how a team member will approach day-to-day challenges related to workflow, problem solving, decision making, and dealing with stress.
Larry Kendall’s Four Characteristics
Author of Ninja Selling and real estate guru, Larry Kendall says rather than manage agents, you want to “sail with them.” He’s categorized four types of agents based on selling and performance characteristics.
Category 1 – Productive and Coachable. All you have to do is give these agents a general direction, they’re highly motivated and can take any task and run with it.
Category 2 – Productive and Uncoachable. These guys can be very successful but you have to sail alongside them, they don’t like to be told what to do.
Category 3 – Unproductive and Coachable. These agents are coachable, but they’re stuck in a rut. They need small, manageable activities and action steps (NOT giant goals and outcomes) to get them back in the game.
Category 4 – Unproductive and Uncoachable. There are approximately 600,000 of these types of agents in the real estate industry. These guys won’t be your rockstars, but they’d do fine in a brokerage with low fees and low expectations.
Larry Kendall’s four characteristics is a great, broad-brush assessment for quickly identifying potential candidates, and gauging the temperature of your team.
Again, be careful not to rush to judgment. Sometimes agents can be labelled a Category 4 when the real problem is no one’s given them the right kind of coaching or tools to help them raise their game.
What to Do about the “Me” Guy (or Gal)
“One of the biggest mistakes is picking agents who want their name in the spotlight. Typically teams are formed when one or two rainmakers come together. The team members added to the group are typically newer in the business and are just starting to cut their teeth. As an individual you are able to promote ‘YOU’. As a member of a team personal promotion takes a back seat.” —Bill Gassett, RE/MAX Executive Realty
Let’s face it: There are some BIG personalities in real estate. And while that’s definitely not a bad thing, it can make it hard to separate your ambitious Category 1 agents from your self-absorbed bad apples.
When you hire each member of the team, be clear about what it means to be on a team. Avoid fighting for the spotlight by having a system in place to make sure your star performers get the recognition they deserve, and have opportunities to develop and advance their careers in the future.
Step 6: Use Your Intuition
“Personally, I go on intuition. I see our success as being based on our uniqueness, a different approach to every aspect of the business, so I am not looking for people that fit the standard molds.” — Kyle Alfriend, Alfriend Real Estate Group
With over 20 years in the game, Kyle Alfriend knows a thing or two about hiring a team. The Dublin, Ohio realtor uses the slogan, “Independently Unified” to remind team members of the importance of being both self-motivated, and tuned in to the bigger picture, a trait he says, is difficult to measure in tests.
But he’s also made some mistakes in the past, and now Kyle hires slow.
- First, his staff conducts an initial phone screening.
- Next is an interview, which incorporates some Myers-Briggs testing with the main focus, of weeding out the bad candidates, as opposed to finding the good ones.
- Finally, the candidate gets to Kyle. “The more ‘out of the box’ I want them, which is marketing and sales, the more I follow my gut. However, on the more procedural or compliance related jobs, like closing coordinators or processors, the more I allow the questionnaires and personality tests to decide,” Kyle explains.
Kyle says, ultimately, regardless of the position, he always makes the final call based on gut feel.
The three types of intuition according to HeartMath Institute. Implicit is based on knowledge acquired in the past that you either forgot, or didn’t realize you had learned. Energetic sensitivity is the nervous system’s ability to detect and respond to environmental signals. And nonlocal intuition is the stuff you feel, but just can’t explain (like when a parent knows their child has been hurt, or an entrepreneur makes a perfect call on a “hunch”.)
Step 7: Lead with Why
“The best teams are bound by common belief systems, values, and purpose.” — Kent Clothier, Real Estate Worldwide
Mega agents like Steve Harney and Dave Liniger, say it all the time: You’ve got to lead with ‘why.’
But why is why so important?
According to real estate training and wholesaling boss, Kent Clothier, your team is there to grow your business and help your clients, while taking the pressure off of you, the entrepreneur. Having to micromanage defeats the purpose.
Kent says, “In my experience, the keys to this are certainly to hire the right people and to have the right systems in place. However, none of it matters if your team is not filled with purpose-driven people that clearly understand why they are a part of your organization and feel compelled to help you and your organization to do more.”
Once you know your employees personalities and productivity styles, you’ll know a lot about what motivates them. Align their personal drivers with the overall mission of the business, and you’ll succeed in keeping them switched on and ready to work each day.
Every year, Kent and his team have a ton of fun with their 1000 Layaways program, where they pay off layaways for people in the community who might be struggling during the holiday season. Now that’s a team with a mission!
“I use that time to connect and motivate. The morning call has brought my team closer together and has elevated our culture.” — Tristan Ahumada, Realtor and National Speaker
As the CEO of Labcoat Agents, and KW realtor with over 14 years leading top-performing teams, Tristan Ahumada is a name you’ve heard before. Running multiple businesses and speaking at real estate events all over the world can definitely keep a guy busy.
So how does he keep his team motivated when he’s always on the go?
The morning call.
According to Tristan, this the #1 most consistent action he takes to keep his team motivated. Almost every morning at 8:30am Tristan and his team huddle together by phone. He chooses a topic to discuss, asks the team questions and sometimes collects their feedback as well.
Tristan & Co. just having a little fun on the job. Source: Top Agent Connection
And how you end the call is important. Take it from another high-octane agent with over a decade in the biz. Barry Jenkins ends his morning calls with the following sign off:
“As you drive to your appointments today, you’re going to see people unhappy and limited by their current employment. You have the opportunity to be different. The sky is the limit with your career path. Be grateful for your current employment and go crush it today!”
Sparking a killer combo of gratitude and grit is the best way to keep your employees motivated—even before they’ve had their morning coffee!
Step 8: Fire Fast
“If someone is not working out or not working well with the team, let them go. One or two bad people can be toxic and ruin the morale for the entire team. The sooner you let them go, the better off the team will be even if they sell a lot of houses.” — Mark Ferguson, Invest Four More
Here’s another one you’ve heard before: Fire fast.
This is a veritable leadership mantra within the real estate community, yet many broker agents still wait far too long to fire the bad apples.
But negativity is contagious and naysayers can the biggest, most detrimental, distraction to a goal-oriented real estate team. Next to lead generation, your biggest job as leader is to protect your team’s focus. It’s hard, especially the first time, but you’ve got to root out the bad seeds before they can spread their negativity onto the rest of the team.
Step 9: Don’t Beat Yourself Up
“Hiring right is not easy, and you have to have perseverance to go through the cycle of hiring and training more than once until you get settled with the right group of people. Oh, and you will almost never hire in someone that is as motivated or driven as you.” — Sep Niakan, HB Roswell Realty
I don’t know who said it first, but damn if it doesn’t bear repeating:
New level, new devil.
Of course, everyone wants to get it right the first time, but some lessons just take longer to learn. And leadership might be the hardest, most valuable lesson of them all.
Your brain on regret. Neuroscientists have proven what we already know: Regret and gratification have lasting effects on the brain. Much of what happens in your head after a call is made depends on your individual personality type and perspective. Bottom line: Learn from it and move on, in whatever way works best for you.
Take a page from Sep Niakan’s book and make peace with the fact that this will be a long (and sometimes painful) process. Sep is the #1 listing broker in the Greater Downtown Miami area and he’s the founder of CondoBlackBook.com, Miami’s most comprehensive condo-only real estate search.
So yeah, he’s been around the block a few times and knows what too many agents are quick to forget:
Leadership is a lifelong process.
When you step into it the first time, you will probably fail. Don’t get down on yourself or let yourself get distracted by the fact that nobody’s as dedicated as you are. You’re the leader for a reason.
Accept right now that you will have your fair share of bad hires and experiences along the way. But that’s what makes you better, and sometimes, that’s also what makes it fun.
So, what do you think? Are you ready to start your own team?
Come on over to Facebook and tell us all about it.
Who are We?
GrowthHouse is where ambitious agents and teams come to learn strategies and tactics to grow their real estate businesses.
The team behind GrowthHouse also runs Follow Up Boss, a sales driven CRM dedicated to helping agents and teams focus and follow up for more appointments and sales. Click here to learn more about how Follow Up Boss can help you accelerate your growth.