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How some brokers turn teams into an advantage

By Desiree French

Commonly called "a company within a company," the agent team concept has gained increasing fanfare at real estate brokerages nationwide. Fueled by the Internet and a plethora of swamped high-producers set on managing their workloads while also boosting revenue and productivity, the agent team has evolved as a convenient option to having top agents form their own, separate real estate firms.

Of course, the agent team concept is not new. In the early days, most originated as husband/wife or parent/child partnerships. Today, many have morphed into larger entities that mirror or exceed the size of a typical real estate firm, defined by the National Association of Realtors as one with a median of six licensees and one staff person.

The Agent Team Model: Anything Goes
A "typical" agent team is more difficult to define, although many now have from two to 20 team members. The members may include licensed buyers' agents, listing coordinators, administrators, prospecting agents, and marketing and technology specialists. One Prudential team in downtown San Diego has 60 sales associates. Some teams are so large that they operate out of their own buildings.

"We call them enterprises," says Sheldon Detrick, chief executive officer of The Detrick Cos., referring to the 18 to 20 teams now operating within 15 company offices in Albuquerque, San Antonio, Oklahoma City, and Tulsa. "I really encourage them. If I don't set up a mechanism for someone who wants their own team, then they're going to leave and set up their own company. This way, I get to keep them, make money, and increase market share-and I give them what they need."
Cindy Sikorski, a broker-owner at RE/MAX Executive Realty in Charlotte, North Carolina, has 300 agents scattered across five offices, and a whopping 49 teams. Echoing Detrick's contentment with teams, she provides this rational for encouraging them: "They're listing like crazy, which helps with our market presence."
To prove it, she rattles off the numbers. One team did $72 million in sales last year. Another brought in $52 million; while several teams had $30 million in business.

Why Agent Teams Can do More Business
The advent of numerous technological applications has made it easier for agents to now get dozens, if not hundreds, of leads to their Web sites. With so many leads pouring in, top-producing agents are sometimes losing them because they cannot keep up. To counter the loss, many have turned to teams to handle the load.

"We have, in the past five years, burdened the agent population with a host of technologies, paperwork, marketing strategies, and other obligations," says Stefan Swanepoel, a real estate trends expert. "Many have no time, inclination, or skills fit to handle all the knowledge and skill sets that are needed to acquire or set up a brokerage firm, so they hire people to do online marketing, distribute fliers, show homes, and follow up on leads for them. A team is like having the best of both worlds."

The Consumer: Catalyst of Change, a report published last year by the Strategic Issues Work Group of NAR's Association Executives Committee, predicts real estate brokerages may, in the future, resemble other professional offices, "where most time-consuming tasks are performed by salaried personnel rather than the agent … This model of specialized service delivery," it states, "is already being used by many successful agent teams-suggesting it has wide applicability in the industry."

The Pros & Cons for Brokers
Team models, or structures, vary. While some personnel, like personal assistants, may be salaried workers, others-such as listing and buyers agents-are paid on commission. Further, some teams are structured as a limited liability company, or LLC, while others are set up based on agreements that hold the parties to various tasks. The agent team leader or principal has some liability but, ultimately, liability rests, as it always does, with the sponsoring broker under whose umbrella the team works.

Several broker-owners contend the growth in teams has been stymied by brokers who are reluctant to give up control. They say brokers' egos cannot handle teams that can function successfully without their input. Others say brokers are too rigid and inflexible to welcome teams. Still others say some brokers are just unsure how the teams should be structured. None, however, say they would approve a team if they think an agent is ill-equipped to manage one and could end up hurting the broker's business.

Steven James, president of Manhattan Brokerage for Prudential Douglas Elliman, has seen the number of teams at his office of 550 agents grow to seven or eight. "Four years ago," he says, "you were lucky if we had one or two teams."
Despite the proliferation of teams, James isn't too excited about their growth. "It's problematic in a city office. On a per-squarefoot basis, it's extremely expensive to run a team," he concedes. "Therefore, I have to be very selective about who can have a team and why. Otherwise, if I can have six agents at 50%, then I can make more per agent than I can with a team."

The outlook is radically different for Margie Richard, vice president and broker-owner of RE/MAX First Choice Real Estate in Northborough, Massachusetts. She has 25 teams and is trying to add more. "I think the concept works wonderfully," she says. "I've never had a problem. They seem to work cohesively. The teams in our office work better than having staff perform the functions themselves."

What is appealing to many brokers is the fact that good team leaders can relieve them of the task of training and managing agents. The team leaders generally call on them only when needed, primarily to help solve truly nagging problems or to answer questions about building, developing, or training a team.

The reality, says Detrick, is that "today, it's really hard to go on your own to start a company because the companies already in existence are strong and tough, and they have big market share. All the leading franchises are taken. So now, as an agent starting on your own, you would have no brand identity and no name." The team option provides a win-win situation for the agent equipped with good sales, management and entrepreneurial skills and the broker looking to up profitability and market share.

When it comes to revenues, there is no set way in which they are divvied up by brokers. Some say it's negotiable. But generally, brokers may charge royalty, and other, fees. For example, there may be a fee attached to every buyer agent that a team leader hires. Many prefer to take a percentage of the team leaders' gross income; but others implement a combination of fees and commission splits.

"In most cases," says Swanepoel, "a team can be advantageous to the broker depending on where a broker draws the line between commissions and responsibilities and experience."

Go Team
Cindy Sikorski with RE/MAX Executive Realty has always run a very team-friendly office. Here, six reasons why she supports agent teams:

1. Their listings and sales are a large contribution to market presence
2. They provide an avenue for inexperienced agents without implementing a training program
3. Good team leaders supervise and handle their own problems
4. Teams relieve administrative employees because they have their own administrative staff
5. Their sales contribute to the company's bottom line
6. A sales associate from a team could join the company as an independent agent

Where the Teams Are
According to RISMedia's 2007 Power Broker Report & Survey, this year's top brokers report a total of 11,488 agent teams within their brokerages. The top five states for agent team population are:

State Number of Agent Teams
Minnesota 1,795
California 1,216
Texas 980
Pennsylvania 768
Florida 727

Number of Years as an Agent Team
– Less than one year 20%
– 1 – 2 years 19%
– 2 – 3 years 17%
– Greater than three years 44%

Number of Team Members per Team
– 2 28%
– 2 – 5 45%
– 5 – 10 20%
– Greater than ten 7%

Source: RISMedia's 2006 Agent Team Survey