Real Estate Team Structure: How Do Real Estate Teams Work?

Real Estate Team Structure

The real estate industry has undergone significant transformation over the past few years, and more real estate professionals are embracing the team structure. Real estate teams offer many advantages, and if you want to maximize your chance at success, building a team might be a great idea.  

But it’s important to be strategic as you create your team and to understand how good, effective teams work. Read on to learn the ins and outs of real estate teams and why you might want to adopt this model for your business.  

How Do Real Estate Teams Work? 

Real estate teams are powerful because they pool resources and information, but individual teams may function differently. For example, many teams are structured with one lead agent and then several supportive agents operating under them. Alternatively, teams might consist of several agents who largely work independently, but who also share office space and other resources. Finding the right team structure for your goals can help to ensure that the arrangement is a success.  

>> Related Read – Real Estate Niches: What’s Lucrative & How to Find Yours 

Real Estate Team vs. Group vs. Brokerage 

At first glance, the terms real estate team, group, and brokerage might all seem to describe the same business structure, but there are some key nuances between these terms. Understanding the key differences between these types of structures can help you to determine which is right for you.  

What Is a Real Estate Team? 

Real estate teams are groups of real estate professionals who work together, rather than working independently. These teams consist of two or more professionals who provide real estate services. 

Specific team structures can vary. A team might consist of a pair of real estate agents who work together, or a team could be a group of 20 real estate agents who support a single lead agent or a pair of lead agents.  

No matter how large the team is, all of the members work together to achieve a common goal. They often share in commissions and operate with a heavy focus on results.  

What Is a Real Estate Group? 

A real estate group consists of two or more real estate professionals who share common interests, but who don’t necessarily work toward a shared, singular goal.  

Real estate groups can be many different sizes, from just a few people to thirty people or more. One example of a real estate group would be a group of 15 real estate agents who share an office space and who market the group using the same marketing materials, yet each agent operates independently and has their own clients.  

What Is a Real Estate Brokerage? 

A real estate brokerage is a company that buys and sells real estate. A brokerage is owned by a real estate broker, and the broker hires real estate agents to work under them.  

Most real estate brokerages are independently owned and operated, and they may specialize in residential or commercial properties or both property types.  

While a brokerage functions as a team, the broker oversees the company’s operation and is responsible for ensuring that the transactions adhere to applicable law. The broker oversees the real estate agents and makes sure that they follow any and all laws.  

>> Related Read – 10 Habits of Successful Real Estate Agents 

How to Compensate and Structure Real Estate Teams 

Identifying an appropriate compensation model is important to keep a real estate team working smoothly, and to keep team members satisfied and invested in their work. Many teams choose to split commissions, often in a 50/50 split, giving 50% to the agent and 50% to the brokerage.  

In some cases, different compensation models may be more appropriate. Some teams offer 100% commission to their real estate agents, but charge agents a per-transaction fee or a flat monthly fee for being part of the team. If a brokerage provides significant support to agents, such as by providing client leads and significant marketing, the brokerage might use an 80/20 split, with 80% commission going to the brokerage and 20% going to the agent.  

Finding the right compensation structure will largely depend on team roles and team models used.  

Real Estate Team Roles and Models 

There are many ways to structure real estate team roles. These different models offer varying benefits, and there are also different risks involved. It’s important to understand the differences between these models when deciding which is right for you.  

Example #1. Mentor/Mentee 

The mentor/mentee model is a low-risk structure in which you would mentor new agents and receive a percentage of their commissions in return for your guidance and time. Often, these new agents agree to work for the team for a 12- to 24-month period, and then they would move on to other opportunities to further advance their career.  

In this model, you would not be responsible for providing leads, managing team members, or paying for marketing expenses. This can be a good way to earn commission percentages without investing significant finances into the team.  

>> Related Read – How Many Homes Does the Average Realtor Sell a Year? 

Example #2. Team Leader 

In the team leader model, you would create a business structure and provide your team members with resources. In turn, your team members would promote your brand, rather than promoting themselves as real estate agents.  

This model allows you to build a refined brand, so you can focus the business on a specific location. As the leader, you would typically operate as the lead listing agent, with your employees acting as showing agents. Creating a business following this model requires a greater investment of time and finances than the mentor/mentee model, but it also allows you to build a branded business with a steady roster of employees you can depend on. 

Example #3. Lead Team 

The lead team model divides the business into inside sales and outside sales branches. The inside sales branch focuses on inbound leads and prequalification, while the outside sales branch focuses on showings, negotiations, and contracts. Together, those two branches can potentially grow the business into a high-volume operation.  

This structure requires employees who are highly driven, and it also requires a significant financial and time investment. It carries more risk than the other models, but it can also lead to significant earning potential.  

How Do Real Estate Teams Split Commission? 

All three of the aforementioned team models operate on a commission basis, but because the risk and financial investment vary so greatly, those typical commission splits vary:  

  • Mentor/Mentee Model: 70-90% commission split to team members 
  • Team Leader Model: 50-60% commission split to team members 
  • Lead Team Model: 30-40% commission split to lead team members 

>> Related Read – Which Real Estate Company Has the Best Commission Split? 

How to Build a Real Estate Team in 3 Easy Steps 

If you’re ready to take the next step in your real estate career, then it’s time to start building your team. These three easy steps will guide you through the process.  

Step #1. Get Organized with Systems and Processes 

A successful team needs well-planned systems and processes to guide its work. Take your time developing your systems so that you’re prepared to get to work once you build your team.  

For example, think about how you will structure your marketing processes, what type of database you will use, how you will manage referrals, and what system you will use to manage your inventory. Other processes should address transaction management, financial reports and forecasting, and advertising.  

Step #2. Get Strategic with Recruiting, Hiring, and Onboarding 

As you build your team, it’s essential to recruit, hire, and onboard the right people at the right time. This process starts with identifying the roles that you need to fill, as well as how you will identify when it’s time to bring on additional employees as your company grows.  

Before you start hiring, you will need a clear vision of your business structure and how the team roles relate to each other. Chances are that as you hire real estate agents, you will also need to hire at least one administrator to help keep the processes running smoothly and take care of administrative tasks.  

Hiring staff is an investment of both time and money. Not only will you need to spend time crafting job descriptions and recruiting staff, but reviewing applications and conducting interviews can take significant time, too. For every position that you hire, plan to invest time in a phone screening and an in-person interview. Some team leaders also prefer to have candidates complete Myers-Briggs testing to better understand their personalities and how they will fit into the team.  

Step #3. Get Enough Business for the Entire Team 

While it can be exciting to grow your team, you also need to have enough volume to justify building that team. An effective marketing and advertising plan can help to generate leads, but networking is also essential in generating the volume that you need.  

Networking can help to connect you to qualified leads, saving you some of the lead qualification time that you would spend when sorting through unqualified leads. Networking may also help to save you money compared to what you would spend on advertising and developing your own lead generation funnel.  

As a member of the Guidance Home Services network, you will be connected to thousands of Guidance Residential buyers. You can tap into that underserved niche market and will receive information on buyers who have been pre-qualified for financing to buy a home in your area. You’ll get that information the moment that consumers are pre-qualified, allowing you to quickly contact them.  

>> Related Read – Understanding the Lender-Realtor Relationship 

Building a real estate team can be an excellent way to maximize your business potential and increase your profits. Finding the right model for your needs can help to maximize your chances of success, but it’s also important to plan out how you will generate enough volume to use your team to their full potential. To keep your real estate team busy serving well-vetted, pre-qualified, and pre-approved homebuyer leads, register to join the Guidance Home Services network today

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