The Essential Guide to real estate teams

Before he became an agent, Kenny Klaus spent a decade driving for FedEx. In the early days, he worked as a “swing driver,” which meant driving all over the place covering the set routes of other people. Eventually, however, Klaus got his route and realized that specialization pays off.

“When I got my own route and became a regular driver,” Klaus recently told Inman, “the efficiencies and the value I was able to deliver went up because I wasn’t running around with my head cut off.”

Klaus got his real estate license in 1999, but after a few years as a solo agent, he knew there were certain parts of the business he enjoyed and others he didn’t. And then finally it dawned on him: The same lesson he learned about specialization while driving for FedEx applies to real estate as well.

So he built a team.

“Building a team kind of came out of necessity,” he recalled.

Klaus started building his team in 2003, and today it includes 23 people working in the Phoenix area. The team is part of a Keller Williams brokerage, and it not only helps buyers and sellers but has also launched a pioneering iBuyer portal called OfferDepot. Klaus has been so personally successful that he has also branched out into other industries and now owns three restaurants.

Klaus’ success is remarkable, but when it comes to real estate teams, it’s not exactly the exception to the rule. Instead, teams are becoming an increasingly popular way for agents to grow their businesses. And like Klaus, many who spoke to Inman for this story directly tied their success to their teams.

In other words, teams are having a moment right now, and understanding them is a key to unlocking greater success for people in the industry.

So what exactly is a team anyway?

Renee and Jeffrey Funk’s team began at the couple’s kitchen table in Florida. It was about four years ago, and Jeffrey was already an agent while Renee worked for Disney Cruise Line. But Jeffrey was getting more leads than he could personally chase and came to Renee with a proposal to expand.

“There literally was a pivotal day, a pivotal moment, of me sitting at the computer one afternoon and digging into our back end,” Renee told Inman.

From there, Renee began working with her husband and about a year later got her real estate license.

Today, the Funk’s Orlando-area eXp team includes 16 people. But when asked when the team really formed, Renee pointed to that moment at the kitchen table, when she realized the potential for her husband’s business to grow.

“I had my hand on the mouse, and I paused, and I said, ‘he’s onto something epic here,'” she recalled. “We have got to grow.”

The comment highlights the nature of a team at its most fundamental: Two people working together in the real estate industry.

Klaus had a similar recollection, saying his team first coalesced when he hired a single administrative staffer to help with things like paperwork. His third staffer was his brother, who helped with logistical tasks such as putting up yard signs.

In both Klaus’ and Funk’s cases, then, the teams didn’t spring into existence with dozens of agents and support staff. They started small with a single agent who looked to another person for help.

Obviously in practice — and as both Klaus’ and Funk’s later career trajectories show — most teams are actually larger than two people. The majority of the agents who spoke with Inman for this story lead teams ranging from between half a dozen to a few dozen people. Additionally, a recent survey from the National Association of Realtors (NAR) showed that the median size for a real estate team is four people.

Size aside, another vital trait of agent teams is that they operate within an existing brokerage. In other words, though teams are groups of agents and thus sometimes resemble a brokerage, they are fundamentally a type of smaller subcategory.

Michelle Pais’ experience illustrates the difference. Pais owns a brokerage, Signature Realty NJ, in New Jersey, which has about 120 agents. But within that brokerage, she also leads a much smaller team of about 10 total people. The team members work more closely together than the agents in the broader brokerage, and having the smaller group boosts productivity and helps the team members succeed, she said.

“I feel that if you have a small team, they’re all making more money, they all have more leads,” Pais told Inman. “It just works.”

Where did teams come from?

Tracing the origins of teams in the real estate industry is a little bit like trying to determine the origins of life on earth. Which is to say, they didn’t burst onto the scene so much as they gradually evolved into what we see today.

There are, however, a few key moments.

Russ Cofano — the former president and general counsel of eXp Realty who recently started his own team at Windermere Real Estate — told Inman that decades ago brokerages “really controlled the consumer relationship” and agents generally made a standard 50-50 commission split.

But that started changing when RE/MAX, in the 1970s, arrived on the scene and opted to instead charge agents a desk fee rather than take a commission split. This was a pivotal moment and represented a philosophical shift because it began the process of placing the agent at the forefront of the industry rather than the brokerage, which had previously been the dominant player.

In other words, agents gradually got more responsibility for their success and had to be more aggressive about their careers.

“They said, ‘we’re just going to facilitate your business,'” Cofano explained of RE/MAX’s strategy at the time.

Cofano stressed that RE/MAX didn’t single-handedly invent teams, but said the innovations the company pioneered decades ago are an essential part of the story that moved the industry to where it is today.

By the 1990s, RE/MAX was encouraging agents to hire assistants — effectively meaning they’d be starting small teams. Company spokesperson Jennifer Armbruster told Inman that in 1993, RE/MAX CEO and co-founder Dave Liniger said that “if you don’t have an assistant, you are one.”

“Liniger urging agents to hire an assistant was the genesis of today’s team era,” Armbruster said in an email.

Parallel to what was happening at RE/MAX, the 1990s also saw Keller Williams run with the team concept, according to Cofano, and that company as much as any other has helped shape the way the industry now conceives of teams.

“I would say Keller Williams is probably the most prolific team-oriented company today,” Cofano added.

Teams have since continued to evolve. Cofano said the next key period for the concept came after the Great Recession and corresponding housing bubble. As the economy clawed its way out of the red and into the black, agents began taking more risks.

At the same time, thanks to a maturing internet, agents also started mastering online lead generation, which became a key part of the story.

“What enables teams to work is lead gen,” Cofano said. “Many teams are fueled by online lead gen, and those things really kicked things into gear in 2012, 2013 and 2014.”

The ability of agents to control their lead generation contrasts markedly to the way the industry worked decades ago, when brokerages more often handled that task, Cofano said. Today, agents can churn up leads from Zillow, Facebook, email campaigns, their own websites and any number of other sources — many of which are relatively young. As those lead sources grew more powerful, they increasingly made it possible for agents to blaze their own paths.

Cofano linked these developments to the rise of teams, saying that with more freedom, agents were more proactive when it came to hiring assistants, expanding their business and collaborating — or in other words, the things that make a team a team.

“Teams are a function of independent real estate agents owning the consumer relationship as opposed to the broker owning the consumer relationship,” Cofano added.

Klaus, the leader in Arizona who used to drive for FedEx, agreed with Cofano, saying changes to both real estate branding concepts and technology are what have made teams so popular at this particular moment.

“I think agents have become the brand and the company is kind of in the background,” he said. “There’s been a shift where people identify with the agent. I think that’s why you’re seeing it continue to grow.”

So how big a deal are teams right now?

According to NAR’s survey, which elicited responses from more than 3,400 agents last year, 26 percent of NAR members are part of a team. Those teams had a median establishment year of 2014, meaning many are relatively young.

Of those agents not on teams, a total of 39 percent had considered to some degree or another joining one, NAR also found.

In a statement describing the survey’s findings, NAR CEO Bob Goldberg indicated the real estate industry is in a period of “transformation” and that the trend toward teams is growing.

“Real estate teams are an increasingly popular business model in response to consumer demand for a wide range of specialties from their Realtor as they expect constant support throughout the real estate transaction,” Goldberg added.

Cofano said that it could actually be difficult to fully grasp the extent of teams within the industry because people define them differently — some “individual agents” still have people working for them in a team-like arrangement — and because they vary in size and scope.

However, Cofano analyzed the latest data from Real Trends and found that teams do appear to be outperforming top individual agents. From 2011 to 2018, individual agents that Real Trends ranked in the top 250 for the industry collectively saw a 21 percent increase in transaction sides.

However, during that same period, transaction sides from teams jumped by a whopping 129 percent — far outpacing the individual agents.

Teams have been particularly successful at some of the larger brands. For example, RE/MAX said that it had 23,360 team leaders and members across its entire network as of the first quarter of this year. But among the top 2.5 percent of RE/MAX agents, nearly 70 percent are members of teams.

At Realogy — where teams began gaining in popularity about two decades ago, according to a spokesperson — the Coldwell Banker brand has 3,273 total teams made up of 8,967 agents. Realogy’s Better Homes and Gardens brand includes 389 teams with 1,021 total team members. And at ERA, also owned by Realogy, 983 agents are members of 331 teams.

Keller Williams also recently celebrated the fact that its brand represented 34.3 percent of Real Trends’ top-ranked teams.

The picture that emerges from all this data is one in which teams are increasingly a tool for the most ambitious agents, and Cofano said that those circumstances are unlikely to change soon.

“I think it’s a new reality,” he said.

How do teams work?

Every team is a little bit different, but there are a few basics that tend to transcend most operations.

Organization 

Most, but not all, teams include a mix of agents and support staff. For example, Dan Beer, who leads an eponymously named eXp team in San Diego, told Inman his team includes about 30 people. However, only 13 of those people are actual agents, with the rest working in various support roles.

“It’s everything from listing management, a runner, a client care concierge,” Beer said of his support staff. “We have a sales manager. Various assistants. Some dedicated to agents and marketing.”

Jeremy Stein, who co-founded the Stein Team in New York City with his wife, leads a group of six people. Everyone on the team has a real estate license, but only four people are involved in sales. The rest, much like with Beer’s team, are dedicated to administrative and support tasks.

“We started very organically, and we brought on a first person to be an assistant,” Stein told Inman. “The goal had always been to bring more people on to help service, so servicing leads.”

And Pais, the broker and team leader in New Jersey, said that her team of 10 includes six agents who work in sales and four people who have administrative roles.

The point is that while these teams vary in size, they all include a mix of administrative staff. Multiple team leaders also told Inman that their support staffers receive a salary, while sales agents get a more conventional commission.

Commissions and services

According to NAR’s survey, 38 percent of agents on teams are compensated via commission splits, making that the most common type of payment in the sector. Another 22 percent receive graduated commission splits, while 13 percent keep 100 percent of their commissions.

Pais said that on her team, agents split commissions 50-50 with the team leader. In exchange, the leader provides a host of services including marketing, administrative support, listing and transaction coordination, graphic design and more.

Many of the team leaders who spoke to Inman for this story were reluctant to provide specific information on how exactly they split commissions with team members — in some cases it varies from person to person — but they all said they roughly follow industry standards. And like Pais, the splits are used to provide an elevated level of service that agents wouldn’t otherwise get as mere members of a brokerage.

In addition to the administrative support services Pais mentioned, other team leaders said that they provide members with lead generation, coaching and various other types of logistics.

In Funk’s case, she also offers what she described as an “amazing compensation plan” that includes regular events.

“On our team, the team members received one monthly customer appreciation event that we provide and facilitate, in addition to at least two other major events throughout the year,” she said. “The agents are essentially showing up and becoming a hero.”

Geography

Cofano said that most teams tend to be limited to one specific location. That’s because teams tend to hit a “ceiling” where they can’t grow much more in their own market. When a brokerage reaches that point, it can expand into a new city, but because a team operates within a brokerage, getting bigger is tough after a certain point.

“There certainly are teams that are multigeographic,” Cofano said. “But what’s stopping that from happening  more is the fact that except for virtual brokerages that allow you to move from state to state to state, a team leader would have to develop a separate relationship with a broker where they want to expand.”

Additionally, team management gets significantly more difficult as the group grows and many agents don’t initially have the experience to oversee massive numbers of people, Cofano said.

What benefits do teams provide?

Nick Shivers spoke to Inman about his Keller Williams team from the jungle of Central America. When Inman first reached out to him, he was preparing to go surfing in Costa Rica. The next day, during a longer phone call, he was watching the local wildlife in Nicaragua.

“I’m watching a sloth right now,” Shivers said at one point during the conversation.

But back at home in Portland, Oregon, Shivers’ team was humming away, and that contrast highlights one of the benefits that came up again and again during conversations for this story: Starting a team lets agents more easily do a variety of other things, including step away for the occasional vacation, while their businesses keep operating.

In Shivers’ case, he formed his team about a decade ago, and it now includes 10 other agents and four support staffers. Today, he spends much of his time on a program called “Sell a Home, Save a Child,” which he and his wife launched to help underprivileged children.

The ability to engage in these various activities — surfing, sloth watching, and more importantly, charity work — is because he has a team.

“I’m really good at delegating,” Shivers added when asked about teams and how he has time for everything.

Other agents said that starting teams similarly allowed them to focus on tasks that they care more about while delegating everything else.

“I can take on four or five appointments per day, and it won’t feel like I’m overwhelmed because I have the right people in place,” Pais said.

Stein expressed a similar view.

“In order for us to do the numbers we do, and to be as successful as we are, we need help,” he said. “There’s just not enough hours in the day to be servicing all the different people that we’re servicing and to be servicing all the different properties that we do.”

How do you start a team?

Klaus said his No. 1 piece of advice for agents looking to start teams is to have a clear and objective-driven hiring process and to do it before the need becomes urgent. He also said that agents who want to lead need to beef up their lead generation abilities because that’s what many future team members will be looking for.

“Put those things together and then have a vision for where you want the business to go,” he added.

Most of the team leaders who spoke with Inman also emphasized team culture, saying agents should hire people who work well together. Some have focused on hiring people who are more or less the same age or who have similar attitudes about the industry. Others have tried to create a group of people with diverse skills that complement each other. But either way, the idea is that creating a cohesive group of people is one of the most important things a would-be leader can do.

While that advice may seem like a no-brainer for other sectors, several agents said it bears remembering in an individualistic industry full of independent contractors. And in the end, the buck stops at the leader.

“The leader must take care of the team members,” Beer argued. “It’s the reason my business operates whether I’m physically there on any given day.”

Finally, Pais suggested starting small and hiring people one-by-one as needed. And she advised agents to take a hard look at why they want to form a team in the first place.

“Ask yourself why you want to start a team,” she said. “Is it because you like the idea of saying you have a team, or is it because you have more business than you can handle?”

Email Jim Dalrymple II