Some real estate agents prefer working solo for the entirety of their careers. Others would rather join a real estate team than take on the responsibility of forming and leading one.
However, if you’ve decided you are at a point where assembling your own team makes sense and you’re ready to manage one, then you need to know where to start and what steps to take to succeed.
With this guide, you will learn the basics of how to build a real estate team that is sure to grow your business.
Getting Started
There are actually a few initial steps you have to take before you can start the hiring process. Be sure that if you skip these and just start interviewing real estate agents, you’re setting your team up for failure.
Step #1: Answer This Question: Is It Time for You to Build a Real Estate Team?
You may have made the decision to build a real estate team, but is it a sound decision? This first step is all about reflecting on where you are in your real estate career.
It’s generally accepted that if a real estate agent is handling every aspect of a transaction, he/she is limited to 50-60 per year. This means any more leads that land on the table have to be sacrificed. When you start sacrificing leads because you don’t have the time to manage them or give them the best services, then it’s time to consider building a real estate team.
If, on the other hand, you haven’t really reached any kind of maximum in terms of how many real estate transactions you can handle personally, then maybe a team is not the right path for you just yet. Rather you should focus on working on your personal real estate agent career as bringing on a team is not really a solution. Even though a team can help you generate more leads, they first need leads to work with. And you have to be generating enough leads where splitting commission on them will be no big deal. Ultimately, a real estate team is meant to bring your business to the next level, not save it.
So remember:
Even if you’re generating a decent amount of leads, you want to be sure that you’ll always have enough ready to go for your team. That’s why some brokers (like this one) actually opt for buying real estate leads. Consider Mashvisor’s lead generation program to ensure you always have a reliable source of, not just any leads, but qualified leads.
To learn more about our lead-generation program, schedule a demo.
Related: Is Buying Real Estate Leads Worth It for an Agent?
Step #2: Review Your Finances
A major benefit of a real estate team is that ultimately, it will allow your business to make more money. But there is also an increase in expenses. Because you have experience operating in your real estate market, however, with some review, you should be able to determine the expenses and budget needed.
What are the expenses of a typical transaction? How many do you think you’ll realistically be taking on with each new member of your real estate team? Study your finances carefully and be sure you have at least a 6-month cash reserve to cover, not only your business expenses but also your personal expenses. This is just in case you experience negative cash flow with your team at first.
Make sure to have a secure financial plan in place. A major issue a lot of real estate teams run into is not having enough funding to operate. This can be avoided with some planning. If you’re not sure where to start, take a look at Keller Williams Realty’s Annual Economic and Budget Model.
Keller Williams Reality’s website made it onto our list for the 20 Best Real Estate Websites for Agents.
Step #3: Make Sure All the Necessary Systems Are in Place
So as a solo real estate agent, you’re generating enough leads to form a team and you have the finances to get started. However, because this real estate team will rely on you and your business foundations, you have to be sure all the necessary systems are in place and ready for action when the team is brought on. It’s likely most of these systems are in order as you are succeeding in your real estate agent career thus far. Still, be sure to review them and make sure everything is as full-proof and scalable as possible.
- Business Plan with Clear Goals for Your Real Estate Team (revenue goals, how many leads required, etc.)
- Branding
- Marketing (including Internet and Social Media Marketing) and Advertising
To increase your visibility to real estate investors and homebuyers, claim your free agent profile at Mashvisor.
- Database and Referral System
- Listing and Farming System
- Buyer, Escrow, and Transaction Management System
- Lead Generation
- Follow-Up System
- Financial, Productivity, Profitability Reports, and Forecasts
Related: These Are the Tools Successful Real Estate Agents Are Using in 2018
Step #4: Decide on Type of Commission Split
While there are a few different ways to handle a commission split for your business, there are two that are most common:
Graduated Commission Split: This real estate team structure for commission means that an agent’s commission may start out at a 50/50 split. As they reach certain goals set by the real estate team leader, the commission will be increased to say, 60/40 and so on. This provides a kind of incentive for team members to meet specific goals needed to grow the real estate business.
100% Commission Split: This structure for commission means that every real estate agent on the team gets 100% commission on their lead conversions.
To follow the best path, you should start with a graduated commission split. As the team grows and hits certain revenue goals, you may want to move to a 100% commission split.
Tips for Setting Your Commission Plan:
- Whatever structure you decide on, keep it simple. Make sure every team member understands why and how they make money and how they can make more.
- Be sure that you’re putting your profit margin first.
- It’s best that a commission plan be fair and based on performance.
Step #5: Draft a Real Estate Team Agreement
Every team member you bring on will need to have a clear understanding of what’s expected of them, their role on the team, and even your role as the team leader. This is why you need to take the time to draft clear and thorough team contracts before you begin interviewing and hiring real estate agents. There are templates online you can use to help you get started in drafting your own. A basic real estate team agreement should include the following:
- Outline what’s expected in terms of performance from the team member
- Specific responsibilities and duties
- Detailed compensation plan including when/how the member will be compensated
- What falls under the property of the real estate team leader; protects you in case of a departure
- Outline specifics of noncompete and liquidation upon departure
- Which expenses are covered by which team members/the leader
- Employment status
Step #6: Choose a Real Estate Team Name
This is the final step in preparing your real estate business for expanding into a team. Select a team name that you think will attract clients (and even other real estate agents). Determine what will make for the best real estate team name and make sure to secure a website and social media pages under this name.
Hiring Team Members
Now that everything is in place for the start of a successful real estate team, it’s time to find the individuals who will help drive your business. Keep in mind that there is a right time to hire each one of these positions and that’s when the demand requires it.
Step #1: Design a Hiring Process
You don’t want to rush into hiring just any real estate agent. Even if they have a proven track record of lead generation and conversion, that doesn’t always mean they will be the right fit for your team’s culture. That’s why a lot of team leaders rely on different personality tests and characteristics along with track records to decide who to hire. Two popular methods are DiSC and Myer-Briggs Type Indicator.
Besides determining the criteria for who will be hired, you also want to consider the process they’ll have to go through. Will you be interviewing them alone or, as the team grows, will other members interview them as well? Will there be different stages of the interview or certain tests? Will the process be a long one or a short one?
Remember, it’s best not to rush hiring any member. A bad hire can cost you and your team a lot of money and time. Of course, there are times when you try to do everything right as the team leader and still end up with the wrong people. In that case, the best tip is to fire fast. Don’t let a bad hire drag your entire real estate team down for too long.
Step #2: Hire a Real Estate Administrative Assistant
Who should be hired first on a real estate team is by far the position that is most argued about. Some experienced real estate agents advise you hire a buyer’s agent first. That’s because a buyer’s agent is typically paid on a 50/50 commission split and not on a salary. And the way these experts view it is that this real estate agent will be allowing you to convert leads and eventually generate more leads, so you’ll only be splitting commission you couldn’t be making without them anyway.
However, hiring a real estate assistant first is a smart move. For one, they can be brought on early to ensure the real estate team leader has support in preparing all the initial steps in our “Getting Started” section above. Besides that, a lot of real estate teams find they experience high turnover with their buyer’s agents. These teams are typically ones without a supportive admin system in place. For instance, the admin will be responsible for carrying contracts to closing, freeing the buyer’s agent from the paperwork and even allowing the agent more time to close on more real estate deals.
Additionally, because you want your real estate assistant to be able to take on many of your daily tasks, freeing you up for lead generation, this hire should have a license. This will allow for more tasks to be delegated to the assistant.
If you’re worried about having to pay for this position’s salary, it’s possible you may not be at the appropriate stage for building a real estate team.
Step #3: Hire a Buyer’s Agent
With your admin support system in place, you’ll probably be able to generate even more leads than before. That’s when it’s time to take the next step and hire the next key member of your real estate team: the buyer’s agent. All those leads you had to pass up on before will now go to the buyer’s agent. This agent’s main duties will consist of lead conversion, showing properties, taking care of any/all buyer’s needs, making offers, and prospecting for both buyer and seller leads.
While it may be tempting to hire a new agent who you can train to do things your way, it makes more sense to go with a more experienced real estate agent. With all the systems in place and the admin support, an experienced buyer’s agent will be able to handle the expected goal of leads set by the team leader. Remember, a successful real estate team starts with a successful real estate agent. Typically, it grows stronger when more successful agents are brought on.
Step #4: Hire an Inside Sales Agent
Because both you and the buyer’s agent will be generating leads, eventually there will come a point when your plates are full and you will need to bring on your next hire: the inside sales agent. This agent is responsible for generating new leads, taking care of inbound leads from sign calls and other sources, and lead conversion.
There are three types of inside sales agents:
Outbound: In this role, the agent is responsible for generating leads from FSBOs, expired listings, just listed or sold, COI, geographic farms, etc. The agent in this role has to be comfortable making cold calls.
Inbound: The responsibilities of this role include responding to leads from sign calls and other sources, lead nurturing and follow-up, and lead conversion. The agent in this role has to be keen on customer service.
Outbound/Inbound: An inside sales agent sometimes takes on the combination of both roles listed above.
Initially, it might make more sense to hire one inside sales agent to take on both roles. As your team grows, you can divide the responsibilities between two inside sales agents.
Step #5: Hire a Listing Agent
As the lead agent on your team, one of your main responsibilities will be to handle listings. However, even with the rest of the team taking on other roles, there will come a point where you have all the listings you can handle. That’s when it’s time to hire a listing agent.
At this point, you’ll have all the main roles filled on your real estate team. Eventually, as your business grows, you may decide to hire more buyer’s agents or another inside sales agent. You can also consider other roles like a transaction coordinator, marketing director, showing assistants, and personal assistants.
Leading Your Team
At this point, your team has everything it needs to succeed but it will all rely on your ability to be a great leader. While this may be your first time in this position, it’s important to do your best to provide a support system and assistance for your team. Communicate and connect with each team member. Find ways to keep everyone motivated, be sure to track the progress of each agent, and give praise where it’s due. Don’t be afraid to delegate- after all, that is why you have built your real estate team!
And remember, you will always need to be on top of providing leads for your team. Mashvisor’s lead generation program can you help you out.