Real Estate Brokerages: Should You Build Teams or Avoid Them? (The Truth)

As an office leader, a brokerage owner, is having teams in your building, teams on your roster, a good idea or a bad idea?

So when you look at this from the outside perspective, and I'm somebody that's been in the business for 36 years, I've owned a network of 17 offices, I've run billion-dollar companies, and so I've had a lot of teams working for me over those years.

And I will tell you that teams overall can add a lot to your company because they help you with market share. There's going to be a tremendous amount of market share growth that they're going to bring to the table.

So do you make a lot of money on a team? Usually not. Usually they're on the lowest splits coming to the company. They take up a lot of resources. They can actually take up a lot of real estate in your office.

So on a profitability scale, not great. But on a market share scale, fantastic.

So we have to ask ourselves—we need to have the right mix. We have to run a lawnmower or a piece of equipment that requires an oil-to-gas mix. You've got to get the mix right. Otherwise, the engine misfires.

That can be the same for real estate companies. If you're overweight in teams, your profitability could suffer. If you're underweight in teams, your market share could suffer. So you need to have the right mix.

So when you talk about the right mix, what is that? It's going to be different in every environment, different in every market. That's something we coach a lot—what is the right mix?

But let me give you another perspective on this. And this is going to happen to you all the time as a brokerage owner or an office leader—you’re going to have solo agents coming to you and saying, should I start a team?

Because having a team is sexy. Everybody wants to have a team.

And when they come to you, I want you to get in the habit of having “The Bakery Conversation.” What's the bakery conversation?

Somebody says, “hey, Jim, I'm thinking about creating a team, you think I should?” I always reply with “let's talk about the bakery down the road.”

When they ask what I’m talking about, I share this analogy:

If you went to the bakery down the road who has amazing donuts right now, they're incredible. You love them. You actually crave them. You think about them during the day. And you say to that baker, hey, how can you sell more donuts?

Is the answer for that baker to bring more bakers in—more people like him that are baking donuts? Or is the answer that he needs to sell a lot more donuts first?

And then as he's selling more and more donuts and he hits his capacity, he can't possibly work any harder, he brings somebody else in. That is the baker.

You see, here is the problem: I see a lot of folks coming to me and saying they want to form a team, but they haven't hit their capacity. They're not selling enough donuts to justify having another person in the office working alongside them.

So here's what I would suggest to you. Let's get your lead gen up. Let's get your closings at your full capacity—whatever that is. We can measure it.

Once you hit that number and you feel like, I just can't possibly do any more, now you're a rainmaker. And now you can start to talk about adding more people to your team.

Because the first person you're going to add to your team is a buyer's agent or an assistant or transaction coordinator. And those are the first things I add—first is an assistant or transaction coordinator, and then I go to a buyer's agent, and then maybe a listing coordinator.

So there's a process to actually building out a team.

But it first starts with selling enough donuts.

A lot of times people go, “oh, that makes total sense,” because they think that just by having a team, it's going to add more production, which is absolutely not true.

And it's a big mistake that a lot of agents make.

Guys, if you want more coaching, more ideas, more strategies for growing your brokerage and really growing it in a way that creates profit for your business, why don't you meet with me?

Let's jump into a conversation over Zoom. It's a discovery call, which you can sign up for below:

https://www.erealestatecoach2.com/path-coaching-sign-up-thank-you

30 minutes. We just talk about what your goals are for the next 12 months. Love to have that conversation.

Have a great day and good selling.

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