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Home » Blog » REI Careers » How do Real Estate Teams Work: What New Agents Need to Know

How do Real Estate Teams Work: What New Agents Need to Know

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We receive a lot of questions from new agents, and two of the most common questions we get are, “How do real estate teams work? Should I join one?”

You know the saying, “Two heads a better than one?” Well, 60% of real estate agents who aren’t members of a team believe so and said they would consider joining (or creating) a team.

But is joining a team worth it? This article will explain how real estate teams work, the pros and cons of joining one, and much more.

How Do Real Estate Teams Work: The Basics

First and foremost, what is a real estate team? A real estate team is exactly that, a team of two or more agents working together to sell real estate.

The team can be as small as two people working together, or it can be a big collaborative effort between real estate professionals, both licensed and unlicensed.

How Do Real Estate Teams Divide the Work?

Real estate teams work together to find leads, handle and market listings, meet with clients, and help everyone develop their professional skills. How these tasks are divided between the team members will vary from team to team.

The optimal structure for a successful real estate team will depend on the agents’ experience, the number of agents on the team, and so on. Most real estate teams follow one of three structures:

Mentor and Mentee Team Structure

Under a mentor and mentee team structure, you have an experienced agent who teaches new and inexperienced agents the ropes. This team model is great for new agents because you’re not going it alone. You can ask your mentor any questions, and they can guide you through this sometimes-complicated industry.

Team Leader Structure

The team leader structure tends to work best if you have an agent with a powerful personal brand who is well known within the local community. Usually, under this structure, the team leader will be the person that brings in the clients, and the rest of the team lightens the load.

Lead Team Structure

Unlike the team leader structure, where one agent is the team’s star and makes all the decisions, agents on a team that uses the lead team structure are equals. This kind of team usually has different strengths; when they all work together, the team succeeds.

When NAR asked real estate team members how to explain their functions within their teams, the most common answers were split as follows:

  • 88% acted as an agent
  • 50% acted as broker
  • 47% did the marketing
  • 47% did administrative work
  • 34% acted as a transaction coordinator

How Do Real Estate Teams Get Paid?

Ah, the million-dollar question. How do real estate team members get paid for the work they do? Surely Jan, who hosts all the open houses for the team, isn’t going to make the same as Marsha,  the one everyone knows because her face is on all the marketing materials.

A real estate team member can get paid in several ways. Some teams will give members a salary and receive a commission based on performance, while others will split the commission and each team member receives a fixed percentage.

In the same NAR report, the most common compensation arrangements are:

  • 38% use fixed commission split
  • 22% use a graduated commission split
  • 13% use a 100% commission split

A Brief Primer on Commission Splits

A fixed commission split is the most common way agents get paid. Commission splits typical fall between 50/50 and 70/30 — the first percentage goes to the agent and the second to the broker.

Under this model, the agent will receive the same commission percentage, regardless of how well they perform.

graduated commission split is similar to a fixed split, but there’s room for an agent to increase their rate based on their performance.

Under this model, you may start receiving a 50/50 split, but if you meet a specific goal, the broker may increase your rate to 60/40. If you meet another goal, it may increase your rate to 70/30.

100% commission split (sometimes called rent-a-desk arrangement) is when the agent keeps the entire commission but is charged fees on various things. Some of these fees may include:

  • Desk fee – A flat fee for office space in the broker’s office.
  • Equipment fee – A flat fee to cover internet, electricity, phone, etc.
  • Administrative fee – A fee to cover getting set up in the brokerage’s system
  • Insurance fee – A fee that is used toward errors and omissions insurance and other liability insurances
  • Transaction fee – A fee added at closing
  • Support fee – A fee for mentoring and ongoing training

Team Leaders and Fiduciary Duty

A team leader always works within a single agency; they’ll only represent the seller and have a fiduciary duty. This often works well for real estate teams because working with buyers requires a different skill set than if you were working with a seller.

If a team member brings a buyer to the table, then a dual agency will apply, which must be disclosed to both the buyer and seller. If you have questions about how dual agencies work, your team leader can give you more information.

Benefits of Joining a Real Estate Team

Lead Generation

To succeed in the real estate industry, you need to have leads. You need to know where they’re coming from, how to find them, and most importantly, how to keep them. When multiple people are looking for leads, there’s a higher likelihood of converting some of them into clients.

Professional Development

When you’re a new agent, it can be overwhelming trying to navigate the industry. Yet, when you’re a team member, you’re not alone. You have seasoned agents who can show you the ropes and offer advice on the many intricacies of being a successful agent.

Moral Support from Your Team

Real estate team members have the unique of always having someone in their corner cheering them on. With all the members working toward a common goal (to sell property, make money, and keep business booming), you can share in each other’s successes and provide comfort when things are rough.

Shared Resources

To be a successful real estate agent, you’ll need more than just your charming personality to make it in the business. You’re going to need a wide breadth of resources to succeed. Unfortunately, those resources can be expensive for a new agent.

When you’re on a team, your teammates can share their resources with you. These resources include software, marketing strategies, an extensive network of professionals like contractors, home stagers, professional photographers, appraisers, etc., and leads.

Accountability

Sometimes there will be days when we’re feeling down on ourselves. There will be days when we wonder why we got into this business because our sales are down and we aren’t performing as well as expected. During those periods, your team will be there to hold you accountable. They’ll help you get back on track and stay on track.

Predictable Income

Income in real estate can be unpredictable, and that’s stressful, to be sure. When you’re by yourself, you have to learn how to get used to unpredictability and deal with it. However, you can guarantee you’ll always be busy when you’re on a team.

As a team, there will be a near consistent flow of clients, listings, showings, and, most importantly, closings.

Drawbacks of Joining a Real Estate Team

Commission Split

One of the significant drawbacks real estate agents say about being on a team is the commission split means they’re getting a smaller piece of the pie. So, while income may be a little more predictable, it isn’t going to be the same amount as if you were working solo.

Clashing Personalities

A real estate team would work together in harmony in a perfect world. Each personality would play off the others, and business would feel like a well-oiled machine.

Unfortunately, finding a team that works in perfect harmony is like finding a needle in a haystack. Sometimes you’ll have a team member whose personality clashes, but they are a top performer. Sometimes you’ll find a team where they’re a team in name only, and each works toward their success and not the team.

No Personal Brand

When you’re on a team, there is no you as an individual. You’re representing the team when you’re out there interacting with the community, getting leads, and growing your network. If you hope to be a superstar real estate agent, being on a team long-term may not be in your best interest.

Lacking Creative Control

One night you may wake up with a brilliant idea for converting leads into clients, but you can’t start implementing that plan the next day. You need to run it by the team and get them on board too. If they all disagree, you may never be able to prove how brilliant your idea is in practice.

Limited Choice of Clients

When you’re on a team, you’ll come across a wide variety of potential clients from all sorts of backgrounds, financial situations, and expectations of what you’ll be able to do for them. While this is great when the market is slow (any business is better than no business), you might find yourself wanting to pursue a different type of clientele.

For example, maybe you want to focus on helping families that want big houses in the suburbs, but most of the leads your team is able to attract are first-time buyers or empty nesters looking to downsize.

Should You Join a Real Estate Team?

There’s a big distinction between joining a real estate team and joining a brokerage. When you join a brokerage, you will have to figure things out on your own. Your broker may offer some guidance and you may even get some advice from fellow agents in the office; but, at the end of the day, you will be responsible for finding your own leads, building a network, and staying motivated.

Joining a real estate team is a good place to start when you’ve just obtained your real estate license. You can benefit greatly from their experience, their resources, and guidance. While it’s true you may not be raking in the big bucks right away or you won’t be able to grow your brand… The benefits outweigh the drawbacks.

If you want more information about starting your real estate career on the right foot, contact the experts at New Western. We can answer more questions than just how real estate teams work.

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Disclaimer: The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.