Go Team Take Your Business to the Next Level
We know what you’re thinking—build a team in this market? However, by joining a team, you can save on expenses and reap the rewards of a partnership.
You’ve done your homework, built your referral base and continued to do business during this challenging back-to-basics market—good for you! However, an unpredictable income can wreak havoc on your business. That’s why many sales associates are partnering for sales success. Consider this: by joining or building a team with other associates you can save on marketing costs, cover more territory and continue to build business at a time when others are leaving the real estate industry. In addition, many coaches and real estate experts say that a slower market is exactly the time you want to expand your business and pick up business that other associates may drop off.
If you’re still deciding which way to take your real estate career, listen to this advice from top coaches and sales associates who’ve created successful teams. The Right Note for You
With so many sales associates forming teams, you might think you have to do the same to stay competitive. Before you do, ask yourself why you want to start a team and whether you have enough business and the skills to manage others.
“Some people start teams to leverage their time and do more business,” says Tom Ferry, CEO and head coach at TomFerry-yourcoach in Newport Beach, Calif. “But it’s a major mistake to assume that you can start hiring people and become more successful. People forget that when they build a team, they’re going from being individual sales associates to being managers, and most have no clue how to manage people or deal with things like payroll.” In addition, he says, if you’re partnering with another associate, it’s vital to join forces with someone who does a similar volume or is lacking in the areas in which you are strong. Each party must bring something to the table.
It’s that leap-before-you-look mentality that can lead to a sour note, says Dirk Zeller, a coach and CEO of Real Estate Champions in Bend, Ore. “Some sales associates slap stuff together and then later realize they didn’t quite design their team well.” When that happens, team leaders need to do some “remodeling,” or starting over to create a better team structure. “Where do you want to be in terms of volume, income and net profit, and what are the sources you’ll use to generate that business? Those are questions you have to ask to avoid remodeling.”
Another question is whether you have enough business to justify expanding. As a rule, you should be able to manage up to 50 transactions annually by yourself, says Bernice Ross, CEO of RealEstateCoach.com
in Austin, Texas. For each 50 additional transactions, you’ll need one administrative staffer to handle your nonsales activity. Of course, expanding in this market may be a smart business move rather than a way to handle additional transactions.
The most important issue to decide may be whether you’re the best person to lead a team. Answering that question requires being honest about your skills. “The most important player on the team is still the lead sales associate,” says Zeller. “You can’t build a champion team without becoming a champion sales associate first. That’s one of the first mistakes I’m seeing, that people creating teams really aren’t that great [as] sales associates to begin with. But how can you train others when you don’t have the skills?”
Susan Kennedy, leader of a 13-person team at GMAC Vanguard Realty in Jacksonville, has also seen sales associates eager to begin a team before they’re ready. “A lot of new sales associates will come to the business and want to start a team, but they don’t have enough money to go around, to keep a team happy,” she says. In her market, Kennedy estimates that sales associates need $4 million to $6 million in production to even consider expanding. In the Tampa area, Annette Bohannon, a broker at Coldwell Banker Residential Real Estate and leader (with her husband and son) of a 15-person team, estimates that sales associates need to earn $8 million to $10 million before adding an assistant and a buyer’s agent. The Foundation Is Critical
You’ve done your homework, and you’re persuaded that you’d be a great team leader. Whom should you hire first, and what systems do you need?
Most experts agree your first hire or two should be administrative, if you’re building a team to handle your additional workload. “Get rid of production-supporting activities as fast as you can,” says Zeller. “For the typical sales associate, your first hire should be administrative, the second could be administrative, depending on the quality of your assistant and your level of production, and the third could be a buyer’s agent.”
However, if you’re partnering with another agent or joining another agent’s team, an administrative person can wait. After all, you want to build the business first.
Remember that administrative staffers don’t have to be full-time, in-office hires. Consider virtual assistants. Maureen Cool, a sales associate with RE/MAX Realty Plus in Sebring, operates a team that consists of herself and Kim Hughes, a VA and owner of Kim Hughes & Co. in Minneola, Texas. “Kim loads my listings onto my Web site and Realtor.com, does the virtual tours, puts my client information into a database, does my direct mail—you name it,” says Cool.
Expect to pay $30-$50 per hour for a good VA, says Hughes. “Even though the hourly rate might be high, if I had a full-time assistant, my budget would be much higher,” says Cool. “I pay for just what I use, and it’s great.”
Another option is to ask a co-worker to handle administrative work as needed. That’s what Bill Berring and Barbarajo Berberi, sales associates and teammates at Exit Realty Foundations in Port Charlotte, have done. Their assistant, a fellow sales associate in their office, works for them on an as-needed and as-available basis. “We pay her a certain fee by the job, and how much she does depends on whether she has time,” explains Berberi.
When you’ve got administrative tasks covered but you have too many leads to service by yourself, it may be time to hire another sales associate, says Ross. But make sure you formalize your work arrangement. “Often, when sales associates add a buyer’s [or seller’s] agent, they do it off a handshake rather than signing a non-compete agreement and creating training and a policies and procedures manual. They also haven’t set up performance standards and monitoring systems,” says Zeller. “They’ve just transferred leads. That’s an example of remodeling. Without those details nailed down, you’ll probably have to go back to square one and rebuild.”
For every team member, whether administrative or a sales associate, create clearly defined roles and responsibilities, along with an actual job description. “For any team, whether it’s a husband and wife, or a parent and an adult child, you must clearly define everybody’s roles and responsibilities,” says Ferry. “’You’re going to join my team? Here are the five things you need to do every day and week.’ Otherwise, you have chaos.”
Ferry also recommends a formal communication system. Have two daily team briefings, one in the morning discussing the day’s agenda and another at day’s end covering what happened that day and what the team needs to improve. Also conduct a weekly team meeting. “Every Monday, meet to discuss what happened at weekend open houses, the hottest leads you’re following up on, which sellers you need to communicate with about a price adjustment or an offer, and marketing,” says Ferry. “The key is to look at all the aspects of your business weekly.”
Don’t forget all the other critical systems. Every successful sales associate and real estate company has systems for every facet of the business, and a team should be no different. “You need a listing system from soup to nuts, a good lead-management software system, a closing-process checklist, an after-sale service system,” says Zeller, naming just a few. “You can’t assume team members know what they’re doing. That’s one of the biggest errors sales associates make when they build teams. They do what many brokers do—give basic training and then say, ‘Here’s your desk and phone. Go get ’em.’”
Bohannon firmly believes in systems. “In the beginning, we had to make sure everybody was on the same page,” she says. “Our son’s brilliant with computer programs, and he was able to design a computer program that helps us do that.” The program allows every team member to access all transaction records remotely to identify the status of all listings, closings and contacts with potential customers.
“Everything’s step by step in that program,” she says. “It’s helped us grow faster and been the key to keeping our finger on the pulse of all transactions to know what’s going on.”
Watch Your Wallet
You can’t be successful as team leader if your team members are compensated better than you are. There are several ways to determine what to pay licensed and nonlicensed team members, and experts vary on which is best.
For administrative staff, Ferry advocates a base salary that’s market competitive plus a bonus of, say, $250, $500 or $1,000 per closing. Zeller disagrees, advising that you simply pay administrators a fair hourly rate. “Too may people do a bonus structure,” he says, “but administrative people aren’t wired that way. They want a regular paycheck. If they have swings in their income, they panic.”
Bohannon pays all administrative staff through a salary. Kennedy does the same, with an occasional bonus. “The bonus was a suggestion from my broker to reward one of my people,” she says. “Most administrative people are fine with salary or hourly. But once in a while, having that bonus structure is important to them.”
Many team leaders simply pay their buyer’s agents 50 percent of each commission check. That’s a mistake, say the experts. “Most sales associates give away the farm and don’t even know that every time their buyer’s agent makes a sale, it usually costs them money,” says Ferry. To avoid that, add up what it costs to operate your business each month, including everything from marketing to assistants’ salaries to the phone system. If 20 percent of your gross revenue goes to operating your business, take that amount off the top of every commission check, plus an additional 10 percent to cover the ongoing cost of generating new leads for buyer’s agents, advises Ferry. Then, determine the split you’ll offer buyer’s agents, and pay that out of the remaining 70 percent.
Already Leading the Band?
If you’re still not sure whether orchestrating the work of a team is best for you, Ross has one last thought to consider. “Often people are intimidated by the thought of working with a team, but they’re already coordinating the work of many people,” she says. “As the agent in charge, I have a team of people who close my transactions, whether it’s mortgage brokers, appraisers, termite inspectors or the messenger who drops off documents. You’re the CEO of the transaction, and you do have a team.” G.M. Filisko is a Chicago-based freelance writer.