Just Starting – Should I Join a Team?

A question that I get over and over again revolves around teams. And if you are new to real estate, then does it make sense to join a team?

It’s a tough question to answer for a couple of reasons. The first is that not all teams are created equal. So, quite frankly, if it is a crappy team whose existence is to just feed the team leader that you are looking at, then it may make more sense to go it alone.

And then, if you have a little bit of undisciplined natural tendencies, then being on your own may be your own worst enemy.

We are going to talk about all that here as we weigh this question. And we will also go over all the pros and cons of joining a team.

Okay… So team or not to team?

I think a team is a GREAT idea for a new agent. There is a reason why 87% of all newly licensed agents are out of business within 2 years. We will touch more on that in a couple moments.

But a team offers a newly licensed agent a steroid shot, drastically increasing their chances of making it in the industry. And for the record, this industry is cutthroat. It is one of the most difficult out there. I know the HGTVs of the world make it look easy. But again, there is a reason that 87% of all agents end up leaving within two years!

Yes. A team is a good idea. But only if it is the right team.

I mentioned a team leader who has a team to serve them a couple moments ago. If this is the team you are looking at, then walk away and find a better team.

Like the Berenstain Bears beds, there are many different styles of teams. Some are really big. We call these mega teams. Then you have what I would call normal size teams. And then you have the smaller husband and wife teams.

And all of them offer a different value proposition and can have some additional negatives. For example, a mega team will most likely offer an agent more resources. Accountability will be a major thing as these mega teams are keeping track of all the KPIs, or key performance indicators.

They will track how many calls you make and how many conversations you have. What the conversation to appointment ratio is. Then the appointment to contract signed ratio. You name it. They track it all. And they have to. Because they invest so much money each and every single month to ensure that the wheel keeps moving. They will also charge the buyer's agent more. But if you are wanting more leads, more training, more accountability and possibly a bigger chance of success, then this is a great bet for you.

Then there is the husband and wife, mom and pop style team. There can be some big advantages to these team structures, but also some disadvantages. For the person wanting some resources, but maybe not wanting all of the accountability, then this could be a great option! But let’s dig into this a little deeper.

These teams aren’t holding their one or two agents accountable because they are not investing that much or even any in you and your business. Oftentimes, the leads that these agents are receiving are the breadcrumbs of the team owners. The leads say that they don’t want to work or the open houses that they don’t want to host.

I know this because this is where my team first originated. It’s how most teams first originated. My business was getting too big for me personally to handle. So I stopped working on all leads below $300,000. Then it became $350,000, and then it became a certain geographical area. Rather than throw away these leads and get nothing for them, I gave them to a buyer agent and did some wishing and praying. Anything converted was considered a little bonus.

In this situation, the training isn’t great. There are leads, but they are the bottom feeder leads. But the splits are ultimately better!

Then there is the in between. The 10 or so person team has a lot of the same resources. Has a bunch of accountability and is run with the agent and their success in mind. Ultimately, at this level, the team leader has stepped out of production. They need their agents to be successful in order to pay their bills! These team structures ultimately feel a lot less like machines and more like a close community. I find that it’s these size teams that generally have the best culture.

Without a doubt, a team will provide a new agent with the best chances of success and drastically reduce the chances that the new agent becomes part of that 87% statistic.

So what is it that an agent is giving up in order to be on a team? A percentage of the commission.

On some teams, that could be 30, 40, or 50. I have even seen teams at 60 to 70 percent for in house leads that an inside sales associate nurtured.

It seems like a lot. I get it. But keep in mind that an agent on one of these teams has little to no monthly expenses.

People think that these teams slaughter it. But consider this. The best and most finely run mega teams will have a profit margin that tops out at 20 percent. If that team has a margin of 15%, then they are doing pretty well… And that’s before Uncle Sam comes knocking.

So what does that mean? Let’s say it’s a $10,000 commission after paying the brokerage as well as any ancillary fees. And let’s say it's a 50/50 split. The agent gets $5,000 of pretty much profit, while the team gets $5,000 of revenue. Of that $5,000, the team will reinvest $4,000 into their business in the form of new leads, office support, and maybe an inside sales associate department, while $1,000 is their top of the line profit.

These bigger teams are built solely to get agents to be more productive and get a return on their invested capital.

Can you succeed as a new and solo agent? Absolutely! Will it be more difficult? 100%. Leads are harder to come by. Training is more important than ever in this rapidly changing industry. And for most, the freedom is enough where we hang ourselves, so accountability is what keeps us focused and in the game.