Do you know how to build a real estate team? Are you a solo agent looking to level up and increase your production? Do you know even where to begin? In today’s mastermind, we’re talking about how and when to start your real estate team.
I hear it all the time. “As a solo agent, I make more money.” This isn’t true. However, it can feel true because as a solo agent, your profit margin is higher. Profit is not the same as profit margin. If you run a team properly, you will have more profit, though you will have a lower profit margin. When you’re considering how to build a real estate team, keep this in mind. Realtors get spooked when thinking about sacrificing a percentage of their commissions, but you need to look at the big picture.
The richest people in the world have the lowest profit margins. This is true across the board — across all industries and businesses. Large corporations and giant teams and companies have smaller profit margins, but they have larger profits. As a solo agent, you probably keep 60-70% of your income. As a team leader, you probably keep closer to 20-30% (at best, 40%) by the time you pay all of your expenses and the salaries and splits of your team members. Regardless of this drop in percentage, you will have a higher profit.
In other words, don’t start a team to bring you business. If you are not planning on giving any leads away, don’t start a team. New team members will expect that you are going to provide them with a certain number of leads. This is one of the huge benefits of joining a team! If you have to buy leads, you are probably not in the position to bring on team members because you likely need to take those leads yourself.
At ICC, we tell our clients all the time: “If you are doing everything you need to do, leads will not be a problem.” If you’re running around and you need more business, you have a huge problem on your hands and you need to solve that before starting a team. I can tell you, 90% of real estate agents can’t figure out how to solve that problem. How much time each day are you spending doing lead generation activities? Before you even consider how to build a real estate team, you must make sure you are on the right track yourself.
The three things a team leader must provide buyers agents on the team:
While considering “how” to build a real estate team, you must also consider “when” is the right timing. The answer is: when your business has plateaued. When you are so overwhelmed with business that you need to stop prospecting and lead generating to survive, it’s time.
A good rule of thumb: if your production is up around 40 units per year, it’s time to start a team.
There are a lot of “real estate team structure” charts out there, but I created this one as combination of the best I have found. It’s based on percentage, so it is more universal because doesn’t matter what your average price is. The “Real Estate Team Production Growth Budget Schedule” shows the average operating expenses that you should have in general categories as you move up. At the bottom, you’ll see the net income and the percent of profit that you keep. You can see the profit margin will decrease as you move up in income. As a rule, your total operating expenses should never exceed 30% of your gross commission income (GCI). Over two thirds of this 30% is going to come from “administrative salaries” and “marketing & lead generation.”
Click the link below to download the “Real Estate Team Production Growth Budget Schedule” for FREE!
As you grow your real estate team, you should not be working more hours. You should actually be working less. You are leveraging your income to get better work/life balance, while growing your profit (not your profit margin) at the same time.
At ICC, as coaches, we work with our clients to figure out where they are stuck, and why they are stuck. Using the Real Estate Team Production Growth Budget Schedule, we work with our clients to figure out the core issues to why they aren’t growing. Is there not enough marketing? Do you need to hire more administrative support? Is it time to hire a buyers agent?
If these are questions you have been asking yourself, or you’d like to learn more about how to build a real estate team, you’re in the right place. My new book, The High-Performing Real Estate Team, is now available for preorder!
If you’re considering how to build a real estate team, we have the book for you. The High-Performing Real Estate Team will be released on September 28, 2021. Click the link below and preorder today.