Real Estate Team Ownership - Learn how real estate team leaders can create a path to ownership for other leaders within their teams.
Today I am going to talk more about real estate team ownership and how to give your sales manager (or your general manager/team leader) a path of growth into ownership. This can work with any leadership position, so this applies to everybody.
Your sales manager can start making more money through their role, and the more agents they are managing, the more they focus on growth. In theory, they may eventually step out of production themselves. They’ll stop taking buyers and start distributing those leads to the buyers agents, and they’ll start to focus on listings and work a more 9-5 schedule.
Here’s how to get those baby steps in line for bringing on a partner and continuing to enjoy the benefits of fully replacing yourself on your team.
VIDEO: Real Estate Team Ownership – How to Bring on a Partner
Stepping out of production: a path to real estate team ownership for your sales manager
Once your sales manager stops taking on buyers, your sales manager will begin to work more of a 9-5 job. But, as the team grows, it will still be a lot of work to balance during that time. As your office continues to grow, and as your manager continues to recruit and support the growth of the team, they are going to want more and more to completely step out of production. They will begin to desire more of the passive income stream from the team’s production.
When they ask about the path to real estate team ownership
At some point, they will ask you for ownership. They are going to ask you, “How do I get to where you are?” They’ll see you enjoying your “retirement” or your new business ventures, and they’ll ask you how to get there themselves.
We see lots of examples of this in the clients we coach here at ICC. We see people step out of production, then we see managers on the path to ownership, and we see partnerships form. You might allow someone to come along and take 50% of the ownership, and then they themselves may go through the same process with someone else and the ownership divides into thirds.
Real estate team ownership: everyone needs a path for growth
This really is the only way to keep a team running for 20 years or more. Everyone needs a path for growth. Team leaders will want real estate team ownership.
Good leaders won’t be happy with a ceiling. You’re going to need to keep giving them opportunities for growth, or else they will hit that ceiling and will feel frustrated that there is nowhere else to go. So they’ll quit and start their own team.
Good leaders want real estate team ownership.
This leadership real estate coaching program is designed for any leadership position within a real estate team or brokerage. Sales managers, productivity coaches, education chair, etc. Build skills on how to lead others, keep an organization motivated and accountable and become an influential person within your organization.
Benchmarks for a path to real estate team ownership
So, how do you create this path?
Create proper benchmarks for your sales manager and create a path for growth. This will ensure that you can allow them to partner with you, and even allow for an additional partner as growth continues, because you know that your team is growing enough to sustain your own net profit.
Benchmarks can be set on increased gross commission income (GCI) or increased team/company dollar (which is the dollar we receive as a team after paying out the agents).
Increase team/company dollar = increased net profit
Most of the teams we work with create benchmarks around team/company dollar. There should be a direct correlation between an increase in team/company dollar and your profitability if you hold your expenses in line with the best practices that we detail in my Agent Financials course.
Let’s say your sales manager takes the team/company dollar up 25%. There should be a reasonable correlation between that increase and your net profit increasing. Maybe 60%. It depends on your team and how it runs.
And maybe your sales manager then takes the team/company dollar up another 25%, and maybe that brings your net profit up to 85%.
If they bring your team/company dollar up 100% (they double it), you will see your net profit increase significantly as well.
Baby steps toward real estate team ownership
In baby steps, you can begin to increase their share of the profit. We call it “profit partnering” or “profit sharing” and you can start paying them 20% of owner distribution, as if they are an owner.
Once they double your net profit, maybe that is when they fully vest as a partner owner with you, if they want the option to vest.
Remember, you are the owner, so you are on the hook for all the liabilities, too. If your sales manager wants to vest, they are also on the hook for the liabilities.
You need to make sure that at this point, you want to be in business with this potential part-owner, too. Make sure you want them to be a part of your real estate team ownership. Partnership divorces are very sloppy when you both have vested shares of ownership in the business.
I hope you are watching this right now with your sales manager. This is the best way to be open and transparent in that relationship. Nothing needs to be hidden about this process.
Work with a coach to help create a path to real estate team ownership
Use a profit and loss statement (P&L) to establish what the benchmarks are for increasing production, and try to correlate them with the increase in your net profitability. Then establish the baby steps for a path to ownership for your sales manager. I encourage you to work on this with a coach to facilitate this move and ensure that you are taking the proper steps for a smooth transition.
And once your sales manager begins to feel burnt out and that he/she needs to follow in your footsteps, they will want to hire their own sales manager and get themselves out of production.
This is the best way to replace yourself in the real estate business. Without a doubt! And it does work. It’s fully transparent and you don’t need to hide the process. If you hide it, your people will lose trust.
Be extremely transparent and treat your sales manager like a future partner. This is how you create a path to being a partner.