Learn the different real estate team profit margins for small and large real estate teams and brokerages.
Profit margins play a critical role in shaping the success of real estate teams, regardless of their size. Whether you’re leading a small team or leading a large brokerage, understanding and balancing your real estate team profit margins can significantly impact your long-term growth and success. However, it’s easy to fall into the trap of obsessing over these margins, which can hinder your team’s ability to scale and thrive.
In this blog, I’m going to walk you through why fixating on profit margins can be detrimental, how small and large teams differ in their approach, and the strategies that can help you grow your business without getting caught up in the profit margin obsession.
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VIDEO: Real Estate Team Profit Margins – Small Vs. Large Teams
The Profit Margin Obsession: A Common Trap
As someone who has coached countless real estate agents, team leaders, and broker owners through Icenhower Coaching & Consulting, I’ve seen firsthand how the obsession with profit margins can stifle growth. This is a universal challenge. We all want to see strong profit margins—after all, more profit means more money in our pockets. But when that obsession becomes too great, it can start to interfere with the bigger picture: growth.
If you’re overly focused on cutting costs to maximize margins, you’re limiting your ability to invest in your team, your marketing, or your operations. Eventually, you’ll hit a ceiling where you’ve cut all you can, but you’re still not seeing the growth or life balance you desire.
This is where many real estate professionals falter. They hit a wall and decide to stay small, believing it’s the safer, more profitable route. The reality, though, is that staying small can often lead to burnout and stagnation. If your goal is to build a business that allows you to scale, grow your income, and gain more time back in your life, you’ll need to stop obsessing over profit margins and start focusing on growth.
Small Teams: High Margins, But Limited Growth
For small real estate teams, profit margins tend to be higher. After all, you’re dealing with fewer agents, fewer administrative staff, and lower overhead costs. Typically, small teams may see margins as high as 30-40%, which feels great—on paper. However, the challenge is that small teams are inherently fragile.
Let’s say you have five agents on your team. If two or three of them decide to leave, that’s a significant blow to your production. The loss of even a couple of agents can disrupt your business, dishearten your administrative staff, and force you to start over in building the team back up.
Small teams also tend to suffer from turnover more frequently. Real estate agents, especially newer ones, often move around in search of better opportunities. Whether it’s a more attractive commission split elsewhere or simply the desire for a change, your small team can easily be disrupted by forces beyond your control.
Despite these challenges, many small team leaders get stuck in the mindset that maintaining high margins is their best route to success. However, this can lead to complacency, burnout, and eventually the downfall of the team. You’re constantly squeezed for time and resources, and as I often say, “you can’t squeeze blood out of a turnip.” There’s only so much you can do with a small team, and at some point, you’ll hit the ceiling of your growth potential.
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The Team Real Estate Coaching Program is for smaller teams looking for internal structure, leverage and leadership.
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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.
Large Teams: Lower Margins, Bigger Growth
On the other hand, large real estate teams tend to operate with much lower profit margins. As teams grow, they require more administrative support, office space, and marketing. You’ll need to invest in transaction coordinators, listing managers, and other staff to handle the increased volume of work.
With these additional expenses, margins for large teams can drop to 20% or even lower. For teams with over 100 agents, margins might dip as low as 10%. While this may sound alarming at first, here’s the key point: the leaders of these larger teams are still making significantly more money than those running smaller teams with higher margins.
Why? Because despite the smaller slice of the pie, the pie itself is much bigger. By scaling your team, you’re generating more revenue overall, which leads to higher net income. Yes, your expenses go up, but so does your earning potential. This is the key to long-term growth—thinking big, not just about the margins.
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Increasing Profitability with Entrepreneurship
Online CourseGo beyond real estate and enter the world of ancillary services. Learn how to partner with vendors and take your business to the next level by leveraging synergistic relationships and growing your profitability at the same time.
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Increasing Profitability with Entrepreneurship
Click to watch more about this real estate training course
Designed for all learning types
Video Training
In-depth video with Brian Icenhower walking you through each Industry Update slide and explaining the meaning, and providing talking points for you to use with your clients.
Written Workbook
Detailed and downloadable written workbook that provides you with each industry graph and chart, along with a written explanation of what it means and talking points to use with your clients.
Course curriculum
Enrollment includes access to the following course materials for 6 months
Welcome to Increasing Profitability with EntrepreneurshipWelcome to Increasing Profitability with Entrepreneurship with Rick Fuller
Sign up for the Executive Leadership Round Table Group Coaching Program
Join us at the ICC Regional Summit
Schedule a Coaching Call
Stay Connected via our REAL ESTATE AGENT ROUND TABLE Facebook Group
- VIDEO: Leading Beyond Real Estate Commission
- WORKBOOK: Leading Beyond Real Estate Commission
- VIDEO: From Team Leader to Entrepreneur
- WORKBOOK: From Team Leader to Entrepreneur
- VIDEO: Growing Your Profitability Through Ancillary
- WORKBOOK: Growing Your Profitability Through Ancillary
- VIDEO: Leading Through Change
- WORKBOOK: Leading Through Change
About this course
- $249.00
- 13 lessons
- 3.5 hours of content
Reviews
"I use ICC systems, the Online Learning Center, and the coaching program to coach and train my team of over 30 agents. I use the ICC dashboard systems to keep my entire team accountable for their activities and set proper expectations."
I use ICC systems, the Online Learning Center, and the coaching program to coach and train my team of over 30 agents. I use the ICC dashboard systems to keep my entire team accountable for their activities and set proper expectations.
Jake Rockwell
Over 500 Units Sold Annually
I have coached with ICC for over five years. ICC has helped me quadruple my luxury business through marketing strategies so that I receive listings and sales through lead generation and multiple pillars of income.
Dennis Adelpour
Luxury Agent - West Los Angeles
When we started coaching with ICC we worked all the time with some degree of success. Now, seven years later, we have grown to have the #1 market share in our area, we more than tripled our income and production, while also improving our work-life balance to enjoy our personal life with family and friends.
Tammi Humphrey
#1 Market Share & 100 Million in Annual Sales Volume
InstructorRick Fuller.
I'm very excited about this course, Increasing Profitability with Entrepreneurship.
Here's my prediction: one day, you and I will sell real estate for the benefit of being able to provide ancillary services, like mortgage, insurance, title, construction related services, and others.
This is about you and I not thinking about the real estate transaction. It's about you and I thinking about the transition from one home to the next, and all the services that go along with that. This is about you and I providing greater service to our clients. This is about you and I providing greater opportunities for the people that are around us. And, this is about you increasing your profitability as you grow.
You're going to learn a lot of information in this course. This is not content you're going to find in quick clips on YouTube, or listening to sound bites on social media. This is an in-depth discussion about how you can have the kind of partnerships with other vendors that is synergistic, so that you can achieve growth together.
Go beyond real estate.
Achieve growth faster by partnering with ancillary services and provide your clients with better service at the same time. Add to CartTalk to a coach
If you've been considering hiring a coach, now's the time. Book a FREE coaching consultation session with your purchase of this course! Book Your Call
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Leadership Strategies
Online CourseRaise your leadership skills and develop your leadership strategies to grow your business. Add to Cart
Leadership Strategies
Click to watch more about this real estate training course
Designed for all learning types
Video Training
In-depth video with Brian Icenhower walking you through each Industry Update slide and explaining the meaning, and providing talking points for you to use with your clients.Written Workbook
Detailed and downloadable written workbook that provides you with each industry graph and chart, along with a written explanation of what it means and talking points to use with your clients.Course curriculum
Enrollment includes access to the following course materials for 6 months
Welcome to Leadership Strategies- Welcome to Leadership Strategies with Rick Fuller
- Sign up for the Executive Leadership Round Table Group Coaching Program
- Join us at the ICC Regional Summit
- Schedule a Coaching Call
- Stay Connected via our REAL ESTATE AGENT ROUND TABLE Facebook Group
- VIDEO: How to Scale Your Team
- WORKBOOK: How to Scale Your Team
- VIDEO: Leadership Training for Real Estate Team Wanting to Grow
- WORKBOOK: Leadership Training for Real Estate Teams Wanting to Grow
- VIDEO: Leading With Opportunities, Not Obstacles
- WORKBOOK: Leading With Opportunities, Not Obstacles
- VIDEO: Real Estate Agent Attraction Recruiting Strategies
- WORKBOOK: Real Estate Agent Attraction Recruiting Strategies
- VIDEO: Real Estate Leadership Coaching Strategies
- WORKBOOK: Real Estate Leadership Coaching Strategies
- VIDEO: Viral Team Goals and Activity Based Indicators
- WORKBOOK: Viral Team Goals and Activity Based Indicators
- VIDEO: Public Accountability and Personal Responsibility
- WORKBOOK: Public Accountability and Personal Responsibility
- VIDEO: The Power of Dashboards
- WORKBOOK: The Power Of Dashboards
- VIDEO: Replacing Yourself as a Real Estate Leader
- WORKBOOK: Replacing Yourself as a Real Estate Leader
About this course
- $249.00
- 23 lessons
- 5.5 hours of video content
Reviews
"I use ICC systems, the Online Learning Center, and the coaching program to coach and train my team of over 30 agents. I use the ICC dashboard systems to keep my entire team accountable for their activities and set proper expectations."Jake Rockwell
Over 500 Units Sold Annually I have coached with ICC for over five years. ICC has helped me quadruple my luxury business through marketing strategies so that I receive listings and sales through lead generation and multiple pillars of income.
Dennis Adelpour
Luxury Agent - West Los Angeles When we started coaching with ICC we worked all the time with some degree of success. Now, seven years later, we have grown to have the #1 market share in our area, we more than tripled our income and production, while also improving our work-life balance to enjoy our personal life with family and friends.
Tammi Humphrey
#1 Market Share & 100 Million in Annual Sales Volume Instructor Rick Fuller.Raise your leadership skills and develop your leadership strategies to grow your business.
I am so excited about this course, Leadership Strategies.
This is about you raising the lid on your leadership so you can raise the lid on all of your organizations, raise the lid on your ancillaries, raise the lid on your people. You cannot outgrow your personal development. Your outward growth starts with your inward development in terms of leadership. This is what this course is all about: raise your leadership skills so that you can grow your business.
Raise the lid on your leadership.
Raise your leadership skills and develop your leadership strategies to grow your business. Add to CartTalk to a coach
If you've been considering hiring a coach, now's the time. Book a FREE coaching consultation session with your purchase of this course! Book Your Call
The Elon Musk Example: Why Margins Don’t Matter as Much as You Think
To illustrate this point, let’s take a look at Elon Musk. As one of the wealthiest individuals in the world, Musk runs businesses like Tesla, which operate on extremely thin margins. Tesla’s profit margin might be less than 1%, but the company generates billions in revenue, which means Musk’s net income is astronomical.
This same principle applies to real estate teams. The most successful real estate leaders—those running large teams, franchises, or brokerages—often have the smallest profit margins. But because they’ve scaled their business and increased their revenue, their net income far surpasses those who focus on preserving high margins within a small team.
The lesson here is simple: if you want to grow your real estate business and achieve more income and free time, you’ll need to move beyond the obsession with profit margins and focus on scaling your operations.
Learn more about the Agent Management Portal
Looking for the best way to add value for your agents? The Agent Management Portal is a powerful learning management system. You get access to all of our state-of-the-industry training materials, as well as tools to help you create your own training content for your agents.
Growing Through the Pain: Investing in Your Business
One of the biggest challenges in growing a real estate team is that it requires investment. Whether it’s hiring administrative support, investing in marketing, or bringing on new agents, these expenses can temporarily reduce your margins. But this short-term reduction is necessary if you want to build a sustainable, scalable business.
As your team grows, you’ll hit new challenges that will require you to reinvest in your business. Maybe you need to bring on more administrative staff or recruit more agents to handle the increasing workload. Perhaps you’ll need to invest in a dedicated office space or spend more on marketing to generate leads. Each of these steps can reduce your margins in the short term, but they are necessary for long-term growth.
It’s important to understand that this process isn’t easy. As I often tell my coaching clients, growing your business can feel like walking across burning coals. It’s uncomfortable, and at times, you might question whether it’s worth the effort. But if you keep pushing forward, you’ll reach the other side, where more income and more free time await.
Real estate team profit margins are important, but they shouldn’t be your primary focus. Whether you’re running a small team or a large brokerage, the goal should always be growth. Investing in your business, hiring the right people, and scaling your operations will lead to more revenue and more time for yourself.
Brian Icenhower
The Recruiting Challenge: Moving from Small to Large
One of the toughest aspects of growing a real estate team is recruiting. Many team leaders get stuck in the small team phase because they’re unable or unwilling to face the challenges of recruiting new agents. It’s a humbling experience—talking to low producers or agents with no experience and convincing them to join your team, knowing that many won’t work out.
But if you want to grow, you need to embrace this challenge. Going from five agents to 20 agents might seem like a huge leap, but it’s possible. Yes, you’ll experience turnover, and not every agent will be a top producer. But once you’ve scaled to around 20 agents, you’ll have enough production to hire additional leaders to help with recruiting and retention. From there, the growth process becomes much more manageable.
The Importance of Overcoming Profit Margin Obsession
At the end of the day, the key to building a successful real estate team is overcoming the obsession with profit margins. Focus on growth instead. Invest in your business, take the necessary steps to scale, and don’t be afraid of short-term reductions in your margins.
Remember, the most successful real estate teams operate on small margins, but they generate large amounts of net income. If you’re willing to push through the discomfort of growth, you’ll ultimately build a team that not only earns you more money but also gives you more time to enjoy life outside of work.
Conclusion: It’s Time to Grow
Real estate team profit margins are important, but they shouldn’t be your primary focus. Whether you’re running a small team or a large brokerage, the goal should always be growth. Investing in your business, hiring the right people, and scaling your operations will lead to more revenue and more time for yourself. So, stop obsessing over profit margins and start thinking bigger—your future success depends on it.
Interested in getting there faster? Book a FREE coaching call with an Icenhower Coach for a free business diagnostic and coaching session.
