Trends in team offices
By John Steger, New Era Group at Your Castle Real Estate
When my grandmother was a real estate professional, just a few miles from where I now practice the profession, it was a very different world. In that world, the brokerage had the power and the resources to allow a professional to thrive. It was vital that your brokerage provided hard copies of contract forms and MLS in the form of a printed property book with three-hole punched fliers to show your clients. A secretary was necessary to answer calls and take messages. Most agents checked into the office by putting a quarter in a payphone. The fax machine and voice mail started the revolution that has now made the brokerage office an optional part of any agent’s business model, rather than a necessity. Once a jacket and a nice office was a sign of prestige, now, if an agent uses a pair of Google glasses, a consumer is more likely to be impressed. Many clients no longer expect an agent to have an office.
This transaction allowed well-networked agents to operate independently. A recent study showed that one-person brokerages are dominating the luxury market in Denver. When even the most prestigious firms in the city are losing market share, year-over-year, the value proposition becomes suspect. With sales associates able to hang their licenses with a plethora of brokers, commission splits will continue to be more favorable to sales associates, and the margins of owning a brokerage will shrink. I have lived this, having gone from a two-person shop with my founding business partner to owning and operating a 20-agent firm. We had a great little brokerage, but after consulting with REAL Trend’s Steve Murray, we realized that dramatic growth would be needed to come close to getting a return on all the time we spent running the brokerage.
At first, we thought we had two choices, shut down our boutique brand or sell the brokerage to a larger firm. There would have been a decent pay day with an outright sale, but the brand would have disappeared, and our crew disbanded. Luckily, we found a solution and merged into a large, well-run independent brokerage and were able to keep our brand identity. Then, the magic happened. The advantage of the team model led to exponential growth and success. Only by having lived this experience can I explain it from a business perspective.
A MARKETING COLLABORATIVE
Teams are now ideal in the industry, with a solid, blue-chip brokerage covering the evil necessities of the business, such as dealing with technology issues, file retention, file auditing, compliance, oversight, lawsuits, complaints, staff turnover, new agent training and more. Running a brokerage is not a sexy business, but it is a platform that must be in place for a sales associate to be a professional. You can be successful solo, but you end up owned by your job, and you can’t be great at everything. However, a team can focus on what the consumers want – awesome marketing and great support and service. That is what the team that I have majority ownership in does now. We consider ourselves a marketing collaborative and everyone contributes. Our mastermind sessions are well attended and offer fertile ground for new sales associates to learn and quickly see results. We share a brand. The brand and marketing platform are all I own. I have expectations of professionalism and team mindset, but we are all broker associates for our mother ship. What does this flat organization, team approach offer?
- We can be selective as to who joins because it is not about head count.
- We are nimble because the leadership is practicing the craft and always innovating.
- We can locate in a cool part of town, by restaurants and coffee shops.
- We don’t need a big office.
- We don’t get geographically pigeonholed.
- We don’t need a stuffy office building from which to work; our offices are everywhere.
- We have a central hub that is a fun place to pop in and out of, where music is playing and people are selling. There is no expectation that any of us goes to the office ever, yet we area attracted to the culture.
- We inspire and support each other without any formal leadership. Yes, I’m still the majority owner of the team, but I don’t have the responsibilities I had as a brokerage owner. Now, I get to spend time working on lead generation for the firm, improving our shared marketing resources and benefiting from these activities as my personal sales volume continues to climb.
- Mega agents are developing within the team.
- We have zero turnover.
Two years after saying goodbye to my beloved New Era Realty and waking up to a business card that says “New Era Group @ Your Castle Real Estate,” I never could have imagined the results. We’ve grown from 20 to 50 agents.
In 2014, the team sold 333 homes and last year we sold 443. Although total sides did not increase dramatically, the price point at which many of our agents are operating has changed. In 2015, our team paid Your Castle Real Estate four times as much in commission splits as it had in 2014. This huge jump in commission earnings and average sales price was, in part, due to dramatically improved marketing materials. More importantly, the business model has attracted some fantastic agents who want to be part of a positive and progressive culture. We are opening a much larger office, but it has all the key components of the smaller one. We remain in a hip, fun part of town with restaurants and coffee shops.
My grandmother would be proud. I am hiring my first assistant to help me keep up with the business that is coming my way. Now that I don’t have the distraction of running a brokerage, I have the time to focus on my clients and marketing platform. This transition has dramatically increased my personal income, as well as helped every sales associate operating under the brand I own.
How has the brokerage we are part of reacted to the explosive growth of the team? The owner of Your Castle Real Estate and I share a meal or play a round of golf on occasion. I enjoy asking him, “Did you ever think it would work out like this?” His typical response is, “Never” with a bemused smile. It’s clear that we’ve stumbled upon something, as his profits continue to rise.
I believe that teams have a huge competitive advantage over both the smalls hops and the big brokerages. With excellent vendors in the marketplace for almost any need, brokerages are no longer necessary in the way they once were. Small shops aren’t experts at anything because they are overwhelmed. Plus, it’s hard to compete with a team that is collaborating and sharing freely. We all feel a sense of brand ownership, and my profit share from the brokerage is becoming more meaningful than the revenue I had when I owned a brokerage myself.
Teams are the answer, my friend, and they are on the rise! ^
This article originally appeared in the April 2016 issue of the REAL Trends Newsletter and is reprinted with permission of REAL Trends Inc. Copyright 2016.
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