“My goal is to have a big team”. I actually had a Realtor say exactly that to me. Why? Is there some special reason someone, who wasn’t deranged, would have the goal of having a big overhead and loads of people to manage and be responsible for and to? Is it possible that a sane and rational person would ever have such a goal? The answer is, yes, if they are stupid enough. He was, too. One of the lowest responsibility, most intellectually lazy people I’ve ever known. He later, as part of his program to build a large team opened his own office and after being open for business about 90 days sent me an email asking the name of a good book on how to recruit agents. He discovered that agents weren’t lining up to come to work for his little shoestring operation and then thought he might want to learn a little about that. If it wasn’t too much trouble, of course. He never did. He then shut that down and went back to being an agent with someone to help him with buyers. He is still working on “having a big team”.
Please understand I am not against someone (say for example, me) having a large team. No no. It is just that isn’t the goal. No good reason for anyone to have that for a goal.
The goal is (or at least should be) something along the lines of I want more money after all expenses and I want more free time. Having a team (other personal) 
can help to make that possible. Most real estate “teams” are
not teams at all. More a group of people all sort of working together in the same building. They may have a helpful attitude towards each other and be quite happy when they see each other but that doesn’t make them a team. I get asked often by other agents who “have a team if my buyer agents are allowed to list property (no, never) or if my listers are allowed to work a buyer (almost never). They are usually surprised, as their “team members” do everything. Some even have administrative people who also “sell a little”. In sports, each of the team members has a specific position they play. If they are a good team they aren’t all just “out there on the field together”. Each one is doing an exact thing. Even when in business, a workable definition for team would be something like, “People working together in a committed way to achieve a common goal or mission. The work is interdependent and team members share responsibility and hold themselves accountable for attaining the results.”
If you are good at lead generation, really really good – you will want to learn the steps necessary to build a team. There is quite a bit to learn but it is totally worth it, as you can give those customers to other people to handle (who are quite good at handling a customer, just not that good at getting them). If you are not good at lead generation you have no business whatsoever even seriously thinking of bringing others into your current failure operation. Dirk Zeller thinks teams started in the early 90’s. It was much earlier than that. Much. The first brokers who were rainmakers and could hire agents (the old 50-50 split shops) that they could route customers to were the first to “build teams” in real estate. It requires certain management skills (that nobody is born with) and a bit of leadership (which can also be learned). Other than that relatively minor quibble, it is otherwise a well thought out article. The two best books on the subject (for Realtors) that I know of are The E-Myth and The Millionaire Real Estate Agent.
The key is lead generation. Period.
But if you are good at lead generation then there is no good reason (other than you simply want less) to spend your time on anything but that dollar productive activity. THE most dollar productive activity in residential real estate sales is lead generation. All of the other activities (yes, all) can be hired for a LOT less going out than the amount coming in from the lead generation. It makes little difference how this is scaled. The agent who simply hires an administrative assistant is applying this principle. The agent who then adds a buyer specialist is applying this principle. The agent who winds up needing several listers and several buyer agents and a crew of admin people is applying this principle. Every assistant we have ever hired makes us money or allows us leisure time or both or they do not belong there. Assistants do not “cost money” they “make money”. If you can produce customers for your business what do you think you time is really worth per hour? A hell of a lot more than you are making is the answer.
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Remarkable, yet true: Terry Day has written me saying thank you for this post on the blog. He has also revised and expanded his original letter and you can see that here.
Eric Blackwell says:
Russell;
I wish i could add something to that. I cannot. Perfectly stated! The purpose of having a team is more time off and more money. If adding overhead does not enhance both of those objectives, don’t do it. Well said!
December 11, 2007 — 3:17 am
Mariana says:
Russell – I agree 100%. We ran a HUGE team for 3 years and have nada, zip, zilch, zero to show from it … One month our staff was making MORE than we did … Ugh.
We quicky learned (well, if 3 years of absolute brain damage can be called “quick”…) that we really DO need to follow the MREA better.
We are now in the process of building a team – again. Why? Well, we have too much business and not enough hours in the day to maintain the level of business that we bring in…
However all we want is a tight-knit group of like-minded, intelligent, devoted people that can be an extension of who we are. Derek and I are lead generators. We love it and do it well. We just want a few other people to support us: assistant, lead coordinator, 2 buyer agents and a listing assistant.
For the most part, big teams are hot beds for controversy and utter failure IMHO …
December 11, 2007 — 7:44 am
Chris Johnson says:
fantastic post. Ego, my friend, ego. Ego is the reason we want teams, and until that’s gone, baby, there’s no hope of deliverance.
December 11, 2007 — 8:31 am
Sam Chapman says:
Funny, but a year ago I didn’t want to have a team. Having been in management for years I just didn’t want toe hassle. However, I seem to be getting more leads thant I know what to do with. I had througt of referring some, but I wouldn’t retain the client for repeat business or referrals. I guess I need to rethink the team thing. It might not be too bad a thing if I can keep it small. Interesting read you posted.
December 11, 2007 — 4:33 pm
Rob Lusk says:
Spot On! When I started my mortgage company I couldn’t wait to start making money on loans that I didn’t orginate. I just wanted to motivate the LO’s, give high fives and sign checks…….Hmmmm. Then the overhead set in. Then the unmotivatable LO’s. They just didn’t get it.
Then I got a coach who broke it all down for me. I still didn’t listen! $75,000 later, I got it. If I build a team, it will be for people who want to work my systems. In order for people to work my systems, I need to be very successful. It will be difficult to be that successful if I’m still building my systems to fit unmotivated employees. It’s a catch 22. I’ve learned that I need to build a rock solid foundation before I drag anyone else into it. Otherwise, you’re just chasing your tail. I now have a successful mortgage practice with very competent people in the right roles for them and my business.
Great topic.
All the best,
Rob
December 11, 2007 — 8:00 pm
Morgan Brown says:
Russell – You are dead on. In this market it is the individual superstars that are feasting – not those that are dependent on small slices of other people’s revenue who are a) not as good as you and b) not as motivated – it doesn’t add up.
December 11, 2007 — 11:21 pm
Rebecca Levinson says:
Interesting views on agent teams and one I have not seen. I think that teams can be effective if they all subscribe to the same systems and the communication is high.
Each team member should be on the team because they specialize and shine in a certain area that the other team members do not. I have spoken with some of our agent members who have successfully built teams that allow them to make more money and have more leisure time.
These teams seem to have a dedicated buyers agent, a lead response member or two, a website developer, a listing agent, a marketing specialist, a transaction coordinator, and administrative staff- 1-2 members. I am probably missing a few positions, but these seem to be the core.
The reason why these teams work strongly is because each knows the others speciality and function, there is effortless communication, and they serve their clients well by providing one point of contact along the way. The other members involved in the transaction remain behind the scenes.
Corporate relocation companies work this way as well. Most transferees speak with one point of contact, a.k.a the relocation specialist. This specialist interacts with team members such as the appraisal review department, accounting, a real estate specialist, the real estate agent assigned to the file, the inventory specialist if the house is bought out by the transferee’s company, and a few managers from each department.
The feedback and necessary information is fed directly to the relocation specialist, who processes, relays and assists the transferee. No one else speaks to the transferee except for this relocation specialist. The amount of work involved in each transferee’s relocation, along with the expertise in each part of the relocation process demands this team effort.
Is a real estate transaction multi-layered and complex enough to warrant a team?
Rebecca
December 12, 2007 — 6:35 am
Ryan H says:
This is a fabulous post on a topic I continually evaluate. I have a small team and often ponder what happens as I continue to grow. I’m a firm believer that EVERY team member MUST both produce more income AND create more free time for you to do other income-producing activities. Creating a team has been a goal for me, just not creating a HUGE team.
I’m great at lead generation, and I’ve spent the last 3 years working all those leads myself. I didn’t plan on bringing more people into the mix until it was absolutely necessary. That’s where I found myself about 3 months ago, when I hired an assistant, and now I find myself referring buyers to free up more time to generate leads. I also find myself unable to handle all the listing leads I have and being hit up by other agents daily about how to list more homes, so the natural progression is to take on a buyers specialist (which I just did) and another listing specialist (which I’m working on as we speak). I don’t necessarily want this to turn into a HUGE team, but if that’s the natural progression, I’m OK with it, as long as I’m making more and freeing up more time for my family in the meantime. Time will tell.
Thanks for your insight.
December 12, 2007 — 9:05 am