What I’ve learned closing 10k transactions in 2022

Outside of sports arenas, team building is an imperfect and largely misunderstood art. We see dysfunctional teams occupy every corner of our industry from a sale to the closing table.

When I started in this business, the first movement toward developing real estate teams began in an attempt to shift the paradigm for high-production agents from being leveraged by their brokerage to leveraging other agents.  As a result, marketing strategies for agents shifted from a lone-wolf, independent style to one of self-promotion via aligning with the overarching brand and image of their brokerage.  

The first to define with confidence what a team should look like was Keller Williams.  Keller iterated training for high-performance agents, encouraged them to act like entrepreneurs, and taught their organizations how to integrate DISC personality traits into their business.  The fundamental goal was for team leaders to climb the production ranks by combining their personal and group’s production - an easy selling point for competitive agents who find it impossible to introduce themselves without the tagline of their annual numbers tacked on. This team matrix promotes the agent, helps reduce their burnout leaving them better equipped to aid weaker and/or newer agents in the business, and consequently the endless revolving door of agents slows. The brokerage gets their share of commissions from an ever-growing agent base, the team leader now moonlights as a recruiter, and also trains and feeds the weaker agents who aren’t revenue makers. A few shout-outs, trophies, and a new title of team leader proved enough to satisfy those who took on the additional responsibilities without, in my opinion, commensurate compensation.

Other shops quickly followed suit and the new team life cycle thrived: Rainmakers feel connected to the leadership and thrive, team leaders become experts in lead generation, a team culture forms, and a false sense of superiority engendered by the security and comfort of a brand satiates high-producing agents from becoming independent mavericks, thus boosting retention.  To summarize, the original concept of a real estate team was incredibly successful at decreasing agent attrition and creating learning environments where realtors could actually build a viable career and a wonderful living.

But problems with the team model began at the outset.  Basically, they are a brokerage within a brokerage, plus a ton of additional overhead. Each agent pays their own fees, has a master split and/or cap with the brokerage, and then an additional percentage goes to the team leader. There are several hands in the pot on every deal. The brokerage is the actual winner, but the team leader takes the brunt of the agent’s frustration once a $10,000 commission results in only $2,800 deposited in their account.

Team structure breaks down further as the team leader resents the fact that all their expenditures and talent isn’t appreciated. So, the best agents, in those team leader positions more often than not, leave and form their own teams, leaving behind the agents that can’t lead-gen for themselves.  Those agents tend to stay forever and work extremely hard for a sliver of their original commission. In my experience, agents that leave teams are far more productive than those who stay long term for two main reasons; one, they were more productive and quicker to that milestone which is why they challenged the concept of emancipating themselves in the first place.  And two, now that the brokerage safety net is removed, the pressure to perform sharpens their focus on lead generation and marketing further boosting their production numbers.  

This intention corrupted somewhat as systems expanded, literally, to accommodate growth. Now, market centers would be owned not just by the mothership, but by individual, or even multiple, owners that have exclusivity in a geographical region. Relational equity didn’t neatly fit into territories and the tail sometimes began to wag the dog. Owners would then have to navigate the tightrope of allowing agents within their geographical area, but not part of their team, access to office space, support, and resources whilst not having the ability to capitalize completely on that same agents’ production.  Where’s the incentive for an owner to outlay expenses in that manner?

Furthermore, how does one get their hands on a coveted market center ownership?  Via the Peter principle, wherein the most highly skilled salespeople get offered ownership opportunities due to their performance, e.g. a high volume of transactions.  Great salespeople don’t necessarily make great managers, and managers are not always the best entrepreneurs. Taking the most productive realtors and having them herd cats rather than do what they do best, sell, ultimately hurts the bottom line.

Prior to joining eXp, I had been a part of a “team” in only a camaraderie, resource-sharing way - there were no commission splits, traditional hierarchy or titles, but we did lean on each other for help in closing difficult deals or sharing contacts. I was hesitant to join a team in the conventional sense for many of the issues already discussed.  However, since then, while at eXp, I learned that real estate teams can be built properly with the right platform. The reason eXp has exploded to 87k agents in half the time of any other brokerage isn’t due to the alternative compensation model or shareholder design, albeit draws for sure. This virtual platform has, and will continue, to grow because it solves all of the blindspots of team organization and reframes how they will operate in the future.

One of the most glaring constraints within traditional team models is baked right into the heart of eXp’s virtual DNA - geographical sales territories and regional monopolies vanish, eradicating a source of tension between and within teams of other organizations.   Real estate teams at eXp can operate on a spectrum of full to discounted caps based on the individual team’s size and goals.

The potential for a contentious relationship to develop between a team leader and members of the team, reasons for which I outlined above, is the largest contributor to agent attrition.  Our approach to team structure solves these potential issues in a few different ways.  ANY agent can invite colleagues across the globe to join their team and be compensated for that without impacting the commission going to that individual agent. It is conceivable for any team member to outperform their team leader, leveling the playing field.  With the addition of awarded stock for reaching a production “ICON” status, the margins of any commission override a team leader may have in place becomes even smaller.  As a result, we see agents come to eXp previously netting 30-35% of commissions at competing platforms, to beginning at 55% and moving to 75% in short order here.  Lastly, should an individual agent want to spread their wings and create their own team, they still retain the support of their sponsor, now, former, team lead. There is no structural reorganization or shuffling of deals necessary.  They also don’t lose access to the healthcare, technology platforms, and world-class education offered daily.

With this unique system in place, I was able to grow a team of three to an organization of 2400 agents, sorted into 263 teams, spread out over 14 countries. There were no acquisition costs, no payroll, no reason for me to sacrifice income off a few deals at an agent’s expense, but rather build something that everyone can equally participate in.  In essence, this new formula and value proposition armed me to get the most talented agents in the country and retain them. I’ve been able to TedTalk this revolution over social media and via coffee meetings resulting in the metric I’m most proud of, retiring 24 agents from production within the short five years I’ve been affiliated.

I didn’t come here to fix my team, but while in the process of learning how to think like an entrepreneur instead of a technician, I found that streamlined overhead expenses can create an equal-opportunity environment that drives team retention, and that these will be requirements for all agents in the future, even the ones who are the last to recognize it.