The Downsides of Teams

Agents will often say that the disadvantages to forming a team are relatively few. For example, an agent who has been working alone will have to be able to cede control of some aspects of the business to others. Being able to work with and trust others is a necessity. Agents also may have to resolve conflicts between team members. And while a well-functioning team will bring in more income than a solo agent, paying payroll taxes and working out benefits for team members adds another layer of accounting to the office workload.

However, when it comes to teams, some significant problems can arise for the brokerages. A recent report by The Swanepoel | T3 Group on behalf of the National Association of Realtors was highly critical of the team model. According to the report, the ability to acquire their own technology essentially allows teams to function autonomously and potentially overshadow the brokerage brand. By acquiring their own technology and building their own brands, they achieve a level of independence that leads to the development of what essentially becomes a company within a company with a lead agent in charge.

Teams, whose transactions all may go under one MLS number, also tend to generate more revenue than single agents, but they spend more on personnel rather than kicking additional dollars back to the brokerage. An increased chance of legal liability also becomes a threat as the team institutes practices and standards without the authorization of the brokerage.

However, Keller Williams, known for its extensive support system for agents and brokers, bucks that trend. Their system has paid off in recent years for the company. The 2015 REAL Trends “The Thousand,” published in conjunction with The Wall Street Journal, listed 120 Keller Williams agent teams among the top thousand real estate professionals and teams in the nation. The report lists the top 250 real estate professionals according to volume and transactions, as well as team sides and volumes. The 2015 report listed 72 Keller Williams agent teams in the top 250 nationally, with 27,391 transactions. Thirty-six Keller Williams agent teams were listed in the top 250 teams by transaction volume, and 12 were singled out in the average sale price listing category.

Keller Williams CEO Chris Heller believes the company’s teams rank so high because of KW’s structure, which encourages agents to form teams and offers them help with building their own brands.

“Our philosophy has always been that we stand behind the agents and the team, and not in front of them,” Heller said. “We want them to build their brand. We have specific classes that teach them how to do that. It’s actually what we teach and promote, along with taking them to the next level, which is teaching an agent how to expand their team into various and multiple marketplaces.”

Heller offers two possible team structures for partner agents: one in which the Realtors split up tasks between them, the other in which they essentially function as independent agents and only overlap on the administrative side. Keller Williams’ forumula calls for more of a top-down structure with an emphasis on developing the administrative staff.

“The first hire that we recommend an agent go with is a talented administrative assistant to help them with all of the files and paperwork,” Heller said. “The next hire would be a showing assistant, someone who is able to take prospective buyers and get them into properties when they want to see them and to know the inventory. It just keeps growing from there. The next hire for a lot of agents could be a second administrative person if their listing business is growing to help on the marketing side, or it could be an inside sales associate who can generate leads along with the agent to bring in business.”

So while the NAR report raises a red flag for brokerages in terms of the imapact of teams, Keller Williams appears to have raised the victory flag with its strategy. Those competing examples, however, underscore the fact that while winning teams can generate tremendous business, they’re not right for everyone or every business environment.