How Do Real Estate Teams Work and Should Agents Join One?

How Do Real Estate Teams Work and Should Agents Join One?

by The CE Shop Team

Joining a Real Estate Team - Is It Worth It?

What is a real estate team? It’s a group of agents working together to serve their community. Joining a real estate team is a personal decision; what works for one agent doesn’t necessarily work for another. There are pros and cons to any choice, so this guide will lay out how real estate teams work and if it’s right for new agents to join one. 

How Real Estate Teams Are Structured 

People are often drawn to the real estate industry because it offers freedom and flexibility. Before we delve into how to structure a real estate team, it’s important to note that, in many states, new agents are required to find a sponsoring broker and hang their license at a brokerage. However, this doesn’t necessarily mean that those agents will work on a team. An agent can work independently under a broker. If you’re considering creating a real estate team or joining a real estate team, you’ll want to know how to structure a real estate team. Below are the most common structures for real estate teams:

  • A real estate broker and an agent, also known as the mentor and mentee real estate team. 
  • A leading real estate broker with a team of real estate agents, all of whom work in the company’s Sales department, exemplify the team leader model.
  • A real estate broker and multiple real estate agents with oversight from the Operations  department comprise the lead team model. 

Consider how you like to interact with groups to determine which team structure to pursue. You might work best with just a mentor or one other agent. You’ll also need to factor in how commissions are split when joining a real estate team. 

How Real Estate Teams Split Commission

Before we get into how real estate teams split commission, let’s get a basic understanding of what real estate commissions are and how real estate agents get paid. In simple terms, a real estate commission is a payment based on the final selling/buying price of the property as defined in the brokerage’s contract with their real estate agent. It is usually paid to the brokerage, then it’s split based on the preset contract. Consensus says this commission fee is 5-6%. Now that we’ve covered this information, you’re likely wondering, “How do real estate teams split commission?”

Real estate teams split their commission differently depending on their team structure and overall earning potential. If you were to join a real estate team comprising multiple agents, there’s a higher potential to sell more properties and make more money. At brokerages like RE/MAX, for example, the commission split can be as high as 95/5 - though these splits vary depending on negotiations. Typically, whoever does the majority of the work gets more of the commission.

So, what would a commission split look like with actual numbers? Using the national average home value of $269,039 with a 60/40 commission split of 6%, the total commission would come to $16,142.16. One agent would make $9,685.30 while the other would make $6,456.85. 

When it comes to joining a real estate team, consider your commission to determine which team structure works best for you. If you prefer a better commission split, the mentor/mentee team is probably best for you. If you like the potential of a real estate team having great volume in terms of buying and selling, the team lead or lead team model might align best with your goals. 

Did You Know?

Real estate teams are not just for new agents. The National Association of Realtors notes that 26% of REALTORS® are members of a real estate team or partnership. 

Pros of Joining a Real Estate Team

Shared Resources

Teams can share leads, software, marketing collateral, and other resources that can be challenging to acquire alone. By joining a real estate team, you have more access to a breadth of tools and people who can help you use them to their full potential.

Accountability 

People fall into funks sometimes. If you work along, it can be challenging to get back into the swing of regular real estate business. With a real estate team, however, your leader or other teammates can help pick you up and hold you accountable when you start to slip. 

Support from Your Team

Working in a team environment means that you should always have people cheering you on - and vice versa. You’re all working toward a common goal, and support from your team is a priceless benefit of joining a real estate team.

Lead Generation 

Success in real estate is all about leads: knowing where the leads are coming from, where to find to find them, and how to keep them. When you have multiple agents looking for leads, your team will be more likely to find ones that convert into clients.

Professional Development & Advice 

If you’re a new real estate agent, being a member of a real estate team can be invaluable because you don’t have to figure the industry out on your own. No matter how your team is structured, you’ll learn the ins and outs of real estate from people with local experience.

Cons of Joining a Real Estate Team

Commission Splits

If you’re a member of a big team, your commission split will shrink. Even if you’re in a mentor/mentee team structure, the split could slant heavily toward your mentor. Finding a team that clearly lays out the commission split and how it benefits you is crucial. 

Negative Team Dynamics 

There’s always the potential that your team won’t fully get along. Whether someone is only working to benefit themselves or just doesn't care about the team, the potential negative team dynamics are a factor to consider when joining a real estate team. 

Less Creative Control 

When joining a real estate team, you can’t just enact every great idea that pops to mind. In most cases, you’ll have to run it by the other team members first and get their approval. Typically, you’ll have less creative control working in a real estate team..

Lacking Personal Brand 

Remember the old adage from the wide world of sports? “There’s no ‘I’ in team.” That means when it comes to branding, it’s about the team. So if you’re looking to build your own name, a real estate team probably isn’t the best avenue to make that happen.