In many markets, the traditional model of the lone real estate agent has shifted towards a more team-oriented approach. It's crucial to weigh the pros and cons before committing to either model. Here are some insights on working with a real estate team to help you make an informed decision.
If you're new to the industry, it’s important to note that real estate agents must work under the supervision of a broker. However, agents who work under the same broker still operate independently. They may be part of the same brokerage, but each agent manages their own clients and earns their own commissions.
This article discusses the trend of real estate agents collaborating to secure more listings and close more deals. Historically, most real estate agents worked solo. However, the industry has seen a significant shift, with more agents forming teams. Generally, real estate agents have embraced this new organizational structure.
An independent national study from Workman Success Systems found that 85% of real estate agents believe being on a team gives them a competitive edge. Additionally, 77% of respondents reported having a “positive” or “very positive” experience when working as part of a real estate team.
The popularity of these arrangements and their success in helping agents thrive make a strong case for their continued growth. However, there are some downsides to this structure.
Let’s examine the pros and cons of working alone versus being part of a real estate team.
It’s difficult to know what working as a real estate agent will be like until you try it. You might think you’ll enjoy the independence but find significant drawbacks to this career path. Here are some pros and cons of working independently within your real estate brokerage.
You might be drawn to real estate because of the independence it offers. That is a significant benefit of working as a solo agent. Here are some other advantages:
Flexibility: Working alone means you can create a schedule based on your preferences, not those of a team.
Unlimited earning potential: Your commissions are based on the transactions you close. Typically, agents who devote more time to their business reap greater financial rewards without having to share their commissions.
Independence: Solo agents can choose their clients and marketing strategies based on their own business model.
Sense of ownership: Real estate appeals to those with an entrepreneurial spirit. Your successes are your own, which can be highly satisfying.
Ability to form relationships with clients: Agents play a crucial role in guiding clients through their transactions. Working independently can foster close relationships with clients.
Despite the benefits, there are some drawbacks to working as a solo real estate agent.
Competition: You will compete with agents from your own brokerage and others.
Income depends on you: Slow periods can make it challenging to cover financial obligations if you don't have adequate savings.
Long hours: Busy agents must attend every open house and client meeting, leading to long hours and a potential lack of work-life balance.
Financial risk: Agents incur expenses, such as advertising and marketing materials, regardless of whether a sale is made.
Some of these challenges also apply to agents who work in teams, but a team can share costs and workload, making them more manageable.
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Real estate teams can have various structures. Some teams work together and benefit from a steady flow of referrals from past clients and a robust lead-generation program. The team distributes leads for follow-up by team members, who may become the primary contact for those clients.
Other teams assign specific roles to each agent. For example, one agent may handle client presentations, another may write sales listings, and a third may oversee lead generation.
Some teams have members specializing in different niches, such as commercial properties, investment properties, or specific types of residential real estate.
Pros and Cons of Forming or Joining a Real Estate Team
Working with a real estate team might appeal to you, but there are drawbacks to consider. Let’s explore the pros and cons.
Working with a real estate team can be a great way to start your career or scale up your current approach. Here are some benefits:
Ability to learn from experienced agents: If you’re new to the industry, working in a team helps you learn from more experienced agents. This hands-on experience will improve your skills and fill gaps in your knowledge.
Share expenses: Many teams share the cost of support staff like assistants, transaction coordinators, or lead nurturers. You can also share costs for a web presence, content creation, graphic design, branding, special events, and other resources, making it more affordable to create promotional materials.
Share profits: Working as part of a team carries less financial risk. Even if the quarter is slow, a team member specializing in another niche might do well.
Share responsibility: Depending on the team structure, you may have a more flexible schedule. Knowing your team members can cover for you might allow you to take a vacation or handle family emergencies, even during busy seasons.
Real estate teams can have their challenges. Here are some things to consider before joining a team:
Marketing your business: If you want to build a personal brand, you might struggle to do so on a team. The team’s identity is usually centered around the team lead, making it harder to create your own professional identity.
Lack of brand differentiation: The team’s brand identity might limit your ability to pursue personal interests. For example, developing a luxury home brand might be difficult if the team focuses on in-town condos. Ensure the team’s focus aligns with your niche.
More personalities: Working with more people means dealing with different personalities. While you’ll bond with some teammates, others might not be a good fit. Strong people skills are essential for productive teamwork.
Smaller commission cut: Being part of a team means sharing your commission with your broker and team lead, resulting in a smaller cut for you. Ensure the increased client volume offsets this reduction.
If you're new to the industry, you might wonder if joining a team is the right move. Consider these questions before making your decision:
If you already have a thriving real estate practice, you might be looking for ways to expand. Consider these aspects of team leadership before deciding to start your own team:
Whatever your decision, consider both your short-term needs and long-term goals. Talk to a trusted mentor or colleague with experience working solo and leading a team to get their insights. Most importantly, do an honest self-assessment to decide if a team dynamic suits you.
As you explore ways to grow your career, join the many real estate agents and brokers who have turned to the Arizona School of Real Estate & Business for high-quality real estate continuing education. Our state-approved real estate CE courses will enhance your industry skills, boost your income, and sharpen your competitive edge. Start today!
