The New Real Estate Model – Part 2: Super Teams

by Sean Purcell

Real Estate Renaissance Man

Author website

In Part 1, I discussed the concept of Disbrokeration; some of its causes and effects. When I originally wrote about Disbrokeration I thought I had a pretty good idea what the next iteration of the industry would be: Super Teams.  This type of development is not new and successful Super Teams abound right now.  For me it seemed the logical next step in a 2.0 world where the Brokers have lost a great deal of their function.  Having said that, I see some flaws with Super Teams.  Especially in their ability to transcend a relatively common problem faced by many self-employed entrepreneurs.  My purpose here is to discover a model that will not just work, but work for the majority.  Let’s look at the pros and cons of the Super Teams and in Part 3 of this three-part series, I will share a model that I think may best serve the future of our industry.

Basic Real Estate Teams
Agents may have more than one reason to create a team in real estate. Some may do so for geographical reasons, some may do so to create multiple streams of income.  It can even be done simply for social reasons.  But the primary reason to create a team is economies of scale.  Simply put, a well managed team can be more efficient through intelligent design and effective division of labor.

Gary Keller, in arguably the best book ever written for real estate success: The Millionaire Real Estate Agent, discusses the team concept as a matter of course.  It is simply a requirement for reaching the millionaire level.  This is due to the economy of scale mentioned earlier.  Mr. Keller’s point is that one person alone cannot see enough clients, list enough homes and work with enough buyers to achieve a million dollars in income.  One simply cannot carry the work load necessary for such a goal.

Others have written on the benefits in creating teams.  Mike Farmer looked at it from the perspective of geographical and technological symbiosis rather than a purely profit driven necessity.  I think I do Mr. Farmer no disservice when I summarize his thoughts as: the sum is greater than the whole of its parts.  While I agree with the conclusion of Mr. Farmer’s thesis, I do not agree with its premise.  Bringing together various people to create a team for the betterment of everyone involved is lofty to be sure, but not realistic on a grand scale.  Communal enhancement is not the biological impetus upon which most of us base our actions.  There are a great many examples of people coming together to work as one group for a higher ideal, but there are even more examples of those same groups coming apart under the strain of a more basic drive: greed.

Greed
The point is, ladies and gentleman, that greed — for lack of a better word — is good.
Greed is right.
Greed works.
Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.
Greed, in all of its forms — greed for life, for money, for love, knowledge — has marked the upward surge of mankind.
Gordon Geckko in the movie Wall Street

Our Goal Model Defined
Yes, greed must be accounted for if we are to design a blueprint for the industry as a whole.  Even more importantly, we must acknowledge the premier ingredient in creating real estate success: lead generation.  The broker is no longer germane.  The ability to create leads is THE most important factor and defines the primary actors in the model that will take us forward.  But we are looking for more.  If we wish to create a model for the future, let’s charge it with an even higher level of responsibility.  Let’s create a model that also rids the industry of loafers and under performing “shoe salesmen“.  Let’s create a model that sustains its growth by success rather than law.  Let’s create a model that generates its own need and reward for education.  Let’s create a model that allows any to enter, but demands dedication and professionalism for success.  Let’s create a model without help from rigged tax laws and a “loose” interpretation of independent contractors.  Finally, and most important to universal portability, let’s create a model that is achievable now and with our current skill sets.  The Basic Real Estate Team model fails right from the beginning.  It takes into account almost none of our needs and few of our desires.  What about Super Teams?

Super Teams
They look like this: one or possibly two agents are the Team Leaders; they are the Rain Makers (RMs).  Beyond the RMs there may be nothing more than a part time administrator; or there may be multiple buyers’ agents, listing agents, lead coordinators, customer service managers, marketing directors and so on.  What makes them unique is the fact that they all work on the RMs’ team and directly for the RMs.  They may bring in some business of their own (and the splits on that business may be higher) but the primary responsibility of those that work on the Super Team is to benefit the RMs.  The entire team exists to enrich the RMs; to help them in their mayoral marketing – to help them become mayor for life.  Super Teams do allow for change.  If someone on the team decides they can be an RM too, they are free to start their own team (and well trained for it too).  But for a great many, the idea of enjoying the profession of real estate without all the messy marketing and concerns over a commission lifestyle makes the Super Team a cozy home.

This model certainly accounts for the greed aspect and literally defines the importance of lead generation.  It also quite adequately rids us of loafers and water cooler whiners (RM’s would have short patience for someone not pulling their weight).  After that though, this model begins to fall off.

The Problems
It rewards education, but only to the degree that the education benefits the RMs.  The Super Team model also suffers from our current “loose” interpretation of what an independent contractor is and continues to muddy the waters of accountability.  The Super Team is also easily susceptible to internecine battles and requires a tremendous figure head as RM to hold it together.  Which leads us to a problem usually overlooked until it is too late.  Often referred to as The Peter Principle, it is what can happen when someone moves from their position of success to a position of managing that at which they were successful.  Being an RM is a highly skilled and deservedly well paid achievement.  But reaching that lofty height in no way ensures you will be successful running a team.  The skill set is different.  In Mr. Keller’s book he suggests that you hire an administrator who will eventually oversee the employees, do the hiring and firing and basically run the business. This makes sense in a small, one man operation that is expanding.  But a well paid assistant is hardly the solution to running a large firm.

At its most basic level: a Rainmaker needs help in handling all of the leads they generate.  Yet by taking on the required help they must divert their time and some portion of their rainmaking to management.  This is, in the end, still a self-employed entrepreneur… but with a growing staff.   Either the model falls under its own weight or the RM morphs into something unintended and unproductive.  In either case success leads to more hours and less enjoyment for the Team Leaders that began as Rainmakers.  This is an unlikely proposition on which to create a new business philosophy and its success is most probably not exportable beyond a select group of people.

A Fix?
One possible solution for the Super Team model is to refer all of the leads out to other agents.  Maintain no overhead and no employees other than a coordinator to track the leads.  I submit, however, that the referral fees currently paid are not large enough to justify the work and expense.  On top of which, at this point you are a Rainmaker who is coming dangerously close to being simply a lead wholesaler.  Our goal was to create a model of success within the real estate industry going forward.

So, our problem continues.  The idea of a broker becomes archaic.  As information becomes more readily available there is a natural progression: middlemen (brokers) go from providers to gatekeepers to restrictors (chokepoints as Greg Swann calls them) and eventually they just become unnecessary.  Yet the sole entrepreneur atop a Super Team still suffers from many of the existing problems and struggles under the weight of their own success.  We need a new model.

Next time: An Old Tool for a New Problem