An Effective Alternative To the Team Model

by Jeff Brown

Real Estate Investments Broker

Author website

I love the team concept as it’s executed corrected by some in the business. However, most of them, IMHO, and through first hand observation, produce pre-tax income less for most team leaders than most think. Going even further, I’d say those workin’ by themselves or partnered, using only assistants, not commissioned agents, will almost always bank more coin than team leaders.

The model I’ve used since late 1996 is so old it was in place in ancient Rome. It starts at the top with The Guy who then has as many assistants as needed, doing all the work that supports rather than generates company earnings. I’d never go as far as to say it beats the Team approach every time out, but there are some distinct advantages to my favored MO when compared tit or tat with the typical team.

My MO, as stated up top, is simple. I hire assistants as business volume dictates. The more the business, the more assistants. When I was able to work in my local market, San Diego, there were long stretches when I had three full timers — none of whom were paid salaries or by the hour. All were paid based on my production. See what I mean? Nothing new or ‘cutting edge’.

The Boss (Don’t ask who that is — must I explain marriage?) for years has resisted my somewhat awkward attempts to point her in this direction for one of her companies. It’s a retail bridal gown ‘n stuff kinda store. She’s a well known designer who’s also sold to other stores nationwide via her wholesale operation — she’s been doin’ this for over 20 years. Her store (Yes Stevie, there is a God) shares a wall with Hooters in the Mission Valley area of San Diego. It’s a measly 500 square feet.

Her MO was to hire salesladies to deal with customers. It was a constant pain in the ass, as most of ’em couldn’t manage a one-man picnic if given a plan and a how-to video. I finally resorted to begging and pleading. Then one night not long ago she suddenly announced she was firing everyone, hiring a friend’s daughter to answer the phone etc., and becoming an appointment only store.

I was elated.

I won’t bore you with the details, but sales, which were already better than most on a per square foot basis, are now through the roof. She has so much business she turns down far more bridezillas than she used to. In fact, the other day a couple gals actually thanked her profusely for allowing them in the store without an appointment. Before long I’m confident she’ll need a second assistant to keep things organized, and deal with brides/bride’s maids/bride’s moms who’re being taken care of by the army of alteration ladies she employs.

This new MO was put in place the first of this month. She’s already made just under 80% of last quarter’s production. Her batting average has literally skyrocketed.

But, you quickly ask, “Why is that?”

Don’t over think it. The answer is so simple, even a Realtor can do it. 🙂 (Hat tip — Russell Shaw) She’s the reason. Brides wanna work with The Gal. The store is now virtually printing money, and it was doin’ damn well before. But then, only about half the brides were able to work directly with her. The other half were shunted off to gals who could study what ‘Nicole’ does for a year and still not know everything she’s forgotten.

The same goes with real estate.

Back in 2002ish I was operating on all 12 cylinders, and had three very cool assistants who were flat awesome. One of them was an agent I was mentoring, but who wasn’t allowed to have their own clients. After a few months he was not only doin’ typical right-hand man stuff for me, but was puttin’ out 80% of the fires that come up from time to time in transactions. I only had to put out the potential forest fires, he did the rest. Imagine how much more time that gave me to do what made the big bucks.

There were literally a few times when, unavoidably, I had two conference rooms goin’ at once. But with three killer assistants doin’ most of the heavy lifting, I was able to shuttle back and forth, getting things done, adding the final touches. The clients very much appreciated how busy we were, and that The Guy was still the one takin’ care of them.

It’s at this point team leaders are dyin’ to interrupt in order to point out that their buyer-agents do extra deals from which he gains 40-60% of the pay. They’re right, no argument. Also, let’s acknowledge the difference between a house agent and an investment property guy. Whereas a client searchin’ for a home in which to live just wants a home, the investor, or even more important, a wannabe investor, doesn’t wanna be ‘shuffled off to Buffalo’ to some agent they’ve never heard of. “Hey, I thought I was gonna be workin’ with The Guy.”

I get it that home buyers are lookin’ for homes, not agents. But what about sellers? You’ve convinced them of your professional superiority, which is why they contacted you in the first place. Unless you’re Russell Shaw, whose team includes one, sometimes two listing specialists, sellers could easily become disenchanted cuz The Guy ‘assigned them’ to an underling. Russ, and those very few like him, are the exceptions proving the rule, in my opinion. Unlike most teams, they can point to a track record of sold listings that ends any, or at least most discussions.

Can you point to a few thousand sold listings? To a couple hundred in the last several months? Didn’t think so — which brings me back to the point — they wanna sell their property, and they want The Guy handling it — Period.

By ensuring you always have support staff doing 95% of what doesn’t generate income, you’re spending most of your time doing, well, what generates income. Duh.

All those follow-ups, all the day-to-day minutia you’re now takin’ care of, even with a team, simply goes away. I’ll admit this works best for a listing oriented agent. Frankly, we all know in our hearts a high school sophomore can be trained to be a buyer-agent in 3-6 weeks. It’s the listing agents who produce inventory, who add the real value as perceived by the public, not buyer-agents. Listing agents don’t need their counterparts to make a living — but try being a buyer-agent without listings. Can we please, Dear Lord in Heaven, not argue this Captain Obvious point?

So how’s my time spent?

The vast majority of the time, I’m doing one of the following.

1. Having an initial conversation with someone interested in what I have to offer — from whatever source they originated.

2. Talkin’ to an owner who needs to sell or exchange.

3. Causing a contract to be created for the purchase of property. And no, I don’t even do that myself.

4. List property for sale/exchange — something I’m just now doing again. Happy freakin’ days!

5. Create and discuss investment plans with new clients.

6. Speak to groups of house agents’ clients who are — or wanna be — investors, generating listings for the house agents — new investment clients for me.

7. Write posts for my blog and others’.

Finally, but not least important by any stretch, is the difference in gross and net income between the two models. For the most part, I’m doin’ as many, if not more sides than most smallish teams. Even when they out produce me in gross volume, my net almost always dwarfs theirs. My expenses don’t include paying commissioned agents. Most team leaders would gladly trade annual pre-tax income with those workin’ my model. They need more office space, more support staff, and all the rest. Me? Our office totals less than 500 square feet including the conference room. My marketing budget is surely about the same as a small team’s — but I simply don’t have many of their expenses to pay.

If a team leader’s group produces $12,000,000 in sides at 3%, they gross $360,000. Take out his marketing costs, office overhead, and buyer-agent commissions, and what’s left for him — maybe $200,000 or so?

The guy with the assistant(s) does the same volume, pays the same for marketing, but pays commissions to nobody. He’s gonna keep at least $300,000 pre-tax. Even if the team ‘out produces’ him, you’d still rather have his bank account at the end of the day. ‘Course at awards time the team leader gets to brag about his volume — a hollow victory if ever there was one.

I’d love to hear your thoughts.