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The New Real Estate Model – Part 2: Super Teams

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

Related posts:
  • The New Real Estate Model – Part 3.1: The Solution
  • Will real estate sell for higher prices in the company of a stunningly beautiful super model? And: What should you do about the drool . . . ?
  • The Brokerage Biz Model That Rocked In 1966 Is Still Rockin’

  • 41 comments

    41 Comments so far

    1. Don Reedy July 30th, 2008 8:53 am

      Sean,

      All right. Now I’m hooked into your ultimate solution. This old tool can’t wait for your “Old Tool….” to make its way to print.

    2. Sean Purcell July 30th, 2008 9:06 am

      Don,

      This old tool can’t wait for your “Old Tool….” to make its way to print

      LMAO

    3. Dick Carlson July 30th, 2008 10:02 am

      I’m not a real estate professional, just a guy who works with some RE folks on projects so I read the bloodhound blog and really enjoy the content.

      I’d like to submit that it’s possible that the problem with your model is that you look upon those of us who are home buyers as “leads” that you are trying to identify or generate, and that becomes your goal. From my perspective, as someone now entering the buying market again, it creates an extremely unpleasant experience with almost everyone in your profession.

      I’m not a lead.

      I’m a reasonably intelligent adult, with lots of experience at sales and business. I understand what you’re doing and why. I even understand some of your tricks and a few of your little income streams that you’d probably rather I didn’t.

      I’m impressed when you offer me information, honest and straightforward opinions, and are direct with me — even if it might mean that I won’t immediately buy the house we’re standing in.

      I back off if you demand to know my income and credit rating the first time we meet, if you call me five times the first week, or if you use my first name more than twenty times in our first meeting.

      But as I said, I’m not a real estate professional. I’m probably full of beans.

    4. Kathleen Couch July 30th, 2008 10:06 am

      Don’t forget the real estate investor as part of the team. Often agents and RE investors view each other as adversaries. Everyone needs to get over it. My partner and I formed a real estate investing company. She is an agent, I am not. She still does her own agent business also.
      When we have an investment property we want to sell, I do most of the advertising by using free on line places. Often after the property has been sold, I still get calls on it. If we have something with our investment company that would work for the person, I first direct it to them. If that doesn’t work, I tell them my partner is an agent, and if they would like I can tell her about them. If they want this, and they buy, I get a consulting fee. Fine with me, I didn’t spend anything, just time I needed to use anyway.
      Also, by sometimes using homemade signs on our own property, and advertising on the web, we get more calls of interested people. Most can be a someone I can tell her about, if they don’t buy. In fact, my partner says we get more calls than she has ever had by traditional methods of advertising.
      The fancy signs and methods often intimidate the public.
      Many people are afraid of getting connected with a push agent that hounds them all the time. Just remember, you don’t have to be pretentious to relate to people.

    5. marc July 30th, 2008 10:39 am

      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.

      The key to making this work is NOT being forced to track/follow-up on leads which are referred to other agents. If the lead recipient has a proper incentive, he/she will gladly report a sale and pay the referral fee.

      I recently modified our lead bidding service to facilitate referrals between brokers/agents. The service handles both the referral exchange and tracking on behalf of the referring broker/agent. As a result, the expense of a coordinator to track the referral is effectively outsourced.

      Marc from RealtyBaron

    6. Mike Farmer July 30th, 2008 11:43 am

      I tend to agree that in the normal sense of things based on common mental models the agent spurred by a desire to achieve more than other agents has traditionally succeeded. This has created an ingrained idea that individual effort creates greater financial reward in real estate than team effort.

      The difficulty in breaking through this mental model has prevented most teams from testing the validity of the premise. “Communal” effort is best understood as “co-ordinated” effort. I, too, shy away from “communal” because it fails to take the individual into account. However, my proposal that a co-ordinated team effort, which replaces the Super Agent with Super Team, is a better business model when you look at competition as business to business rather than as agent to agent. The best co-ordinated effort begins to brand itself as the best business to do business with. Once business begins to flow into THE business, all individuals who are working together in a co-ordinated effort are better off than the success they can generate competing with other agents.

    7. Sean Purcell July 30th, 2008 12:28 pm

      Dick,

      If it has not been said before: welcome to BloodhoundBlog. Although this is ostensibly set up as a means of communicating ideas within the industry in order to better our industry, I think the ideas here benefit anyone with an interest in real estate. Especially given the degree of transparency that is practiced here.

      I even understand some of your tricks and a few of your little income streams that you’d probably rather I didn’t.

      Again, given the transparency of the discussions, I assume that is directed at the real estate industry as a whole and not here specifically.

      I’m not a lead.

      But you are! You said: From my perspective, as someone now entering the buying market again… that is the very definition of a lead. For purposes of this discussion that is a good thing. Let me explain: the dialogue I am opening here is about how the mechanics of the real estate industry should be set up going forward. Please don’t confuse that with how agents should conduct their business personally.

      The most important aspect of a successful real estate business is the ability to gather leads. But once someone has your name, it is what they do with it and how you are treated that decides whether that company stays in business. Assuming you wish to deal with professional agents that do not demand to know my income and credit rating the first time we meet, if you call me five times the first week, or if you use my first name more than twenty times in our first meeting as you put it, then you have a vested interest in seeing a new model come to fruition that rewards and promotes those agents who do business your way. Our current model, at best, rewards the broker for gaining listings and not much else. There is not a lot of incentive to create the level of professionalism you desire and deserve.

      Look forward to more of your insights.

    8. Sean Purcell July 30th, 2008 12:34 pm

      Kathleen,

      Don’t forget the real estate investor as part of the team.

      I agree with you when it comes to investors. I have worked with a few and always found it mutually beneficial. The make-up of a Super Team or any new model should be unique to the people involved. That is one of the benefits of the changes I believe the industry is going through.

      Also, by sometimes using homemade signs on our own property, and advertising on the web, we get more calls of interested people

      How about sharing some more on your marketing ideas?

    9. Sean Purcell July 30th, 2008 12:37 pm

      Marc,

      Sounds like you have a business plan that is working for you. My point here is to help create a new model for the real estate industry as a whole. I do not think that generating leads to refer out is going to be that model.

    10. Sean Purcell July 30th, 2008 12:50 pm

      Mike,

      Great to hear from you.

      look at competition as business to business rather than as agent to agent. The best co-ordinated effort begins to brand itself as the best business to do business with

      I agree with you on both counts. But with the Super Team concept you must either have an extremely strong figure head to hold the vision for the group or you have a group of people all submitting to a communal benefit. The former is not very universal and the latter is not very realistic.

      I think our ideas on Super Teams differ a little as well. If I understand it correctly, you are calling for the coming together of various strengths in order to benefit the group as a whole. The team would be coordinated (led?) by a coach. Whereas the Super Team as I define it is made up of one or two leaders and the team that surrounds and supports them.

      I argue that my description is closer to what we are seeing and less likely to succeed over the long term. Your description is less hierarchical and more patnership and you know, with a little tweaking, a partnership could be molded into… well I will have to save that till Part 3. :)

    11. Jeff Brown July 30th, 2008 2:58 pm

      Sean — I’ve always been a drinker of your team concepts Kool-Aid.

      Speaking only for myself, I have the following observations.

      1. One ‘Chief’ is the exact number of leaders for your model. I’ve seen various approaches make valiant tries at shared leadership, and it predictably becomes laughable quickly.

      Hint: The lead by committee approach is the gov’t model. You wanna follow their model on purpose? Really?

      2. Using baseball as a model (surprise), view the on-field manager as the Chief. The players are the agents under him. Everyone else services whatever makes performance on the field better. Trainers, docs, travel secretary, you get the picture.

      3. The team gets a base runner. That’s a lead. (Yeah, it IS a lead, verse #54 in the Kumbuya songbook aside.) The correct teammate bunts runner into scoring position.

      4. The designated RBI guy then grabs a bat, walks into the batter’s box, waits for the hangin’ curve and doubles the run in. Everybody has their assigned tasks, so just keep yer lips zipped and do yer job.

      5. Don’t think it’ll work? Talk with Russell Shaw. And while yer talkin’ with him, joke a bit. Ask him who’s in charge of his team. :)

      I saw this model from the inside out as both the janitor, listing printer, and later, glow in the dark newbie agent in the 1960′s.

      It worked then, blowing the competition away without much of a fight. It’ll work now, only much mo betta, ‘cuz of technology.

      One very bad-ass Chief ran that operation. It was his way or the highway. His way attracted mostly major league caliber players. They dominated. NY Yanks kinda domination.

      As always, there’s a bunch of ways to skin the cat. If I was gonna create a house selling/listing team, this would be the model for me. I surely wouldn’t wanna compete against it. This model, IMHO is a no-brainer.

      And for the record? Add in huge doses of Old School prospecting and the competition would be screamin’ for the breakup of your team. Just sayin’

    12. Sean Purcell July 30th, 2008 3:17 pm

      Jeff,

      Interesting… so you are using a baseball analogy for our business. I would have never expected it from you.

      I agree with your take on the team concept, especially an examply like Russell Shaw. But my concern (or course there is a concern, otherwise I would have no reason to write Part 3) is whether or not others can duplicate. Russell, like you, is a rare cat. I want to find a model that will work for the also rans… you know, like the Padres. If someone sets up a NY Yanks style Super Team as you are describing, they will no doubt be a competitor of huge (if not reviled) dimensions. (Did you notice the slight slam of the Yankees there? Very subtle, I know.) :)

    13. Don Reedy July 30th, 2008 3:31 pm

      Jeff and Sean,

      How many ways can a runner score from 3rd base without the batter actually striking the ball?

      The answer always tells me who the real baseball afficienados are. Jeff, give it a try….I know of seven ways, but there may be more.

      In the end, though, as you will see from the answer, true control of getting that runner in comes only with bat on ball, ball hit in the right place, at the right speed, hustling down the base path, every single time. Therefore it seems to me that your analogy of getting on base, sacrificing over, and then driving in the run is very appropo, and very analgous to an efficient team effort.

    14. Sean Purcell July 30th, 2008 3:37 pm

      Don,

      How many ways can a runner score from 3rd base without the batter actually striking the ball?

      No doubt most everyone here at MLB.com knows the answer to that question. But I tell you what: let’s give that new kid bawldguy a shot. Jeff?

    15. mike farmer July 30th, 2008 3:40 pm

      I’m looking forward to three — I think partnership is the key — it’s where our thoughts end up.

      Yes, my model depends on a leader/coach — you are right, a good one is rare.

      I would never assume that a group of people could work as a team without leadership/coaching.

    16. Jeff Brown July 30th, 2008 5:06 pm

      Sean — There are those who’ll never come close to Russell’s success, and those who’ll race by him like he’s standin’ still. It’s all about the system.

      Also rans? By definition they’re not leaders, at least in my experience. Your system will work as long as the one indispensable factor, the leader, can actually play the part.

      The Padres suck harder than a new Dyson to be sure. But you know what they call the Padre players? Major Leaguers. Your Super Team model is Major League. It’s their competitors who will, for the most part, be also rans.

      It’s the system/model. The recipe is Super Team model + strong leader = huge wall covered in cat skins.

      And for the record, technically the Pads are what’s known as a AAAA team. Most of their players are too good for AAA but not quite MLB caliber. :)

    17. Jeff Brown July 30th, 2008 5:17 pm

      Don — This one is a bar bet, ‘cuz it matters what definition you apply for some of the ways of scoring. As a former ‘blue’ here’s my take. WAY more than seven, though that’s what’s widely accepted as correct.

      1. Bases loaded walk.
      2. Bases loaded hit by pitch.
      3. Passed Ball.
      4. Wild Pitch.
      5. Balk
      6. Fielder’s choice.
      7. Error
      8. Steal
      9. Sacrifice fly.
      10. Squeeze bunt/or suicide squeeze.
      11. Batter awarded 1B due to interference w/bases loaded.
      12. Obstruction
      13. Obstruction on preceding runner forces 3B runner to score.

      There’s one more, but I’ve only heard of it happening. Pitcher tries to pick of runner and throws ball into the dugout. Dead ball, all runners advance. That would be 14.

    18. Erion Shehaj July 30th, 2008 5:57 pm

      Sean

      It seems to me this is straight from the David Chase School of setup.

      You’re bringing Tony into the restaurant. The family comes in also one after another.

      “Can’t stop believing.. ” (on the background)

      Read part three suckers… :-)

    19. Jeff Brown July 30th, 2008 6:08 pm

      Erion — I’m slow but I’m old. Once again, slowly and in English please? I don’t wanna miss anything. Thanks

    20. Erion Shehaj July 30th, 2008 6:13 pm

      Sorry Jeff. It was in continuation to a comment in Part One of this group of posts that:

      I haven’t felt this sense of anticipation for the next episode since the Sopranos finale.

      In other words, I don’t know much about baseball :-)

    21. Jeff Brown July 30th, 2008 6:16 pm

      Erion — >In other words, I don’t know much about basebal

      They’ve found a cure for that, you know. :)

    22. Erion Shehaj July 30th, 2008 6:18 pm

      I just found out it consists of extensive reading of comment threads about cat skinning. ;-)

    23. Jeff Brown July 30th, 2008 6:22 pm

      A cure is wherever we find it. I’m thinkin’ I should’ve used soccer for some.

    24. Erion Shehaj July 30th, 2008 6:30 pm

      I would have been 100% clear with that :-)

      In all seriousness, it’s always a pleasure to read what you have to say.

    25. [...] Fast forward to Inman Connect SF. I’m having lunch with Joseph Ferrara of Sellsius fame, who is also an attorney, and I say to him, “You know, Joe, I’ve been thinking alot about brokerage business models — why couldn’t it replicate how law firms work?” Joe and I talk about this for a pleasant half hour or so. I end up talking to people about the idea of the “Bill Belichick Brokerage” (more on that later). Then I get back home and I see these two great posts by Sean Purcell on Bloodhound Blog on this very topic: Disbrokeration and Super-Teams. [...]

    26. Sean Purcell July 30th, 2008 6:49 pm

      Jeff
      I think you have too many possibilities. Don’s question said “without the batter actually stiking the ball”. Don’t 6,7,9 & 10 involve putting wood on it? And just for my and Erion’s sake, what is the difference between 3&4?

      Erion
      If you think baseball and soccer are fun, wait till you get a load of my marketing post on making music. It’s a gas, gas, gas.

    27. Don Reedy July 30th, 2008 6:50 pm

      Jeff,

      I AM impressed. Although I think I said advance the runner “without strking the ball”, which would preclude a number of these.

      Funny, I grew up in a baseball family, and never thought of this as a bar bet, but I can see you and I need to have that single malt soon.

    28. Jeff Brown July 30th, 2008 7:00 pm

      Sorry, my Attention Baseball Deficit Syndrome kicked in.

      That means there are only 12. My bad.

      Single malt? Now yer talkin’.

    29. Jeff Brown July 30th, 2008 7:03 pm

      Sean –

      6. Fielder’s choice. You’re correct.

      7. Error Pitcher makes errant pickoff throw, runner scores.

      9. Sacrifice fly. You’re correct.

      10. Squeeze bunt/or suicide squeeze. You’re correct.

      I’m now down to 11. :)

    30. St. George Townhomes August 1st, 2008 9:14 am

      Real estate teams are very beneficial especially to new real estate agents who are just coming out of school. The real estate teams that I have come into contact with are much more organized as each person specializes in a certain field.

      Like a crime scene investigation team.

    31. Jeff Brown August 1st, 2008 12:52 pm

      CSI team is the best analogy I’ve heard yet. Way good.

    32. Bob August 3rd, 2008 7:51 am

      With apologies to Mr. Carlson, it starts with the lead. Without numbers, there is no success for the team. In baseball parlance, I would suggest this would be on base percentage, which is considered by many to be the most important stat. Is there any surprise about the careers of the guys on that wiki list? Can you say Cooperstown?

      As Jeff pointed out, there are many ways to get a runner home, but without runners on base, you are going to have to throw a shut out to win.

      As for the structure of referral vs team, I have done it both ways. It doesnt matter if you have the right people. I’m getting 40%. Most recent closed Thursday. My cut of the $23k+ is $9k and change. I farm out leads to two agents at the moment (need more, so please hit me up if you works buyers in San Diego and would like to meet a few of them) that have 3 in escrow and both are busy showing more. I tried to dish off another, but they’re booked, so I’m pinch hitting, showing $1.2 mil Coronado beach front condos in an hour.

      For me, it comes down to two skillsets – the ability to get on base, and the ability to make contact to bring them home. There will always be runners left on base, but put the ball in play often enough and you’ll put runs on the board.

    33. Sean Purcell August 3rd, 2008 8:05 am

      Bob,

      Well said. I could not agree more that on base percentage is the most important stat in baseball, in real estate and in life. We all get roughly the same number of “ups”. It is what you do with them that counts.

      Too many people (to paraphrase Katherine Hepburn) stay on the bench, seeing life as more of a spectator sport. Then there are those that get up every time swinging for the fence in a mistaken belief that homeruns are all that matter.

      I often use the endurance vs sprint athlete analogy but the point you make is the same: play for the long haul and know that hitting a high average is the best way to enjoy the game.

    34. Sean Purcell August 3rd, 2008 8:07 am

      PS

      Can you tell us more about how you handle your referrals? A 40% referral fee would cause me to go back and take a longer look at the referral based system. What I am seeing out there is 20% for a basic referral and up to 30% for a well-qualified and pre-approved referral.

    35. [...] Part 2: Super Teams, I looked at a natural progression that is already occurring in our industry: Real Estate Teams.  [...]

    36. [...] Part 2: Super Teams, I looked at a natural progression that is already occurring in our industry: Real Estate Teams.  [...]

    37. [...] The New Real Estate Model – Part 2: Super Teams [...]

    38. [...] The New Real Estate Model – Part 2: Super Teams [...]

    39. [...] read all Sean Purcell’s posts here, here, here, and here all Mike Farmer’s posts here, here, here, here, here, and here.  But, in [...]

    40. [...] Sean Purcell nails it when he says “the premier ingredient in creating real estate success: lead generation.” Let’s look at how putting property search capability on your site can expand your reach and increase visitor engagement as part of your lead generation activities. [...]

    41. [...] Part 2: Super Teams, I looked at a natural progression that is already occurring in our industry: Real Estate Teams.  [...]