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As Jim Dalrymple wrote in his recent Inman article, “The new normal: What if the brokerage of the future is not a brokerage at all?”Real estate teams continue to grow and emerge as the dominant force in the real estate industry.
TThe last 15 years have seen an explosion in teams, with some brokerages (like Keller Williams) emerging as a major team defender, even providing a roadmap to get there.
I see three main types of teams emerging: real estate teams, expansion teams, and real estate platforms. Let’s start by agreeing on some definitions that will help us frame the rest of this conversation.
1. Real estate team
This is your traditional team model. The team is usually led by a mega agent or CEO who has a team of buyer specialists, administrative and operational support staff, and perhaps a showcase assistant or listing specialist. This team operates in a market.
Example: Most brokerage house real estate teams like Keller Williams, eXp, Compass, etc.
2. Expansion team
Expansion teams are similar to what Russ Cofano, president and COO of NexTile, calls “cross-jurisdictional teams.” They are real estate teams without borders, although generally they remain tied to a single broker.
They operate much like a traditional real estate team, focused on sales and clients, they simply operate with agents in multiple markets or even multiple states. Their suite of services is generally focused on increasing real estate sales and creating a more streamlined process for their clients.
Example: Real estate teams operating in multiple locations, often in multiple states.
3. Real estate platform
The real estate services platform takes expansion teams to the next level. In addition to real estate sales systems and support, a platform includes things like human resources, title, mortgage, property management, productivity training, technology, leadership training, wealth management, health training, insurance, services. removals and more.
Real estate platforms can include one or more entities that work together to serve the client and the agent. The real estate services platform creates a consumer-oriented business that offers an optimized experience for agents and their clients, no matter where they are.
Such examples of real estate platforms would include: Redfin, our company, and Place. All slightly different models but still real estate platforms.
Think: the Starbucks franchise model or Capital One cafes, but for real estate. These real estate platforms very often still operate within a brokerage.
Example: Expansion teams that have gone beyond the real estate transaction to offer a set of services for both agents and clients, often through new business divisions or complementary companies.
What are the advantages of joining a larger real estate platform?
Recently, we have seen more and more teams – large, successful, profitable teams – join forces, specifically with real estate businesses offering a service platform.
Why are several million real estate teams considering the idea of joining a larger real estate platform? There are several factors at play here: pservice platform, nfinancial responsibility, culture and lifestyle.
When you lead a $ 100 million team, you face the complexities of managing staff, managing customer service and human resources, leveraging technology solutions, building a culture and brand, and more.
It took our company 12 years of iteration, innovation, and failure to achieve a service platform.
The competition is fierce. Rather than reinvent the wheel, these great teams are looking to merge, so that they can continue to grow faster and more efficiently, often with less financial risk and more significant upside potential.
Joining a real estate company with this service platform allows these great teams to connect to an ecosystem and start seeing results right away. And yes, one of those results is that team profitability it increases dramatically as well.
Although all expansion teams and real estate platforms work a little differently, most take most of the financial responsibility. After the merger, these great teams no longer have to worry about cash flow, making payroll, tax credits, asset leverage, or expense management.
The real estate platform will take care of most of these elements or will work hand in hand with the individual team leader to guide these decisions backed by years of experience and knowledge.
Culture it is much more than ping pong tables and pizza parties. While those are welcome benefits, authentic culture is a set of beliefs and values that the people in your company subscribe to and embody. Creating a viable and sustainable culture is not an easy task.
We believe that business is a conduit for personal growth. We believe in productivity, being hungry and humble, learning, playing and working every day, and being open minded and growth oriented.
Having a pre-established culture based on prescriptive models and systems that individual teams can connect to is very attractive to these $ 100 million plus teams. It enables them to become a part of something bigger than themselves and ultimately helps them attract and retain agents and employees, which is excellent for the team and the end consumer.
Ultimately, what I’ve discovered while building our real estate platform over the past 10 years is this: Leadership and business building are lonely. Team leaders carry on their shoulders the burden of being responsible for the livelihood of other people.
They are sacrificing the quality of their life, their health, and the time they spend with their families. And they don’t always have the right people around them to share this burden or the ability to receive advice from someone who truly understands it.
I think a big part of why these $ 100 million teams are looking to join expansion teams and real estate platforms is that they want to be a part of something bigger than themselves and they want to do it with other like-minded leaders. Building massive businesses is so much more fun when you do it with other great people.
A real estate services platform gives these team leaders just that: a platform that allows them to maximize their time, work in their strength zones, increase their quality of life and compete fiercely in their market with a national real estate services platform behind them.
In addition, it provides greater leadership opportunities, not only for the team leader, but also for the members of his team. Opportunities they might not have been able to provide without partnering with an expansion team or real estate platform.
The downsides of joining a larger real estate platform
Now joining an expansion team or a real estate platform isn’t for everyone, and that’s okay. There are certainly downsides, as there are with any major merger or business decision.
The team that joins an expansion team or real estate platform may have to give up their branding and marketing. Very often, that team leader will no longer be the final decision maker. They may have less discretion in choosing where to spend their team money or resources.
Ultimately, the main reason I think teams would choose not to join a larger team or real estate business is that they would be giving up some, or in some cases all, control. That is the nature of the beast and it would simply have to be compared to what they would gain from doing so.
For teams looking for that camaraderie, culture, and sharing the burden of building a business, there are other options besides expansion teams or real estate platforms. For example, two teams could partner in a co-CEO model.
A team could partner with an investor. Or they could establish an informal board of directors to help guide your business. The team could also hire an outside leader and simply become their own business owner / investor, depending on their long-term plans and goals.
With that said, while I’ve long believed that teams are the future of real estate, I’ve since revisited that belief to this: Rreal estate service platforms they are the future of real estate. Why? Because it is what clients and agents want.
Streamlined, seamless, end-to-end experiences to run your business and participate in all things real estate. This year alone, we are generating more than $ 150 million in volume per month and we expect growth of around $ 300 million per month by the end of the year. These numbers don’t lie. We will continue to see great teams merging, with expansion teams or with real estate services platforms.
A consumer-oriented real estate services platform that supports agents and provides the most comprehensive consumer experience is the reason large teams are drawn to expansion teams and real estate platforms. I think this will only continue to grow faster for the next 18-24 months. And I’m here for that.
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Adam Hergenrother is the founder and CEO of Adam Hergenrother Companies