Atricle Courtesy of: Inman News
Written by: Teke Wiggin
Creative use of tech support, stock options, health insurance, financing and legal support can all help solidify a long-term brokerage-team relationship.
Whether you’re a rookie agent, a rising team leader or an established veteran broker, we can all benefit from sharpening our skills. Follow our “Back to Basics” series to learn fundamental strategies, tactics, philosophies and more from real estate pros across the industry.
Real estate agent teams are growing rapidly in number and strength. The trend is causing soul-searching among many brokerages.
In a sense, teams compete with brokerages. They can siphon off commission revenue generated by less experienced agents that would have gone to brokerages in the past. They’re also largely independent businesses — fickle and sometimes willing to defect on short notice.
Yet because teams can reel in so much business, many brokerages are nonetheless scrambling to build warm and cozy nests for them. Some newer firms have taken off like rocket ships thanks partly to their team-oriented focus.
Dangling attractive commission splits is, of course, a tried-and-true way to grab the attention of top producers. But there are plenty of other techniques that brokerages are using to hook and retain teams. Here are nine of them.
1. Stock options and signing bonuses
Given how much commission revenue teams can haul in, some brokerages are handing out big bucks to lure and lock them in.
One way is to pony up fat signing bonuses. Stock options are another. Options can be particularly alluring to team leaders when they are paid out in exchange for recruiting new agents.
That’s because recruiting is often part and parcel of running a team. So rewarding leaders for conducting business as usual can be a strong draw. EXp Realty and Fathom Realty are among firms that have found success with tying stock options to recruiting.
2. Revenue sharing
Brokerage revenue and profit-sharing programs typically also reward existing agents for recruiting new agents. They do this by giving the existing agent a portion of the subsequent commission revenue generated by the new agent.
Like stock option recruitment rewards, these programs are particularly attractive to team leaders because leaders routinely bring on new agents. Keller Williams Realty popularized the idea with profit-sharing. And eXp Realty has put a new spin on it: revenue-sharing.
“If I close a sale today, theoretically, revenue share could be paid out at the same time,” explained Russ Cofano, former president of eXp World Holdings. “But that can’t be done in the profit-sharing scenario because you don’t know what your profit is [until later].”
Profit-sharing tends to be “less transparent, less immediate and a smaller number at the end of the day,” he added.
3. Health insurance
Team leaders often nurture their juniors with leads, training, support and business tools. Brokerages that offer discount health insurance plans would allow leaders to make sure their rank and file are taken care of as well.
Many brokerages will claim to offer health insurance, but what they’re really offering is access “through a fancy webpage and a link to an insurance broker,” said Leslie Ebersole, a real estate consultant, in the Facebook group Inman Coast to Coast.
“The outside insurance broker has no obligation to enroll people with prior medical conditions and redirects applicants to the state ACA [Affordable Care Act] website/providers,” she said.
The independent contractor status of most agents has traditionally restricted brokerages from offering employer-like plans that could be cheaper. But health care reform announced in June of last year has opened the door for Realtors to create group plans that could be more affordable than what’s on tap in government marketplaces.
Compass and Fathom Realty claim to offer coverage that actually can save their agents money.
To pull this off, Compass partnered with a benefits company, IdilusHR, that offers access to insurance, as well as other benefits such as dental, vision, etc. “While pricing varies nationally, the program offers value through a combination of price, lower annual out-of-pocket expense and access to national PPO network,” a Compass spokesperson said in an email.
Fathom Realty CEO Joshua Harley said Fathom did it by contracting with an independent brokerage to create a “private label” plan. But not all agents can qualify for it.
“Ultimately, we had to choose between creating a plan that worked for every agent but saved no one money or creating a plan that was a fit for 70 percent to 80 percent of our agents but saved them a lot of money,” he said.
Cofano offered one way to target health coverage specifically at teams.
“I am not very close on this subject but there could be a possibility for a [team leader] to cover some portion or all of the costs of the insurance through the [team leader]/team member commission split,” he said.
4. Business loans
Business loans are quite the carrot to dangle to team leaders. Compass has been doing this by offering no-interest financing to agents. And it announced plans for its own credit card in November.
“It is my hope that this program will help alleviate the initial financial pressure that comes with looking to grow your teams,” Compass CEO Robert Reffkin said in a company-wide email that explained the loans.
Compass expects to have distributed more than $100 million of this capital to agents by the end of 2019.
“What better way to create retention than have someone owe you money?” Cofano asked.
Indeed, Compass agents are required to pay off the loans in full if they leave the brokerage, according to Compass spokeswoman Gabriella Lourie.
“Compass recognizes, however, that every agent’s situation is unique and is willing to discuss repayment options on a case-by-case basis,” she added.
Business loans represent one perk that Compass is unusually well-equipped to offer due to its massive venture capital funding. Cofano said he has heard anecdotally of other brokerages that have provided similar financing. But none specifically came to mind, he said.
5. Let team brands shine bright — like a diamond
Side, a high-tech brokerage that caters to teams, makes a point of subordinating its brand to that of its teams. Indeed, brokerages that accept a low-profile, behind-the-scenes role can appeal to team leaders. Leaders generally want to own relationships with customers.
“Our website is completely our own branding … I don’t even know if Side has any fingerprint on it at all,” Daniel Risman-Jones, co-leader of Ascend Real Estate, a team with Side, previously told Inman.
6. Make expansion easy
Team leaders can be hungry to charge into new markets. But the process can be tricky if their brokerage isn’t licensed in multiple states. This requires teams to partner with firms in other locales on a case-by-case basis, often a cumbersome process, according to Cofano.
Streamlining this relationship-building can be one way to please team leaders. Another is to simply get licenses in many states.
“A brokerage company like eXp can offer frictionless expansion to other markets because eXp is the broker and not a franchise,” Cofano said. “I believe that is a big reason they have successfully recruited teams from some well-known franchise orgs.”
7. Reduced commission caps for team members
This is pretty straightforward: “Many companies will offer reduced caps to team members, which results in the team member generating more team commission income that the [team leader] can take a piece of,” Cofano said.
8. Provide team-oriented technology
This is becoming a must for forward-looking brokerages, according to Cofano.
At the least, brokerages ought to offer internal communications platforms to teams. The most popular options are Slack or Microsoft Teams, he said.
Customer relationship management systems and accountability software geared toward teams, such as Sisu and FirePoint, are also highly valued by team leaders, said Brandon Doyle in the real estate Facebook group Inman Coast to Coast. Doyle is a co-leader of the Doyle Real Estate Team, a Maple Grove, Minnesota-based team at RE/MAX Results.
Matthew Rathbun, executive vice president of Coldwell Banker Elite, recommends the following team toolbox: MyOutDesk.com for virtual assistants; Follow Up Boss for customer relationship management; FiveStreet for lead management; Trello for task management; Slack for team communication; Grasshopper for phone communication; and SiSu for production tracking; and G Suite for email.
Similarly, Pat Hiban wrote a story for Inman about five tech tools you could group together for teams that cost just over $1,000 a year.
9. Community and legal support
Analogue support can also endear brokerages to team leaders.
Fathom Realty’s CEO, Harley, says Fathom is developing three types of mastermind groups for teams. The first will teach agents who want to create teams how to structure and hire for them.
The second is for smaller teams looking to take their businesses to the next level. And the third helps top-producing teams pinpoint the best ways to maximize team member productivity, satisfaction and marketing return on investment.
Rathbun, the executive vice president of Coldwell Banker Elite, said his brokerage equips aspiring and existing team leaders with sample team agreements, attorneys who can help with the legal work of setting up and maintaining teams, job descriptions for recruiting team members and team coaching.
“When they are respected, trained and supported, they stay with you and add a lot of value to your firm,” Rathun said about teams.