Building A Real Estate Team? Part 1
In theory building and running a real estate team seems like a pretty good idea. You are getting more leads than you know what to do with so you bring on a junior agent as your buyer agent. You give them good quality leads and if they sell the client a home you take a percentage of their commission. The more junior agents you have working for you the more money you make. Sounds awesome.
The reality is that when you run a team you agree to take on a lot more responsibility. Not only are you a selling agent you are now a manager, a leader, a trainer, a mentor and an engaged human resources director. If you cannot lead effectively, or over-manage the team you will ,in effect, spend more time managing and less time doing what you do best…selling. But when you dive into the relationship even further a few dichotomies surface. As a sales representative you are working as an independent contractor for your broker, your team members also work for the brokerage but report to you. Hopefully you have the same values as your brokerage and are on the same page when it comes to business goals. With any luck your team members are well-trained and share your ethics too. But what happens when a team member does something wrong? Your brokerage is on the hook to clean up the mistakes even when, for example, the mistake was made because they were following the team leader’s direction. So the question remains, who is responsible for the team members? The team leader or the brokerage? With teams these two entities are fundimentally at odds with eachother. The brokerage provides services essential to the agent (The ABC test of who controls the services) vs the team leader who supplies the leads ( the economic reality test). The real estate brokerage is, in many ways a unique creature. It is statutorily required to provide certain duties, like oversee agents, provide accounting and practice risk reduction.
Compensation based on commission.
Here is something else to consider. There are currently three separate cases before the courts in the United States that are challenging the very nature of the agent and team member relationship. The outcomes could very well force team leaders to re-evaluate how they build their teams. In each of the cases the team members are arguing that they were hired as buyer agents but were also required to perform tasks for the leader such as pick up and deliver cheques, meet appraisers, sit agent open houses, home inspections or even write blogs or post stories on social sites. The very nature of these tasks, it is argued, presumes an employee/employer relationship and if that is the case then wouldn’t the team member deserve the benefits that an employee would receive, such as employment insurance, medical and dental?
If teams are here for the long-term then, in my opinion, it is important for brokerages to develop a policy and procedure manual and some standards of service. Team contracts need to be more than just a handshake agreement or a quick email. The reality is that no two teams are the same so a blanket agreement is just not going to work. Have a lawyer draw up a binding agreement and make sure that it works within the laws of REBBA 2002.
Certainly brokerages need to understand that teams are developing at a fast and furious pace and there is yet another complication….the sub brokerage. I will talk more about that in part 2 and then later in part 3 I will talk about the finer points of developing your team.The reality is that as the team concept evolves, more questions and complications will develop. In the meantime the best you can do as a team leader is to have a written agreement which sets a tone and understanding of the relationship, achnowledge that compensation is based on commission, list tools and materials supplied for day to day efficiencies as well as who is responsible for their maintenance and upkeep, include clauses on sick leave, vacation time, desk duty (if required) and above all else have a system that will have solid arbitration mechanisms.
mark mclean is the Broker/Manager at the Bosley Real Estate Queen St W office and President-Elect for the Toronto Real Estate Board. The opinions expressed here do not reflect the opinions of TREB or Bosley RE.