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Sometimes it feels like every which way you look, agents are teaming up. Indeed, the real estate industry has seen a proliferation of teams in recent years.
“The increase of teams in the real estate industry is an undeniable trend,” says Sam DeBord, vice president of strategic growth at Coldwell Banker Danforth in the Seattle area.
But hard data quantifying that shift has been relatively scarce. Now, research from the National Association of REALTORS® aims to put that trend into context. The 2018 Teams Survey, released today, found that 26 percent of NAR members are part of a real estate team.
While nearly three out of every four REALTORS® is a solo salesperson, the survey found that nearly 40 percent of non-team respondents have considered or strongly considered joining a team, which DeBord says signals “a continuing potential for the growth of the team model.”
“Brokerages would be wise to stay focused on the ever-increasing existence and importance of teams, but not abandon the single- or dual-agent model support that still dominates the industry,” says DeBord, whose firm has 400 associate-brokers, of whom 10 percent are on teams.
Kathy MacNaughton, owner and principal broker of the MacNaughton Group at Windermere Realty Trust, a team leader who has worked more than 20 years as a residential real estate broker in Portland, Ore., agrees that this is a space to watch for expansion, and is thankful for a data-driven baseline. “I am convinced that the team approach will continue to grow,” she says. “I appreciate that NAR is exploring the growth, development, and operation of teams in our industry.”
Yet, despite their growing popularity, 58 percent of respondents said they haven’t even considered joining a team. Many of these respondents said they value the independence they have as a solo practitioner as a reason for their stance. Others cited organization problems they’ve witnessed while working with other teams, commission split issues, and a desire to retain control of an entire transaction.
© REALTOR® Magazine
“This research reinforces teams’ importance, but also provides some objectivity as to teams’ overall share of real estate salespeople,” DeBord says.
The ultralarge teams that some worry can compete with a larger brokerage brand seems somewhat scarce in the research—the plurality of respondents’ teams (29 percent) have two people, while the median number of people on a team is four. The survey found that about 80 percent of real estate teams are wholly comprised of licensed salespeople. Another revelation from the survey is that teams are a newer phenomenon than anecdotes in the industry might suggest. The median year that real estate teams were established was in 2014, according to the survey, but respondents typically joined their current real estate team in 2016.
Of course, teams do bring a number of positive factors to the table, both for individuals and for brokerages. MacNaughton points out two benefits she’s personally witnessed with teams—higher individual sales volume averages than non-team salespeople—even if it’s only one or two team members to whom the reported sales volume are attributed—and the additional guidance, oversight, and supervision of salespeople.
“With its emphasis on efficacy and specialization of skills, in an increasingly competitive brokerage environment, the team model will likely continue to grow in its share of agents as well as market volume,” says DeBord.
Compensation structures track closely to that of the general membership, as measured by NAR’s Member Profile. The 2018 Teams Survey found that the most common compensation arrangements within a real estate team is a fixed commission split at 38 percent, with 22 percent of respondents being paid under a graduated commission split that increases with productivity. A further 13 percent are paid with a capped commission split that rises to 100 percent after a predetermined threshold is met. In NAR’s 2018 Member Profile, that same line of questioning broke out to 35 percent of REALTORS® being compensated under a fixed commission split (under 100 percent) in 2017, 25 percent being paid through a graduated commission split, and 14 percent at a capped commission split.