As Real Estate Team Popularity Explodes, the Paradox Grows
Survey of Top Execs Shows Benefits, Risks in Supporting Teams
Real estate executives across the country are acknowledging teams and their higher sales volumes with more eagerness than five years ago, a new study from Imprev shows. The Imprev Thought Leader Study, which surveyed brokerage leaders representing firms of all sizes across the U.S., found that execs are in broad agreement (80%) that teams have helped grow their brokerage’s business over the last five years.
Much of that growth is related to sales volume: 76% of leaders say real estate teams have a greater impact on total sales volume today than five years ago. According to the study’s findings, teams on average account for 30% of brokerages’ total dollar volume and 29% of their number of sales. A remarkable 91% of brokerages have one or more teams, with 45% having six to 20 teams.
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However, a growing paradox emerges from the study’s data: Real estate brokers say teams are valuable but increasing team business is coming at a cost. Nearly two-thirds (64%) of participants polled shared that real estate teams cut into brokerage profits. A few brokers specifically point out that “profitability per agent is lower” with teams, in part due to higher commission splits and a heavier strain on office space and other resources. Study participants also show lingering concern about the danger teams pose to their businesses—when asked if real estate teams are a competitive threat to their brokerage, 52% said yes while 48% said no.
“We knew teams were making a powerful impact on real estate. There are many fantastic studies out there covering the inner workings of teams, but we felt there was a need to understand teams from leadership’s perspective,” shares Renwick Congdon, CEO of Imprev. “This study shows that the effects are more double-edged than we anticipated.”
Despite apprehension over profitability, the majority of brokers polled aren’t painting themselves as anti-team. More than two-thirds (68%) say they encourage the creation of teams. And when asked, “Does your brokerage fear or embrace teams?” on a scale of 1 to 100 (with 1 fully fearing teams and 100 fully embracing teams), the average score was 73—a surprising turn in sentiment over the past five years.
“With so much success coming at a growing cost, what should leaders do to ensure their greatest fears about teams don’t come true?” asks Congdon. “Based on brokers’ feedback, the key at the moment seems to be putting more comprehensive policies and frameworks in place to ensure team leaders and brokers build strong, mutually-beneficial relationships.”
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The Imprev study found that current brokerage guidelines and technology don’t always support real estate teams well. While nearly three-quarters of brokerages have set policies or guidelines for teams to follow, leaders don’t perceive those policies to be as effective as needed to drive success. When asked what management can do to better support teams, 78% of brokers ranked “Create guidelines, team models to assist new teams” as their top choice. The next important initiative, according to 71%, is to “Provide technology that supports both teams and individual agents.”
When it comes to supporting agents—and therefore teams—one broker, in particular, is challenging the status quo, saying, “Adopt a perspective that the business is the agents, not the brokerage. Operate from the belief that the agent is the customer first, and the consumer second.” Another broker echoes his point of view: “Try not to just ‘tolerate’ [teams] but try to find ways they can help us be profitable and grow.”
This study is being released this morning in advance of Imprev’s presentation later today at Inman Connect’s CMO Connect. The presentation will include a brief summary of this study’s findings. Inman Connect is the nation’s largest real estate technology conference being held July 17-20 at the San Francisco Hilton.
About the Thought Leader Teams Study
This latest Thought Leader Survey was conducted from June 11 to June 19, 2018. The study defined a team as “a group of people working collaboratively on a regular basis to list and sell residential real estate, including co-listing agents.” The survey polled real estate leaders who represent brokerages responsible for approximately half of all U.S. residential real estate transactions last year. Brokerages with 50 agents or less represented 20% of the participants, firms with 51 to 100 agents represented 19% of the participants, firms with 101 to 500 agents represented 46% of the participants, and firms with 501 or more agents represented 15% of the participants.
The annual Imprev Thought Leader study is one of the most comprehensive in real estate and was created by Imprev to provide insight on key business challenges top executives and broker owners face, encouraging an exchange of ideas and solutions among industry thought leaders.
A copy of a summary of the study findings is available online here.