Real estate teams are rapidly extending their sales lead over individual agents

A study shows that real estate teams increased their sales 117% from 2011 to 2017 while individual agents increased theirs 13%

Mar.March 17, 2019 04:10 PM

(Credit: Pixabay, iStock)

New analysis shows that real estate teams have made dramatic gains in market share since the housing crisis a decade ago.

The sales volume of the best teams increased nine times faster from 2011 to 2017 than the volume of the best individual agents, according to a study by brokerage industry veteran Russ Cofano, host of a real estate podcast called “Gradually … Then, suddenly!”

Based on his analysis of data from REAL Trends, the number of closings by the top 250 teams in the United States grew from 61,000 in 2011 to 133,000 in 2017 – a 115 percent increase.

During the same period, the number of closings by the top 250 individual agents grew 13 percent from 45,000 to 51,000.

The growth rates from 2016 to 2017 were lopsided, too. Team sales increased by 13 percent and individual agent sales by 4 percent.

The faster growth in team sales volume is challenging brokerages because team sales “have significantly better profit margins than brokerage companies do,” Cofano told Inman.

He also said the trend probably applies not only to the best teams and individual agents but across the board.

In a recent survey by the National Association of Realtors, 26 percent of the respondents identified themselves as members of a team.

The proliferation of teams may stem from a brokerage model that RE/MAX introduced. Top agents pay a monthly “desk fee” plus an unusually low share of their commission income to RE/MAX franchisees.

Cofano said that type of business model effectively shifts the ownership of consumer relationships from brokerages to their agents.

Customer-relationship software and other technological advances have led the best agents to seek other ways to improve their performance, and “teams are a natural outgrowth of that,” he said.

By providing sales leads, technology and training, leaders of real estate teams collect large shares of the commission income of less experienced team members that previously went to their brokerages.

As a result, some brokerages now see internal teams as direct competitors but cede control to them, anyway, because they close so many sales, Cofano said. [Inman] Mike Seemuth

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