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Big Teams Reign Supreme Over Brokerages; Go Team Go!

Big Teams Reign Supreme Over Brokerages; Go Team Go!In Friday’s blog about company names (and JVM’s new name), I mentioned I had a very sweet deal with a mortgage firm that was set up just like a real estate brokerage (which was legal at the time).

They only charged me a flat fee of $2,500 per month and I kept every penny of my commissions – which were well into the six-figure range every month.

When I went out on my own in 2006, my overhead increased massively because I suddenly had to cover my own legal, insurance, compliance, software, bookkeeping, lender approval and government reporting costs.

In other words, I was far better off as a high-producing team under someone else’s umbrella.

Note: The brokerage offered me such a sweet deal because they needed my volume to garner certain lender approvals and pricing advantages. My volume and name also helped their reputation.

REAL ESTATE FIRMS BEAT BROKERAGES IN PROFITABILITY

In light of the above, the following HousingWire article did not surprise me at all: Real Estate Teams Beat Brokerages In Profitability

The article focuses on extensive surveys of America’s “mega-teams” done by RealTrends, and it shares some fascinating data.

The average number of transactions increased by almost 50% (252 sides in 2020) over 2019.

The teams in the survey averaged $3.33 million in gross commission revenues, have been in business for an average of 10.9 years and have an average of 13.9 agents and 4.5 employees.

Most tellingly though were the profit margins comparisons. Large teams had average gross margins of about 62% vs. only 14% for brokerages.

And the reason seems obvious to me, as brokerages have to offer the big teams the world to keep them under their umbrellas and the brokerages have to cover a lot more fixed expenses than the teams do.

This is something I discovered in spades after I went out on my own in the early 2000s (and I probably should have been much more appreciative of my brokerage 😊).

TOP 1,000 TEAMS

The article also lists the top 1,000 teams here by various metrics (total sales; total units; total sides; etc.), and it is pretty fun to see a lot of familiar names.

CAN TEAMS BE SCALED NATIONALLY?

The article says “yes,” and uses Robert Slack, Mark Spain and Ben Kinney as examples.

WHY I LOVE TEAMS!

JVM is effectively nothing more than a mega-team, and I used to do entire presentations on team building because I think it is so beneficial.

  1. Leverage. A powerful team allows you to do what you do best (selling, creating systems, building relationships, building tech, or whatever) while your team does the rest.
  2. More Money. You clearly can make far more money when you build a powerful team.
  3. More Freedom. A powerful team allows you to take weekends off and to not be “on-call” all the time.
  4. Salable Business. A powerful team is a business in and of itself and can be sold as such in a way that an individual’s book of business cannot.
  5. Fun. Running a successful team is also very fun.

In conclusion – GO TEAM! Or GO TEAMS!

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167

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