Building a successfully commercial real estate brokerage team is not easy. With the turnover in many brokerage firms, one might question the sanity of even trying. The only reason to do it is to do it differently and create a better mouse trap.
To start, let’s consider the inherent flaws with the current system. For decades, the Commercial Brokerage Industry has been plagued with a lack of loyalty and trust between brokerage firms and the commercial real estate brokers. Changes in market dynamics, swings in the economy, mergers & acquisitions, and trends within the workplace, have all contributed to a community of disillusioned brokers who must first focus on their wallets when it comes to where they work.
I think that building a commercial real estate brokerage team is like building a sports team. Before you can start signing or drafting players you must determine what type of organization you want to be. Do you need to win immediately, or do you have the infrastructure, the patience, and the foundation to build a solid team that will be competitive year in and year out? Once you determine the type of organization you want to have, you then must formulate a strategy and create the foundation for that team to succeed.
The foundation first starts with the facilities that you have to offer the team. They must be state of the art, yet comfortable and work for both veterans and rookies alike. Once you have the facilities in place, you then need to make sure that you have all the appropriate tools and support so that the team can succeed. This means top tier marketing materials, advanced technologies, lead generation strategies and a culture that encourages collaboration (not silos!).
The economics must make sense for both parties. This is where most sports teams, and most brokerage companies, get it wrong. For the team to succeed, and for continuity and longevity, you must develop an economic system that works in all markets. One that does not change as the market or economy changes and one that promotes, and rewards consistent effort and results throughout the entire calendar year. The days of extending large signing bonuses for players to either stay or join your team should be over. The days of creating complex compensation structures, which are different for many players on the same team, and which change depending upon the economy, management, or corporate structure, should also be over. There is a better way.
Develop a financial structure which rewards accomplishments at the same rate day one of a calendar year as it does on day 365. A fixed split structure in which the commission rate only changes based upon whether the lead was generated by the house, is a much better way. This gives brokers the incentive to work on all business aggressively. Leads from the house at a lower split are very well received particularly when there is a reasonably clear path to closing. At the same time, commission splits for leads generated by the brokers is much higher and rewards them for bringing in business on their own. 85% of all existing commercial real estate brokers in our market would make more money under this structure (based upon our own company’s internal splits).
The key is to make sure the structure works for both the organization and the players. This type of structure may not attract the superstars but think of how many times teams have overpaid for superstars to find that they do not achieve the results they hoped. Additionally, many of those signings destroy team chemistry and morale.
Building the right facilities, providing ample marketing support, and implementing a new, simple, yet powerful compensation structure will not guarantee a successful team. The most difficult ingredients to cultivate are culture, personality, character, and chemistry. I would much rather have a team full of above average players with heart, determination, and the willingness to perform based upon a commitment to enhancing the lives of those they serve.
Building a successful commercial real estate brokerage team is not easy, but building one that is innovative, thoughtful and compelling is worthy of both the time and effort.