The Good, Bad & Ugly: The Importance of Building a High Performance Team

Hey there. Welcome back to another edition of the Business Freedom Podcast. And this is the Good, the Bad, the Ugly. Building a Real estate Business Transitioning from Producer to Business Owner. And today I want to chat about. Really, this is where I get to rant. This is one of those rant kind of days. You know, there's a lot of different models in the real estate industry. Teams, quote unquote, you know, that scale quickly and we never quite get the opportunity to look at the financials of any of these businesses. You know, I know that there are teams that are expanding across the country. I know one of the largest ones is, you know, is like doing less than 10 transactions, an agent, and there's a lot of confusion around what, what type of business you really want to build. You know, when we talk about going from producer to building a team, I want to be clear what my version of a team is in the real estate industry. And I call it. It just so happens that my business is called High Performance Real Estate Advisors. And the, the model that I think is going to be best positioned in the future is what we call an hpret. And I've been teaching this for probably the better part of the last four or five years. It's a high performance real estate team. It's before I even had the team name that I have now. It's the concept that I believe that individual real estate agents are going to be. It's gonna be really tough to compete with teams that are designed properly. And when I say that, I mean a team that is a real. Not even a team, but it's a business. It's in the business of helping buyers and sellers at the highest level. So the work that they're doing is focused on delivering a very specific and repeatable proven process to buyers and a specific, repeatable, proven process to sellers. That it's focused on delivering an experience that is just not. You can't get it elsewhere. That is what I'm talking about. A business that focuses on making those services the best they possibly could be, becoming the Nordstrom of real estate service, the Mercedes of whatever analogy you want to use. That's what I'm talking about building. So it's not a loose collection of agents that each provide service a completely different way. You know, most real estate teams are just that they're really a brokerage and a brokerage, and there's not a focus on delivering a service that is differentiated. And I believe with all of my heart that that's going to be the business that survives in the Future. And so if you're not building a high performance real estate team with the focus on, you know, creating an experience for buyers and sellers that is above and beyond anything else they can get in their market, you're going to be challenged as a real estate agent to get the kind of commissions that you want to get. And so we are focusing our efforts on building out those emotionally driven experiences for our clients. And so it kind of goes back to the, you know, just to kind of drive home the point of why even building a team is, is the way to go. It's, it's my belief that if you aren't building a team and a very specific version of a team, it's likely that you'll be working for one in the future. You know, we are being marginalized. We are in a commodity business. There's too many of us. You know, there's Amazon opened up a physical real estate office in Charlotte, North Carolina. You know, what do you do with that? How do you compete with an Amazon? They have a quatrillion dollars of cash. And so they could be, not Amazon, sorry, Zillow. Amazon is probably going to get into real estate as well, if they're not already. But Zillow, they have like a trillion dollars of cash and they opened up a physical office space. How do you compete with that? The only way you compete with that is providing a service that they can't possibly provide. That hyper local, super knowledgeable, emotionally driven, high consumer experience type deal. And that's what I believe everyone needs to start building if they're not doing so already. The profit margins in building a team like this are super high. And that's what I want to really get the point across here. If you're a top producing agent, the risk of sort of staying in the grind of production and not shifting toward building a team is that number one, it's going to be hard to compete with a high performance real estate team in the future and you'll limit your income and ultimately burn out. And so I kind of started the podcast today with the question, you know, what is the point of doing this if I didn't start it with that? That is the title of today's session. What is the point of doing all this? Right? Why build a real estate team, any team, versus a high performance real estate team? And what is the outcome of a business? I want to give you something that if you're taking notes, I know some of you are just geek out on these podcasts and you take notes. The outcome of a Business is to create a sustainable system that allows you to consistently increase the quality of your life life and the lives of the people you serve. And that includes buyers, sellers and your team members. And this is what will ultimately lead if you do this the right way. This is what gets you the time and money, freedom as well as a higher level of fulfillment because you're building a team and you're serving your team members. The challenge here is that most real estate agents and even team leaders get caught on the transaction treadmill and they don't focus on the desired outcome. If I want to focus on building the best real estate business in terms of serving buyers and sellers possible, and that's my three to five year goal versus just doing deals, I'm going to be in a better position three to five years from now, even if it cost me some investment dollars to do it, than someone that is doing production. And they have sort of a loose collection of agents. That's a typical team as the team leader. 90% of team leaders are in production because they didn't set it up right. They don't have the back end to support the promises they're making in sales. And they have, you know, four or five agents alongside them that are kind of doing business the way they think they should do business, but it's not driven by the same repeatable process. And then the whole point ultimately is that you need to build this thing in a way on the right economic model where you can make profit. Enough profit to make the whole thing worth it, but also to have a healthy business. A lot of these real estate teams, when I dig into them and I talk to the real estate team leaders, they're single digitized by Google returns. So their return from the real estate team is single digits. So profit before taxes is less than 10%. And that is not a model where, that's not a model that I want to help anyone build to. It is way too risky. You know, your profits can go away, you can go into loss territory really quickly if you're, if you're focused, your model is focused on single digit returns, right? We're talking about 30 to 40% profit before taxes. That's the economic model that we subscribe to. And in every ounce of my being I want you to help. I've gone through it before. The Rev's economic model is about 70% gross margin. So you pay your broker and your agents about 30% blended listings and buyers with you completely out of production. And it's 10% to advertising, 10% to people and 10% to overhead, 12 in each of those three categories if you're pushing it. So that gets you 36% off of the 70, and you're at about 34% to 40% profit before taxes. That's the whole model. And there are very few teams that are running that model when you look at the teams across the country. So you've got to have that in mind. And to build a real business, you have to act as if you have an exit strategy. We've talked about e myth before. How would you think about your business differently if you knew you needed to replicate it 10,000 times? So that's like the ultimate question. Like, you'd have to get out of production because you couldn't be in production in 10,000 different teams, right? You'd have to build out systems to work with buyers the way that you work with buyers, to work with sellers the way that you work with sellers, you know, so that is the question you have to build. You have to focus on the mindset of building a business as if you couldn't be in it, and to have a business that's sellable. You can't be the most important cog in the business, and that's how to think about your business. So hopefully this was helpful. My point here is to drive home the fact that our industry is transforming in significant ways where if you don't make this decision where you want to end up, the industry will decide where you end up. If you're a top producing agent and you don't make the shift to team leader, building a team a very specific way, you are going to be challenged to compete with a team that is building a service that you can't possibly compete with as a solo agent. So you'll be working for one of those teams, and there's nothing wrong with that. If you want to be in business for yourself, you have to make this leap from the mindset of production to the mindset of business ownership, business building, systems building. And that's where if you ever want to have a conversation about that, you know, it's rebstrategysession.com give me a few bits of information about your business and we can jump on a call. It's really to drive home this mindset that the business is changing. And if you don't decide where you want to be, the industry and the business will decide for you. And I do not want that for you. My mission is to help serve this broken industry. If you've achieved traditional success, you need to make this leap to business ownership and set your business up the right way. We'll talk to you on a future podcast. Bye. Bye.