Real Estate Teams by the Numbers with Andrew Flachner | Ep 048

How does your cost per lead compare to other teams your size? How do your lead sources line up with those of your peers and your competitors? How do the referral fees that you're paying out compare to what the market is paying at large? Roles, compensation, org structure, database size if you're wondering where you line up against other teams, you're in the right place because we're talking in this episode about the Teams Report which provides essential benchmarks for real estate teams. With us today is Andrew Flackner, the co founder and president of Real Scout, the team that pioneered this report along with the Tom ferry organization and T360 and of course supported by dozens of other brands, brokerages, tech companies. You'll learn many of them here in this episode. And we walk through four categories of key takeaways from the team's report. Learn about the level of optimism among real estate teams about the 12 months ahead in terms of revenue growth, recruiting and customer acquisition. Learn about team size and structure, including non agent roles. Learn about the differences between large teams and small teams in terms of cost per lead, referral fees and compensation. You'll also learn about the biggest opportunity in the year ahead for teams of all sizes according to those teams themselves. It's all right now with me and Andrew Flackner talking about the team's report on real Estate Team os. No matter where your business is today or where you want to take it, you'll get there faster and more profitably with an operating system. Welcome to Team os, your guide to starting, growing and optimizing real estate team. Here's your host, Ethan Butte. Andrew, I love this Teams Report project that you've put together. I thank you so much for bringing it to the show. Always great to spend time with you in conversation. Welcome to Real Estate Team os.

Thank you. Good to be here.

You have undertaken what I think is. I'll get your take on it in a minute. A first of its kind dive into real estate teams. Benchmarks for team size, org structure, roles, compensation by role, gci, growth expectations, tech budget, lead, gen and distribution, cost per lead, referral fees, database size, SOI and nurturing and a whole lot more. Would you call it first of its kind?

Yeah, I think so. There hasn't been a report that has been this robust and had a sample size this large as far as I know.

Cool. We're going to dive into some of the initial findings. We'll dive into what it is, why you like, why you, why Real Scout, why the folks that you brought together to put this thing Together. How did it come together? What can agents and team leaders learn from it? Brokerage owners as well, why they should go fill it out, where to go fill it out. But I am going to start with my standard opener, Andrew, which is what is a must have characteristic of a high performing team.

I think a high performance team needs to be focused on data. And whereas teams used to be a little less sophisticated, usually they were kind of mom and pop operations. Today we're finding that the teams that are really growing quickly are the ones that have access to the data. And I have the infrastructure to act on that data.

Yeah. I would also add the data literacy. I mean, I think it comes natural to some people. Some people have had formal or informal kind of training around it. But I also sometimes worry about data in the hands of someone who's not particularly data literate and perhaps like overreacting or misreading or whatever.

Yeah, I mean, you don't want to be data rich and insight poor. Right. So you need that translation layer if it's you or somebody in your team or someone you trust or, or some expert in the industry that you look up to. But it's really critical, especially as so much is changing in the industry, that you're able to navigate this not only on instinct, but using data to make decisions.

Yeah, I think when most people hear data in this context, I know I did initially, but I always catch myself. We think about quantitative data like things gathered, measured, flowed between systems, put into nice dashboards or reports and presented that way. But qualitative data has a role to play too. And I feel like maybe a really experienced agent or team leader or brokerage owner may have really good, a good handle on. Even if they don't think about it intentionally this way. Gathering and using qualitative data stories that they're hearing, things that they experience themselves, things they're hearing from their peers, things they're hearing from agents, et cetera. But the quantitative side is probably the big missing piece. Anything thoughts on that?

Yeah, I mean, I think qualitative is pretty important as well. And so there's plenty of opportunities throughout a transaction life cycle to gather data about your process and how clients are responding. So it's one thing to send out a request for somebody to write you a glowing review. It's another thing for you to meet with a past client or a client who's about to close the transaction and ask the tough questions, like, what do I need to do to improve? Like what was the least enjoyable or the most rough part of this process and that's going to help you improve.

Or even taking all of your customer reviews and running them through a little AI tool and identifying themes.

I think that's one option. But remember that a lot of times when you're requesting reviews, you've already established a relationship with your client, they are trying to help you and help your business. And so oftentimes those are going to be sugar coated. And then back to your question about quantitative. I think that it is important to get data from a larger sample size. So there's nothing wrong with asking a peer or a friend or even a competitor. But I think better than that might be a mastermind where you're sitting around the table where 15 or 20 of your peers can contribute ideas and weigh in on your process. And then there's another use case where, hey, I want to learn from hundreds of agents and see how hundreds of team leaders are developing their business.

Yeah. So let's dive into some of the data that you've collected in the teams report. Theteamsreport.com, we'll probably say that a couple of times if you want to go a, get the preview and or B, more importantly, go ahead and fill out the survey and you'll get a much better sense of what it is here through the conversation because that is the only way that you get the full complete report. It's by and for the community. And so if you want full access to all of the information, we're just going to kind of COVID over some of the main ideas here in this conversation. But to get it going in that direction, one of the things you asked about was optimism about the year ahead. Here's we record this and release this at the end of 2024. Looking forward to the year ahead, nearly 3/4 of teams, 10% or greater revenue growth next year. Talk about the optimism that you saw with regard to revenue growth.

Yeah, so let's talk about optimism. Let's talk about how team leads are responding to everything that's happening in the industry. It's true. 75% of the respondents to the survey said that they will see a 10% year over year growth or greater. And only 2 1/2% of team leads said they expect negative growth. And I think there's a few reasons for this. I mean, one kind of funny way to position this is that it can only go uphill from here. Right. Because between July and August, existing home sales fell to a seasonally adjusted annual rate of less than 4 million. That's down from a peak of 6.1 million in 2021. So it can really only go up from here, as I think a lot of the sentiments here. But I just heard a stat the other day from keeping current Matters saying that, you know, home sales will grow 20% in 2025. So I think that growth is on a lot of people's minds and obviously a welcome change to the current real estate environment. But even when it comes to things like the election, which is now behind us, NAR settlement, the cost of lead gen and inventory, 70% of the team leads who responded to the survey said that these things will either have a neutral or positive impact on their business. When it comes to interest rates, of course, there's a lot more optimism around that, even despite the recent uptick after the election, 75% of team respondents said that they think interest rates will have a positive impact over the next 12 months.

Yeah, the only one that stood out to me there is slightly negative is inventory. There's probably just still some concern of will this unfreeze, will this unlock, will we start to get more normal inventory? It's interesting because when we see that 75% of folks expect like moderate or high growth. By the way, for anyone who missed that previous slide, if you're listening and not watching as well, almost 15% of people expected to grow 50 to 100% and 2% expected to double their businesses in the year ahead. So I have, I have a feeling that has a lot more to do with market conditions. Whereas the moderate growth population says, you know, we're going to keep doing what we're doing structurally, but we're going to benefit from some of these positive trends in the market, including ideally, interest rates coming to a zone where, I don't know, people hope and expect they'll land. With regard to the full report, you have optimism about recruiting. You have mixed results kind of on customer acquisition. You want to give a little bit of tease to some of the way that those questions were structured and what teams are expecting with regard to recruiting and customer acquisition.

Yeah, well, there's a lot that's moving around right now in the industry. Right. There's, there's some incumbents that are getting a second bite at the apple and they have new models, fresh ideas. You have some new up and coming brokerages that are starting to sweep the industry. And so combine that with how tumultuous it's been in the market with interest rates and the election and, you know, the costs of lead gen changing. I think what you're, what you're seeing is that a lot of the team leads that are best prepared going into 2025 are feeling quite optimistic about recruiting. Right. When there's someone who's shaking up the snow globe, you know, where those little flakes of snow will land has a lot to do with how prepared those teams are who are in a position to a position of strength and position of recruiting. So I think that's driving a lot of the optimism. And certainly a lot of the people who filled out the survey are in a position of strength and they're excited about the recent changes.

We just kind of teed up. What I wanted to do, which is to back out a little bit and talk about the teams report overall. You mentioned like the types of folks who filled this out, so we'll get to that. But, you know, for anyone who is not familiar with the teams report, what's your kind of elevator description of it?

The reason why we're so passionate about pulling together this research is actually based off a quote that a friend of mine had. His name's Suhail Doshi and he's a pretty iconic founder in Silicon Valley. And he has this quote that I haven't been able to get out of my head for the past few years. And it says this. Most of the world will make decisions by either guessing or using their gut. They will either be lucky or wrong. And I think that you've been doing these interviews for a long time. You're interviewing some of the most sophisticated teams out there. But many of the teams that we meet out in the field, they are relying on instinct. Now, that instinct is backed by years of experience. I don't want to belittle that, but certainly if you can widen the aperture, you can look into data from a lot of your peers or even your competitors. It's going to help you grow your business in a new way. So in many ways, we think this is the ideal time and the most critical time to take out your binoculars, to look over the hedges, see what your peers and competitors are doing, because it's going to inform your 2025 strategy. So what we decided to do was to create the teams report. We partnered with Tom Ferry and T360 in authoring the report. But the reality is that we have many, many distribution partners, including Follow Up Boss, of course. But the biggest brokerages in the country, Exp, Syde, lpt, Real, even remax, were involved in Distrib it. A lot of really great technology companies like Curator, Blended Sense, Follow Up Boss, of course, Street Text I'm not going to name every logo in this, but certainly we have a lot of really great distribution partners that have helped get the report into the hands of so many team leaders. I did want to make sure that I make it clear the only way to get the full report is to complete the survey on theteamsreport.com and we introduced this mechanism. It's almost a pay to play, but instead of paying money, you just, just have to pay with your time. But once you contribute to the data set, then you have the access of the full 50 page PDF. And if you're not a team lead or you don't want to go through the time of filling out the survey, there is a way to just download a 14 page preview doc and some of those insights we're going to cover on today's conversation.

How did you develop the question set? Give a sense of the range of what is covered in the full survey and what someone's going to get in the 50 page full report?

Yeah, absolutely. So we didn't have the answer to this question when we got started with the survey. And so what we did was we did a lot of interviews with top producing teams and we asked our friends, we asked follow up boss, hey, can you connect us to some of your top customers? We want to understand how they're thinking about their business, how they're thinking about 2025 and most importantly, which questions they have about the industry and the business. And we had Tom Ferry do the same. So a lot of it involved me sitting in front of top teams across the country for hours upon hours of interviews asking Ethan, what do you want to know about the business? What do you want to know about what your peers and competitors are doing? And that made the basis of the survey. Now there were a lot of questions we didn't have an opportunity to ask that I think we'll ask in subsequent reports. I mean we could have probably written a 50 page report just on lead gen or paid acquisition. And yet we had to really just scratch the surface across a variety of different topics.

Why didn't this exist before? Again I mentioned in the intro and off the top there, some of the things that are covered here. It's in depth. It's what other team leaders and brokerage owners want to know. Why do you think this hasn't existed before and why did you take this on? Or why did Real Scout take this on?

Yeah, well, it's a good question. I think partly it's because it's a lot of work, right? I Mean this was a six month effort. It was cross disciplinary, multiple teams at were focused on it, but we also had staff at Tom ferry and a T360 and all the companies on the screen that were pouring a lot into making this happen. It was really an interesting blend between anecdotal insights where we met with individual teams to create the formation of the questions, but then also getting data in aggregate and being able to analyze that data. I will say that we're not the first to run a survey or run a poll, but usually those are, they're almost like pulse updates on the industry. Like hey, what does everyone think of the NAR settlement? But to go this in depth, I think it takes a lot of effort and also to the credit of everyone who filled out the survey, it takes a lot of time from them as well. I think the average respondent took about 20 minutes to complete a survey and given how busy business is, I think it is a lot to ask of the people who filled out the survey. But the flip side of that coin is I spoke to one team lead who said, hey Andrew, I don't care if it would have taken me an hour to fill out this survey, I would fill it out because every single one of the questions I want to know the answer to. I want to see how other teams are answering these questions.

Yeah. So you've had what, a thousand ish teams fill this out so far?

Yeah. By the time this airs we will have over 1000 team leaders who have taken the time to fill out the survey. There's actually. Well when we crunch the data for today's conversation, there's only about 350 in the sample. But we do want to rerun the data, see if there's any material shifts in the responses.

What kind of feedback have you been getting? You just shared a really good story of like I would have spent an hour because I want to know what everyone else thinks. But you know now that of course the preview is out, you've shared this out in the community at large. What's some of the feedback you've been getting about the report? Like specifically? I guess two, did it fulfill your own expectations while probably surprising or satisfying or delighting some other folks out there?

Yeah, it exceeded my expectations. I did not expect that every major brokerage, every major technology company would be distributing this to their email list repeatedly and sharing it on social media. So clearly there was an appetite.