Inside the profitable team-structured brokerage business model

Authored by:
Paul Hagey
Published:
July 2020

The team business model has spread like wildfire through the residential real estate brokerage industry in recent years. Tech companies and portals increasingly tailor their models to better serve them, Keller Williams Realty leveraged them to grow into the world’s largest real estate franchise, and a raft of newer brokerage models such as Redfin, eXp Realty, Side and more, are leveraging this model to fuel their growth.

While teams gain great transaction, many traditional brokerages struggle to incorporate teams effectively and profitably into their company. High-performance teams, the focus of this article, have very specific divisions of labor, typically generate the bulk of the teams leads and, accordingly, command commission from their agents at much higher splits than many brokers.

Brokerages and teams have traditionally been viewed as competitive, but some brokerages have found ways to incorporate the team philosophy into a team-structured brokerage.

Well-operated traditional brokerages, offering more traditional administration and management services, achieve profit margins of from 6 to 10 percent. Team-structured brokerages, which drive the bulk of the business its agents complete, coupled with strong business systems, can realize operating profits above 20 percent.

In this article, T3 Sixty features one such new team-structured brokerage that has perfected the marriage between the two models.

Brokerage as Team, Team as Brokerage

Matt Curtis Real Estate, a brokerage based in Huntsville, Alabama, in 2019, had an annual sales volume of $243 million with 1,085 sides and a profit margin of over 25 percent, according to founder and owner Matt Curtis.

Matt Curtis

The brokerage has 53 agents and staff. While 32 independent contractor agents hang their license with the brokerage, the company operates as one large high-performance real estate team, meaning all agents operate in a tight division of labor with specific tasks and responsibilities, and follow exact systems and protocols designed and determined by broker-owner Matt Curtis.

The brokerage provides extensive admin and support staff with 21 employees. Important to note is that six of the staff members have real estate licenses, but do not sell. The brokerage takes everything not dollar-productive off its 32 selling agents’ plates.

At many traditional brokerages, listing and buyer agents alike take a commission split in the 70-80 percent range. Matt Curtis Real Estate’s listing agents receive only 30 percent of the commission, with the brokerage taking the balance. Read that last sentence again. 30 percent. Because buyers often require more work, buyers’ agents at the firm operate often get compensated a little more at a 40-50 percent splits with the brokerage, depending on how much volume they do. To a traditional agent that may sound like a low percentage but each selling agent on the team averages over 30 closed transactions each year, four times the national average.

The Matt Curtis Real Estate structure  
The brokerage has divided operations into three overarching parts:
1) Marketing and relationships;
2) Serving consumers on the buy and list side; and
3) closing services.  
The brokerage team handles Nos. one and three, and the team’s selling agents focus on number two. For example, when the brokerage receives a new listing, the company pays for and coordinates photographs, inputs the listing into the MLS, distributes it online, and markets it; and a team runner installs signs. When a contract is signed, a closing coordinator navigates it to close including negotiations. Selling agents essentially have everything off their plate, but working with clients before a contract, fielding leads, and maintaining relationships.

“Many other industries operate like a team does,” Curtis says. So why doesn’t real estate brokerage?

Curtis says the company maintains 80 to 90 percent retention of its productive agents based primarily on providing them a high, steady income (in the $150,000 range for productive agents) combined with a strong focus on culture, which includes taking lead agents and their spouses on paid trips

The brokerage also operates a hub model for the team with agents broken down into pods of four to six agents managed by an agent team lead. Curtis pays team leads a flat monthly fee of $500 for leading their pod of agents and includes bonus incentives for pod production.

The Matt Curtis Real Estate brokerage team. Credit: Matt Curtis Real Estate

Numbers

Curtis is a self-described numbers guy easily recalls that the team had generated 91 percent of the 552 transactions it closed in 2020 through June 29. He also knows precisely where the that closed business came from because of an organized lead-conversion and tagging process with the help of Salesforce. Of these 552 contracts:

  • 42 percent were referrals (9 percent were from the team’s selling agents, the rest from the team or Matt Curtis)
  • 30 percent came from the web through a mix of website leads (100 percent organic traffic), pay-per-click and Facebook ads through lead-gen service Ylopo and through Zillow (the team does not advertise on the portal, but consumers find the team there through reviews).
  • 14 percent mass media (from the 50 billboards the team has around Huntsville, radio)
  • 8 percent sign calls
  • 3 percent open houses
  • 3 percent other

With systems in place, and knowing your numbers, Curtis says, the brokerage spins as a productive flywheel so expanding 20,000 transaction sides per year across the southeast is on his radar.

Takeaway

With their focus on company-generated business, tight systems and high value delivered to all the agents in the brokerage, Curtis has developed a compelling team structured model that brokers can leverage to create more sustainable brokerages.

Editor’s note: While Matt Curtis is an alumnus of T3 Sixty’s brokerage and team accelerator T3 Fellows, the decision to feature his brokerage in this Insight article centered on his innovative and noteworthy business model and success.

T3 Sixty – Trusted business advisors and management consultants.

Part of the T3 Sixty family of companies.

© T3 Sixty 2020. Enabling Intelligent Change.

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