Agent Teams Threaten the Survival of Brokerages

Teams cannibalize brokerage companies by siphoning off their profits, leaving them exposed to all the risk. The team concept has been around for a long time, but in recent history it has emerged as a much larger factor in the brokerage industry. Most companies have endorsed or at least tolerated the concept in light of the revenue it generates. However, there are issues that need to be addressed when teams function as an autonomous brokerage unit. From a marketing perspective they often develop their own brands, which in some instances become more powerful than the brokerage brand. Their self-directed status is enhanced by their ability to obtain their own technology and operate more efficiently and effectively for their own benefit. All of which presents the opportunity for the emergence of the “lead agent-centric” model, the company within the company. Agent teams greatly expand the broker’s potential legal liability as the master agent imposes standards and best practices on the team that have not been approved by either the brokerage or the broker’s legal counsel. Economics also come into play here. Master agents with teams tend to make more money than traditional office managers. So here again the industry’s economic profile is being distorted when funds that arguably should be distributed as dividends are being expended for management or labor.

Teams dominate and make it harder for solo agents to succeed and for companies to act as entrepreneurial as they may wish. There is a strong tendency for teams, as part of their business plan and their own identity/brand, to establish their own operating guidelines, standards, and procedures. Some of these independent decisions and actions may run afoul of Real Estate Settlement Procedures Act (RESPA) compliance or the Consumer Financial Protection Bureau, especially decisions involving Affiliated Business arrangements. On the other hand, with good management and oversight, teams can become a strong growth opportunity as demonstrated by some large national franchises.