The Real Estate Team Split Mistake That Traps Most Leaders

When team leaders come to us with problems, the issues almost always trace back to one place: the mindset they had when they first set up their split model.

What we see over and over again is this. A solo agent decides to start a team, and they look at the whole thing through their own lens as an agent. They think to themselves, “Well, I would never join a team. I just did it myself. I became a top agent on my own.”

So they don’t see the value of being on a team because they don’t see it for themselves. And when they don’t see the value, they don’t justify the correct split with the agent. They tell themselves nobody would join their team unless they give the agent 70% or 80% of the split.

And honestly, if that’s where your mindset is, you’re better off staying a solo agent and just finding admin support you can pay hourly or by salary to leverage you out of the low-dollar-per-hour activities. Because if you can’t justify the value of your team, you don’t have a team. You have an expensive arrangement that’s eating into your production.

The real value of being on a team. A lot of team leaders think the value they offer is leads. And when they don’t have a strong lead pipeline, they convince themselves that no one would want to join. “All my business comes from my sphere. I don’t pay for leads. Why would anyone join my team?”

That’s not why agents join a team. Leads are easy. Anybody can stroke a check for leads. Back in the day, when Tiger Leads first came out, leads were tough to find, and being one of the first ones in your market to pay for leads was a real edge. That’s not the case anymore.

The real reason agents join, even for a solo agent bringing on their first partner agent, is the ability to be around you and see how you operate. Most agents we talk to don’t think that’s valuable, because they’re inside it every day.

But it’s a huge value in and of itself. Then you add staff, systems, technology, and all the risk you take on as the team leader instead of the agent. You pound all of that on, and suddenly, a 50% split is almost too much to pay the agent, especially if it’s a company-generated lead, or if you’re handing them ready, willing, enabled clients from your sphere.

And then on listings, the team is paying for everything. On our team, we paid 30% to 35% listing splits to our agents because we generated all the deals. We did only in-office listing appointments. An ISA set the appointments. Staff prepared all the paperwork and CMAs. Then the staff handled the entire listing until an offer was on the table.

We had two listing agents, both making multiple six figures, who weren’t working with buyers anymore. But we had to build that. That structure didn’t appear overnight.

The chicken-or-egg question. This is the other piece we see team leaders get wrong. The question they ask themselves is: which comes first, the splits or the value? Do I charge the correct splits first and then create the value, or do I have to create the value first, then charge the correct splits?

The answer is the former. You have to charge the splits to create the value.

You can’t create the value first, because it’ll come out of your own production.

That’s the trap. You leave the splits too generous because you don’t feel like you’ve earned the right to charge more yet. You tell yourself you’ll fix it once you build the value. But the value is what the splits pay for. So you spend from your own production to build the team, and now you can never change the splits because the team is already there, and you’re stuck providing for that team out of what you should be taking home.

Once the splits are set correctly from the start, you have the budget to build the staff, the systems, and the technology that justify those splits. The agents see the value because they’re living inside it. And the math works.

If you’re building a team, restructuring an existing one, or trying to figure out why your numbers aren’t working the way you’d expect, we’d love to talk. Book a free discovery call with us at calendly.com/simple-numbers123/discoverycall, or email andy@simple-numbers.com to start the conversation.