If you run a real estate team, you know getting from $1M to $10M takes more than just hiring more agents. And what got you to $1M looks different from what gets you to $10M, which looks different from the path to $50M.
So, the more you hear about teams scaling to $100M, maybe you’re thinking, “Sounds great, I’m in! How do I get there?” Because it’s not just more of what you’ve been doing already.
In last week’s BAM webinar, Byron Lazine, Lisa Chinatti, and Luke Acree broke down the four team models and explained why so many teams stall out before they get there. They also revealed how to figure out which build is actually right for you.
The answers might surprise you.
The Four Team Models (And Where Most Teams Get Lost)
Let’s start with a quick breakdown of the four team models:
- Rainmaker/Navy SEAL team
- “Messy Middle” (10-30 agents)
- Large team (30-45 agents)
- Mega/Enterprise team (50+ agents)
In the smallest of these, the Rainmaker/Navy SEAL team, the team leader stays in production and hires W2 staff over 1099 agents. Because, as Lisa pointed out, it costs less to pay W2 staff to handle tasks that free up agents for client-facing work than to pay 1099 agents.
“I think sometimes as agents, we’re a little bit scared to take on the risk of having a salary or a pay expectation. But…even if somebody took the whole transaction from start to finish and say it was 20 hours of work, how much would you spend in an hourly rate to get that accomplished versus how much would you have to give up in this commission splits? And you can understand why it’s so much more profitable to be in that Rainmaker level with a highly leveraged staff.”
This kind of team typically starts because the team leader has more leads coming in than they can handle on their own, so bringing on help is a response to overflow. The lead volume is what triggers the build.
But where you go from there depends on how you answer a few important questions (which we’ll cover near the end).
When you get to the “messy middle” stage with more than 10 but fewer than 30 agents, more than likely you’ve got talent carrying the team instead of what you need for sustainable growth: systems.
At the large team stage (30-45 agents), the challenges and needs of your team, as well as the leadership skills required at this size, are different.
You’re still vulnerable at this stage. If you lose 10-20 agents, you’re looking at a massive drop in revenue as well as internal chaos. Without a strong system for recruitment and onboarding, you’re looking at a prolonged layover in the messy middle.
Think of a large team going through attrition during a difficult market, with agents breaking off in search of bigger splits or better training, or leaving the industry altogether.
Team leaders who get to the mega/enterprise level are working with a completely different animal:
- 50+ agents strong
- Systems-driven
- Recruiting funnel in place
- Team leader operating in their strengths
And the leadership skills at this size look different, because the needs and challenges of a mega team are different, as Lisa explained:
“When you start running 10 agents, the leadership skills are one set. What you need to do to manage that is one thing. When you have 20 agents, the leadership skills are slightly different than what it took to manage 10 people. When you get to 50 people, you’re in a whole new set of leadership skills and problems, and then you hit a hundred and it’s completely different yet again about the leadership skills and everything that shakes out in there.”
Why Teams Get Stuck and Never Break Through
If you recognize the messy middle or large team stage as where you are right now, you have to know what’s keeping you there before you can break through.
Byron zeroed in on what he’s seeing in teams that stay stuck: they treat the team more like a club or a family than like a business. When people use the words “club” or “family,” they’re usually thinking of a smaller, more select group where everyone gets along and feels an emotional attachment to the team.
To get to the mega/enterprise team level, team leaders can’t afford to think small-scale. We’ll come back to that.
When you’re in the messy middle, it’s too easy to get absorbed in day-to-day production and lose sight of the build.
One major stumbling block at this stage is recruiting on potential rather than fit, then failing to support the agents you bring in. Without a system in place for recruitment and onboarding, backed by your budget and hard-wired for accountability, all you’re building is a money pit.
Building a team of 10 agents and up requires the team leader to think like a business leader.
Lisa explained it this way:
“The biggest thing across the board is that there has been a gap in the industry for years where we give everybody a license, we teach them how to sell homes, and we expect that they know how to run a business. And so I think…we don’t know how to run it as a business and therefore we don’t run it as a business.”
Luke added a harsh reality most team leaders don’t think about when they’re growing their teams:
“Every single (leader) that I’ve talked to that has made it through, they either lost money in the messy middle or they went down significantly in income. And that is also what kills the team leader…because you were making, let’s say a couple hundred thousand dollars a year, quarter of a million…. And all of a sudden, George Laughton, he told me he went down to making $65K is what he was paying himself….Now he’s doing a billion dollars with his…brokerage, but he went down to making $65K.”
Bigger isn’t always better. But if your plan is to grow to mega/enterprise level, there are things team leaders go through on that path that don’t get talked about nearly enough.
The Two Models Worth Building Toward
No one wants to stay in the messy middle, or even at the large team stage described here. These are danger zones. Something to get through on the way to something better.
But whether you have to depends on which model you choose.
Looking at all four models, two are worth building toward for the long haul.
- Rainmaker/Navy Seal: the path for team leaders who want to stay in production, maximize personal output, and build a highly-leveraged W2 staff around them
- Mega/Enterprise: the path for team leaders who want to scale agent count, build recruiting funnels, and operate like a true business with SOPs and tiered systems
If you’re looking at those two and wondering which is going to be the best fit for you and your team, Luke offered a quick question that can clarify the situation:
“It’s not only your skill and what you love and all that you’re good at there, but it’s also what type of lifestyle do you want?”
Some lifestyles are more labor-intensive than others, as Byron pointed out:
“If you hate the idea of working seven days a week, well, on your path to building a hundred-plus million-dollar team, this is not for you.”
There are sacrifices team leaders must make if they’re determined to grow past the Rainmaker model and scale to $100M and beyond.
“If we want to get to the real talk about what the messy middle looks like, it looks like months that pop up where you’re taking money from your savings from your past production to float the W2 salaries payroll that is hitting every single two weeks… There have been times where I know I have had to go into my savings to cover payroll and, I’ll say it, multiple times inside of that messy middle because you’re trying to get to the other side. You’re trying to get yourself potentially during that messy middle out of production, if that’s in line with your end goal and what you’re building. And so the messy middle is not only a danger zone, but it is a very expensive place to be. And there’s no reason ever to be there unless you are committed to getting to the other side.”
How to Know Which Model You’re Actually Building
Byron introduced a matrix from Gino Wickman with four categories team leaders can use to get clarity on your strengths and weaknesses, as well as the kind of business model that will serve you and your team best.
Those four categories:
- You love it and you’re great at it
- You like it and you’re good at it
- You don’t like it, but you’re good at it
- You hate it, and you’re not good at it
Lisa volunteered some examples, saying she hates selling but is good at it (#3). She also hates managing people and isn’t good at it (#4), which is why she has seven managers on her team.
Byron used himself as an example of someone who loves building businesses and who loves working on the business itself.
Take a look at the four categories for yourself and apply them to the real activities involved in running a real estate team:
- Recruiting
- Onboarding
- Training
- Selling
- Managing people
- Investing money back into the team
Not every team leader’s goals or strengths line up with the mega/enterprise model, and Byron walked through some tell-tale signs this model may not be the best fit:
- You hate investing money back into the team
- You’re not good at saving money, meaning you won’t have the runway to get through the messy middle
- You hate the idea of working seven days a week on the path to $100M
- Managing people drains you and you’re not good at it (and you can’t yet afford seven managers like Lisa)
- You don’t have or want to build a recruiting funnel with real budget behind it
- You’re fine with running a smaller team with a smaller total revenue as long as your team is thriving and your clients are happy
From 50-plus interviews with the top team leaders across the country, Luke found a consistent profile among those who broke through the messy middle. The common thread had nothing to do with market conditions or price point. The team leaders who build to $100M and beyond share a recognizable set of traits:
- You love helping other agents grow their careers, not just your own production
- You’re passionate about recruiting and good at it
- You love working on the business itself, not just in it
- You’re willing to take money out of your own savings to float payroll and keep building
- You’re comfortable going down in personal income for two to three years to get to the other side
- You think in terms of systems and operations, not just transactions
Not every team leader is going to reach $100M, and that’s not the goal, anyway. The goal is knowing which build fits your business and your life before you spend five years in the wrong model (or on the path to it).
Leading a mega team isn’t the only way to succeed in real estate. But if that’s what you’re building towards, this webinar should be on your watch list.
BAMx members can watch the full replay anytime. They’re also the first to get a heads-up about our upcoming BAM Camp Team Leaders on September 22-23.
This is the #1 mastermind event for real estate team leaders and operators ready to break through to $100M and beyond.
Check out the speaker line-up, the curriculum, and the perks on the event page. BAM is hosting this smaller in-person event for 100 attendees at the Fairmont Scottsdale Princess in Scottsdale, Arizona. And yes, there’s a VIP option, limited to 10 seats.
