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More Teams = More Regulation? NAR Thinks So

The More Real Estate Teams, The Better?

As real estate teams become a fixture of the contemporary real estate environment, it’s important to understand that real estate teams will attract the attention of real estate regulators. In recent years, 24 states have statutes or formal regulations in place that address real estate teams.

“These regulations may continue to be relatively minimal, limited largely to advertising rules. Yet, as teams continue to develop and as the practice continues to evolve, it is possible that more extensive regulations will also develop and evolve,” says NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri, and CEO of RE/MAX Boone Realty.

According to a recent NAR study, teams are becoming more common in the real estate industry as an increasing number of Realtors® consider themselves a member of a real estate team, according to a new survey by NAR.

NAR’s 2018 Teams Survey found that 26 percent of respondents were members of a real estate team while 73 percent were not a member of a real estate team.

The definition of a real estate team varies and some states describe it as two or more real estate salespeople or licensees who work together to provide real estate services, or who hold themselves out to the public as a member of a team. Real estate teams are an appealing option as they help sales productivity by letting individual team members thrive with their own strengths and skill sets.

“The transformation of the real estate landscape continues to change the way Realtors® do business. Over the last few years, Realtors® have continued to embrace changing technology and business tactics that are modernizing the industry. Real estate teams are an increasingly popular business model in response to consumer demand for a wide range of specialties from their Realtor® as they expect constant support throughout the real estate transaction,” said NAR CEO Bob Goldberg.

The median year that real estate teams were established was in 2014 and Realtors® typically joined their current real estate team in 2016, according to the report. Nearly 30 percent of Realtors® had two people on their real estate team, with a median number of four team members.

Among respondents that are not currently on a real estate team, 16 percent have previously been on a team, while 84 percent have never been a member of a real estate team. For Realtors® that are not currently on a real estate team, nine percent have strongly considered the prospect and 30 percent have briefly considered joining or starting a real estate team.

The survey asked Realtors® to choose from a list of activities to explain their primary functions on a team. The most common answer was agent (88 percent), followed by broker (50 percent), marketing (47 percent), administrative (47 percent) and transaction coordinator (34 percent).

“This growing trend not only helps our members share workloads and responsibilities but also allow Realtors® to benefit from the experience of fellow professionals. The synergies of a well-functioning team are often an incentive to relinquish some of the independence of a solo practitioner and offer many attractive features for both licensees and their customers,” said Mendenhall.

The most common compensation arrangements within a real estate team were fixed commission split (38 percent), graduated commission split (22 percent), and 100 percent commission split (13 percent).

In July 2018, NAR invited a random sample of 50,436 active Realtors® to complete the Real Estate Teams survey. A total of 3,483 usable responses were received for an overall response rate of 6.9 percent. At the 95 percent confidence level, the margin of error is plus-or-minus 1.66 percent.

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