Stay on the Right Side of the License Law with Your Team

Real estate teams may be an increasingly popular business model but remember that the Illinois Real Estate License Act applies and affects how teams can operate like a division within a brokerage. For an in-depth discussion of how the Act affects employment, agency and marketing involving teams, read “Teams – What Are(n’t) They?”.

You will find additional team legal resources and articles on the Illinois REALTORS® website at https://www.IllinoisRealtors.org/Legal/Legal-A-Z/Teams. Members are also encouraged to download the FREE team informational resource, “Teams and the Illinois Real Estate Brokerage Firm” at http://bit.ly/TeamsDownload

REALTOR® Alice Chin has built a successful business and credits her nine-person real estate team with helping her better use her time, produce more and create a satisfactory work-life balance.

Like many REALTORS®, Chin opted to create a real estate team rather than go it alone. The Alice Chin Team in Naperville operates as a functional unit under the Keller Williams Realty Infinity brokerage.

“I might have been able to produce on my own the same amount or close, but not without literally burning out because there are just so many things that need to get done in a day,” she said. “If I tried to do everyone’s position, it’s not possible.”

[LEGAL NOTE: Remember that teams are not separate legal entities — they are not incorporated and critically, they are not themselves licensed. Teams are similar to divisions within a company, in this case the real estate brokerage firm under which they operate.]

So how do you know if the team concept might work for you and how can you ensure that you are successful if you do go that route? Some Illinois REALTORS® share their strategies for navigating the rules and rewards of real estate teams.

REALTOR^® Tammy Mitchell Hines formed a team in 2008 when her business was growing quickly and it was no longer feasible to juggle all the details by herself. She had an unlicensed assistant working for her but decided to hire a buyer’s agent to share the workload.

“I had been doing 180 transactions a year on my own and I knew that the only way to have a real life and a family was to have a team because I could not do it all by myself,” says Hines who is now managing broker of Tammy Mitchell Hines & Co. with offices in Columbia and Fairview Heights.

Her team has grown to two listing agents, five buyer’s agents, a full-time photographer, a marketing director and two support staff. The division of labor has allowed Hines to step into the role of manager and trainer.

REALTOR® Kyle Killebrew with The Real Estate Group, started the Killebrew & Co. Real Estate Team in Springfield 11 years ago with a buyer’s agent and now has a team of nine. In downstate communities where median home prices might average in the $150,000 range, successful agents must do more volume to get ahead.

“If you do a good job and build enough clients, at some point you’re going to need some help,” Killebrew said, but added that you don’t want to form a team too quickly. Make sure your business is solid and consistent before you expand.

Chin said she also sees teams as a way to build a business legacy of sorts.

“The best way to work around (someone getting sick or retiring) is to build a team of individuals who are working toward the same goal so that if something happens to the rainmaker or the original member of the team, it could still go on as a business,” she said.

You’ve decided to create a team. Now you need to decide how you will structure it.

REALTORS® and siblings Jason Stratton and Sophia Klopas formed a traditional family team, The KlopasStratton Team under the Berkshire Hathaway HomeServices KoenigRubloff Realty Group in Chicago.

“The best part of having a business partner, and the fact that it is my sister, is that we’re sounding boards for each other,” Stratton said. “We call each other a minimum of five times a day, but I want to say that on a normal day it’s closer to 10 to 15 times.”

Stratton had worked as an options trader in finance before his sister encouraged him to move beyond personally investing in real estate and get a license and work as a REALTOR® with her as a team. Now he can’t imagine working in real estate with anyone else.

“You can’t do the volume that we do and deal with the personalities on a customer basis and not have someone to help you with the load mentally,” he said. The fact that they are family makes it easier to have honest conversations about the business and their shared goals, he said.

Chin and Killebrew created teams where they are the “rainmaker” whose name is the public face of the team.

That said, Killebrew says on today’s team everyone is striving for a common goal and consumers aren’t as concerned with working directly with the rainmaker as they are hiring a successful team.

Hines went a different direction and created a brokerage and team all in one, because it made more sense financially even if it involved more paperwork and licensing.

“The first thing I did was look at the financials—how much I paid the company that I was with versus what my expenses would be to form my own brokerage. I found that, although there were a few extra expenses, because I had already been paying so much of my marketing on my own, the difference was not significant,” she said.

[LEGAL NOTE: It is important to remember that no matter how a brokerage structures its compensation or business modeling, a team is always only a functional unit within a brokerage and not a separate legal entity. Also, all licensed team members must be compensated through the sponsoring brokerage company.]

One of the most important things you can do is hire people in the right order, Chin says. For example, don’t hire a buyer’s agent before you have someone to help with administrative duties. Once you figure out what you want, find a person who is the right fit and look for people who want a career not a job.

“We have a pretty rigorous interview process to make sure that the position they are in is not only the best for them, but also the best fit for the team as well,” she said. “I’m a firm believer that if you have the right person in the right position, they shouldn’t really want to change because they are going to enjoy the position they are in.”

Killebrew has found success giving a DISC personality test to all new hires. Then he can compare the personality traits of new hires with those of other team members and see if they will be a good fit.

Hines admits that finding the right talent can be one of the toughest jobs for the team leader. She’s had better luck recruiting newer agents who want to be part of a team atmosphere where they aren’t in direct competition with each other.

Besides hiring the right people, the next important step that can make or break your team is properly training them, Chin says.

“You are responsible for their success or failure,” she said. “Most times it’s not up to that individual, believe it or not.”

Team leaders also have to stand back and let people do the jobs they were hired to do, Killebrew said. One of the initial mistakes he says he made was always jumping in and taking over instead of delegating.

“Once you have that person, you have to build a checklist of the things you really want them to do for you and you’ve got to let them do it,” he said. “And, you’ve got to let them make some mistakes and there will be some and your client will know it because it will happen with them involved. It’s just part of the process.”

His team has created a series of detailed checklists that cover every step and scenario in the home buying and selling process and what each team member should be doing so that everyone knows their role and expectations. His team also meets three times a week to make sure everyone is on the same page.

“Having a team allows you to be proactive if you do it correctly,” Killebrew said.

If you are providing professional value and hiring people for the right positions, your team can be successful, but even then it might be inevitable that some team members might eventually decide to move on to something else.

Some REALTORS^® might be concerned about that, but Stratton said he thinks that scenario is the ultimate compliment and a testament to the successful team you have created. 

“If someone goes through us, ends up being a multi-million-dollar agent and goes off on their own, I couldn’t be prouder,” he said.

10 Team Takeaways

1. Before you create a team, run the numbers to determine if it makes sense for your business.
2. Don’t create a team at the first sign of success. Make sure your surge in business is sustained and consistent before you hire additional help.
3. Grow your team slowly and add people to fill positions as they become needed.
4. Once you hire your team, train them properly for the job. You are responsible for their success or failure.
5. Create a detailed checklist of duties so that everyone on the team knows his or her responsibilities.
6. Step back and let team members do the job you hired them to do. Don’t micromanage; delegate.
7. Meet frequently as a team to make sure everyone is on the same page. Be careful about sharing opposing parties’ confidential information – depending on how your team operates.
8. Deal with conflicts honestly and quickly so they can be resolved before they become bigger issues.
9. Hold team members accountable and be prepared to let them go if they aren’t the right fit.
10. Finally, and most importantly, make sure you and your team are following all the regulations of the Illinois Real Estate License Act , the rules under the Act and the REALTOR^® Code of Ethics.