2019 Aug 29th

Real Estate Teams Take Over the Hoboken Market

Nowadays, every realtor is on a ‘team’.  What does that mean, exactly and why has this developed?  Interestingly, most consumers are pretty clueless about how the real estate brokerage industry is structured.  First – a little update on terminology.

Much of the general public does not know the difference between a broker and an agent.  The terms are often used interchangeably though they have different meanings.  In general, a brokerage is the actual company (Century 21, Remax, Keller Williams, etc).  In New Jersey, the brokerage company must have a brick and mortar office.  They can’t be internet only based.  Every physical branch of the brokerage has a broker who is in charge of that office.  It takes 3 years of experience as an agent, 150 more hours of school and a different licensing test to become a broker.  All agents must work under a broker who is legally responsible for the agent at a brokerage company.  Some agents become brokers just for the sake of getting the higher-level license but they don’t necessarily open their own brokerage.  They continue to work just as an agent would, parking their license at a brokerage and working under the managing broker of that brokerage.

Another complication is that real estate agents are considered independent contractors in most cases.  Some brokerages, like Redfin, hire agents as employees.  They are paid a salary instead of working purely on commission, may receive other typical employee benefits and also can be given much more direction in how to carry out there work – the bright line test for determining legally if an independent contract is really that.  Remember, if a company has employees they have to fork over payroll tax on those employees, and then may provide vacation pay, health insurance, 401k plans and more.  It is way more beneficial for the brokerage to have as few employees as possible and practical.

So what is a realtor?  That’s a marketing term made up by the National Association of Realtors to designate which agents and brokers are also members of the NAR.  It also means that realtors are obligated to follow the NAR Code of Ethics.  All realtors are agents or brokers but not all agents are realtors.  Except here in Hudson county, in order to be a member of our local realty board (and therefore access the MLS) it is required to also be a member of NAR.  But the biggest change over the past few years has been the appearance of teams.

Teams are a group of agents (and possibly brokers) all marketing themselves to the public under the team name.  Often, the team name is the name of the lead agent – i.e., The Sally Smith Super Seller Team.  Sometimes, the team name is more generic, like The Hoboken Heavy Hitter Team.  There are as many permutations as to how a team is structured as their are teams.

In general it works something like this.  Sam Smith has been an agent for a while and is doing well.  He has a pretty big past client base, repeat clients and lots of referrals.  He “hires” an administrative assistant to help with the back office paperwork and scheduling.  Then he “hires” a buyer’s agent solely to take buyers out to see properties.  Next he may “hire” listing agents to solicit sellers to list their property for sale with the Sam Smith Super Seller Team.  Often, all the transactions done by the team are done under Sam Smith’s name.  If one were to look at the MLS, it would appear that Sam sold an awful lot of real estate.  In reality, the team members are the ones handling many of these clients and transactions.  It’s great for Sam’s marketing to be able to say he did $100 million worth of deals last year.  That sort of omits the fact that it was the 10 team members together with Sam who actually did that volume but it was all put in Sam’s name.

Why would agents agree to let Sam put her name on their business?  Team members tend to be newer agents.  New agents often don’t have many leads or much business of their own.  In exchange for Sam handing them Zillow leads (for which Sam pays dearly – sometimes to the point of unprofitability), or sending them on listing appointments, the team members give Sam nice cut of the commission on everything they do.  I’m told that this cut is often about 30% or more.  Sam is paying for the marketing and generating the business, building the team brand recognition, and the team members contribute to Sam’s bottom line.  Team members receive administrative support, graphic design, transaction coordination, training and direction from Sam.  When it works, everyone wins.

Why does any of this matter?  As a consumer, when you hire Sam to sell your home you might expect to actually be working with Sam throughout the process.  But depending on the size and nature of the team, Sam’s involvement  with you may be minimal and you will interact with the junior team members instead.  Since all teams are structured and work differently, this is something about which you might be wise to inquire during the hiring process.  Team members may be very new, inexperienced agents – naturally drawn to the big name teams by the lure of lots of deals, good marketing materials, and hand’s on training by the team leader.  (New agent training is not something for which many brokerage companies are known, though it’s gotten better over time and some companies are way better at it than others).  As a consumer, you may not care if the team member is handling things as long as they are supervised by an experienced agent and do a good job.

Some teams may be as small as two people.  Others may be huge.  They essentially become a brokerage within the brokerage.  When some teams expand too much or too quickly, the team leader becomes a manager and is no longer really doing real estate.  They spend their time on marketing (which may mean negotiating with Zillow on buying leads – paying to be a “premier agent” as you see on Zillow’s site), hiring new team members to replace ones who leave, expanding their team into multiple markets and generally doing what it takes to grow their business.  As more of the real estate business springs from internet sites, the potential for teams to reap the rewards of internet-based lead generation will continue.  As the industry continues to transform with the increased prevalence of companies like OpenDoor not only making instant offers on homes but offering mortgage services, the role of agents and the importance of teams will continue to evolve.  Like everything, when making a big financial decision, it is important to understand these structures and perform due diligence to know what you are buying before you sign a listing agreement or go out shopping for a new home.


  1. JC

    Good stuff…thanks for sharing. As long as this team effort is properly disclosed To seller when they sign on, I see no problem with it. Who wouldn’t like a “team” of people working for them. Might as well have a mortgage broker, attorney and title comping part of the team.

  2. Lori

    Agreed, JC. It also makes a big difference how many people are on a ‘team’. Some are as small as one agent and an assistant (which is really like working with a dedicated agent. Others have dozens of agents and admin. staff. Very different animals and very different service provided by each.

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