In a recent survey on the state of the CRE industry, the Massimo Group found that integrated teams were becoming more and more common. In addition, the more tenure you have in the industry, the more likely you are to have a team, and the more money you make.
There are many ways to design a brokerage team, but the most effective teams are built with a cohesive structure and dynamic partnership in mind.
The broker team
The majority of brokerage firms will display some form of hierarchy by their very nature. This usually includes partners within the lead broker team, including senior, full and junior partners.
- Senior partners will typically handle deals valued at more than $20 million
- Full partners will deal with $5 million to $20 million transactions
- Junior partners will focus on $3 million to $5 million deals
- Associates will delve into transactions smaller than $3 million
This structure, of course, varies depending on the size of the brokerage firm, the size of the market and the success of the firm.
Associates are typically entry-level brokers who are new to the commercial real estate world. They may have just finished their degree, a certification or internship program. Though associates can take on clients of their own, they also serve a valuable role assisting the team’s partners on larger transactions.
There are three common ways to approach broker-generated commissions.
1. Brokers who prefer to work solo generally agree to retain 90% of their commission. The remaining 10% is placed in an operations fund that supports the firm’s auxiliary team and supplemental resources.
2. Brokers who work collaboratively with lower-level partners or associates tend to draw up commission splits. This is normally a 75-25 split that occurs in two scenarios. If a senior partner enlists a junior partner to be the lead on a transaction valued below the senior partner’s general threshold, the junior partner will retain 75% of the commission. If the role is reversed and a senior partner is called in to help with a deal larger than the junior partner’s threshold, then the senior partner will receive the 75%.
3. A 50-50 split is generally put into place if a partner agrees to work side by side with a fellow broker. If seniority is a factor, the higher-level broker is usually given 60% of the commission after the operations are funded.
The operations and support teams
Besides the brokers and partners, there are other contributors who are critical to a firm's success. Affiliates, mentees and interns provide additional (usually administrative) assistance to help prospect and get deals done.
Broker affiliates may receive up to 50% of a commission when they are directly involved in a transaction, while mentees can receive between 25 - 50% depending on their level of involvement. Senior interns aren’t normally part of the commission structure. They do receive a salary, however, and may be eligible for bonuses when and if they’re able to contribute to a deal.
Then there is the team behind the scenes, also known as operations. The research manager and analyst provide valuable insight that will help the brokerage team analyze the market, its trends, and buyers and sellers. This information is generally integrated into marketing materials as well. The marketing director will handle outreach strategies that generate more leads and bring in more business. This may include social media efforts, blogs, bylined columns, media interviews and marketing materials that appear both online and in print.
A final position that can’t be overlooked is the transaction coordinator. This point person handles the brokerage’s closings and contracts. A broker is only as good as his last deal—and that deal is only as good as the valid paperwork submitted and retained—which is why the transaction coordinator cannot be overlooked. A financial analyst can also manage your records and help you plan for growth.
The operations and support staff are paid standard salaries, but can also be eligible for bonuses as the partnership group sees fit. These bonuses are usually allocated based on the position’s direct contribution to a specific deal or sales volume goal.
Decision-makers within the brokerage team should also realize that many individuals who comprise the support staff would eventually like to transition to the sales side of the brokerage. Opportunities should be provided in-house whenever possible to promote team-building, show trust and create a strong sense of morale.