Will Teams replace brokerages as the primary business unit in Real Estate Sales?

On the wall in the offices of RE/MAX Properties East in Louisville Kentucky hangs a sign:

"The strength of the pack is the wolf and the strength of the wolf is the pack."

For 20 years, they have thrived on the notion that the basic economic unit of the real estate sales industry is the brokerage. A patriarchal broker built a caring staff and helped agents develop thriving businesses of their own, and yet all hunted together by buying space as a group in newspapers and other marketing ventures, sharing office expenses in lieu of the agent getting an ever increasing share of the commissions. It has worked and worked well.

As brokers in general are aging and looking toward retirement, franchise chains are looking to grow, agents are looking to increase earnings in a more and more competitive environment, and the internet is lowering the barriers to entry and changing the rules of lead generation entirely, will the brokerage remain the basic familial unit of the real estate industry? Let's consider some basic differences and similarieties between brokerages and teams:

1. One Technology savvy person on a staff can generate literally thousands of leads per year via the internet. This can be accomplshed by either a brokerage or a team. In the past, lead generation was accomplished by more traditional media buying, where financial might was more of a determining factor in exposure. Bigger was better. In today's market, young and fast moving entrepreneurial  REALTORS can generate the leads needed where larger brokerages are often stodgy and have a slower decision making process and in many cases are stuck on the "old media" techniques that are now proving ineffective. Simply put, a small team can be every bit as effective as a large brokerage at generating leads and revenue via the internet.
2. Banks are now more willing to finance team operations as a business unit than they once were. This is especially true where adequate business systems in place for proper accounting and records managment. It is not uncommon for a well managed team to gross seven figures in commissions, giving them the size and clout to earn the respect of financial institutions and status as a going concern and not just as a "self employment" type of business.
3. Teams are making up a larger percentage of brokerages than ever. When a broker's market share can be affected significantly by the addition or loss of a team as part of the brokerage, there is significant leverage.
4. Branding a team can be every bit as effective as bradning an office. The general public does not perceive a significant difference between teams and brokerages. Their relationship is directly with the people who are assisting them with the buying or selling of their home. In many cases, this can be an agent specializing in working with buyers or even an assistant that is trained to handle closing issues. 
5. Agents are realizing that by forming teams that they can sell their business when they are ready to retire and receive multiples of the income they would have recieved without being organised and branded as a team. In many cases this can mean 3 to even 4 times the value simply created by having a good succession plan and exit strategy. 

All of the above factors get weighed against the backdrop of the broker still having the legal responsibility for the transaction and the financial responsibility of the escrow account and you have an interesting contest going on for how the "pack" is defined in the coming years for the real estate industry. Will the franchise and brokerage work with the young agents wanting to build their businesses into teams? It appears likely.

We know who the wolf is: It is the agent. But is the pack the brokerage? or is the pack truly the  agent team with the cooperation of a broker willing to take less of a patriarchal role?

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