Realtor partnerships seem to be gaining in popularity. In addition to the ones that already exist, there are no doubt thousands of others that are contemplating the option. Many are experiencing trepidation for a variety of reasons, with a bottom line concern that the partnership won’t work and valuable time will be lost.
Those Outside of Real Estate
There are, of course, partnerships in business outside of real estate and in fact many facets of life. I watched a morning television show today while I exercised. The menu each day is politics, and today the various hosts and guests discussed the benefits that President George Bush gained from his relationship with Republican strategist and campaign manager Carl Rove. There is a similar synergy, they purported, between Republican nominee Mitt Romney and aide Eric Fehrnstrom.
The Ying and the Yang
A partnership is a balancing act, and there is a “ying and yang” component to those that are truly successful. The “power of two” can be best leveraged if the weaknesses that one partner has are strengths of the other and vice- versa. For realtors who are contemplating such a venture, below are some other important things to consider.
- Production Level: Most partnerships work best if there is a 50/50 sharing of commissions. Otherwise it becomes too confusing and the number of misunderstandings are bound to increase. An equal distribution of commission, however, can engender resentment unless both members of the partnership have a history of generating similar volume.
- Work Ethic: Both of you need to have a similar will to succeed. Although sometimes difficult to measure, if one member of the partnership is much more driven than the other, frustration on the part of both agents will be prevalent.
- Goals: Similar to drive, you should be in concert on both short term and long term goals.
- Time Commitment: Are you each capable of committing a comparable amount of time to your business? If there are significant time constraints for one of you and not for the other, resentment is sure to set in.
- Longevity: Discuss the passion that each of you currently have for real estate and your intention for the long term. If one of you are commited for fifteen years and the other for five, that information should be shared up front so that there are fewer misunderstandings in the future.
- Philosophical Perspective: There are many gray areas in real estate and many different ways in which to conduct yourself. What one considers great business acumen may be considered poor form by another. To an extent that is feasible, ensure that both of you have a similar perspective on what is acceptable practice and what is not.
- Financial Need: If one of you has a much greater financial need than the other, this implicates the possibility of significant future differences in many different areas.
- Doubling Your Production: Will this partnership double your volume production? If not, then be sure that the other benefits to the partnership are worth it to you. If you are sharing the commissions equally and yet do not at least double your production, then by definition you will experience a loss of gross commission income.
If the chemistry is right, partnerships can be dynamic, energizing and extremely challenging for others to compete with. Your prospects for success, however, will be much greater if you’re mindful of the considerations above.
Are there any other issues that you think should be considered before a partnership is established?
If you have contemplated a partnerhip yourself, what has impeded you from doing so?
If you are already in a partnership, what advice would you give to those who are weighing their options?
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