Staff numbers and ratios: what works best for agencies?

One of the most important decisions you’ll make as a principal is the size of your team. For every team member, there needs to be enough income generated to cover their role.

Employ too few, and your team will burn out and work ineffectively. Employ too many without the revenue to support them and you’re not going to stay afloat financially.

My wife and I met with some of our members in Melbourne recently, and we were surprised to discover that there are almost as many styles of running an agency as there are principals running them.

We talked to one principal with a team of 12 staff who holds a meeting every Monday at 8am sharp where they hash out the week’s work and targets. Another principal, with a similarly sized team, said his staff were self-starters who were off doing their own thing most of the time, only calling in when they needed support.

But however your business runs, you need enough income-producing staff to cover operational costs, including the salaries of your administrative team. The numbers I give below are observations, not recommendations, as each principal will know what works best for their unique set-up, but they will give you some ideas for structuring your team.

You need the right balance of revenue-producing staff to admin employees.

So what is the size of a typical real estate team?

Sales team – smaller agency

The formula that I see most commonly with small agencies is one lead sales agent who focuses on vendors and clients, one or two junior agents to respond to buyer enquiries, and one person handling administration and providing marketing support.

One of the common problems that can arise is your team can become too administration-heavy; admin roles don’t generate any income. If your administration staff numbers start to equal or outweigh sales staff, you might have a problem.

Much of your administrative work can now be outsourced or handled by software, and savvy agencies will look very carefully at how to use software to streamline their processes and reduce costs.

Sales team – larger agency

In a sales agency with 100-200  listings a year I would expect to see:

• 1 to 2 selling principals
• 3 to 6 independent sales agents
• 1 to 3 marketing and administration staffers, including a front office manager, and possibly a finance broker, although most agencies find it more efficient to outsource this role.

Property management team – small agency

Here, the traditional number is one business development manager and one property manager for between 60 and 200 rental properties. This does depend on the level of automation and whether or not the team uses sophisticated property management software, which can obviously save time and money.

Property management team – larger agency

A team managing between 300 and 800 property management listings a year might have in their property management team, depending on the level of automation:

• 1 business development manager (although we’ve observed that most entrepreneurial business development managers want to go into sales, so it can be tricky to find someone to suit the role.)
• 1 to 2 senior property managers overseeing ‘pods’ or ‘cells’ of junior property managers
• 3 to 4 junior property managers

Keeping an eye on the bigger picture

One thing I’m sure we’ve all observed is that an agency tends to be more profitable if the principal continues to sell some properties. This profit doesn’t need to be split with an agent, but can go directly into the business. Being at the coal face and selling also allows you as a principal to keep your hand in sales while running the rest of the business.

As with running any business, focusing purely on sales is misleading, especially in an industry such as real estate where market sentiment can have such a huge impact.

What is equally important is keeping track of expenses, and reducing them where feasible. Outsourcing where possible (for example hiring a virtual assistant) is always worth considering, along with using new technology to reduce costs. Remember, cost control is under your control.