Yes – there are examples of successful partnerships, but since starting this business I’ve seen hundreds of REALTOR™ partnerships fail – and some in the most catastrophic ways.
Things to consider upfront
Successful partnerships are built on trust, an upfront understanding of roles and responsibility, and a well-written contract. Here are the top five things agents from failed partnerships have told me:
- Make sure you know who owns the partnership branding: logos, flyer/business card designs, letter/email templates, and customer service system
- Who owns the website? Remember that a high-ranking website is a valuable asset and both partners might lay claim if/when the partnership fails.
- How will the clients be split if the partnership fails?
- How can one party buy out/leave the partnership?
- In case of disagreement, who has the deciding vote?
Why they fail
Mixing work and friends – The oldest, but most common reason in the book. There nothing sadder than when friendships are pushed aside for money – I see it happen all the time. Two REALTORS™ being friends is not a reason to form a partnership:
“A friendship founded on business is a good deal better than a business founded on friendship.” – John D. Rockefeller
Mixing work and love – Yikes! I’m still not sure which comes first: the divorce or the failed partnership – but in either case these are ugly. There’s nothing worse than waking up and seeing slanderous language on your website written by your former spouse who’s managed to guess your password. I should add that though many “spouses selling houses” end in disaster, some of the strongest and most successful partnerships I’ve seen are married couples.
Joint Liability – One partner taking a contractual shortcut or not playing by the rules jeopardizes both partners. Remember that both parties are jointly and individually liable for the business activities of the other. If your partner disappears, you’ll be liable for all the debts, not just half of them. If one partner considers the other to be a liability then the partnership will fail.
Commission Split – Here’s the number-one reason partnerships end: one partner feels they do more work than the other. Having a suitable mechanism to deal with this is imperative to success.
So why have a partnership?
Some of the most successful businesses in the world are partnerships. I myself have a business partner (my twin brother) and we’ve been working together for many years. Here are some of the reasons why having a partnership can be a good idea:
- Partnerships can be stronger because of reinforced support and motivation
- Partnerships can spend more on marketing
- Skills can be shared and learned by each partner
- Two people working together can accomplish more than twice the work of one