How the 8z Employee-Owned Real Estate Brokerage Thrives

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One Colorado brokerage does things differently than all the others. It holds the title of perhaps the only employee-owned residential real estate brokerage in the country.

Prior to 2019, 8z Real Estate was not unlike other brokerages across the country, using a network of agents who are independent contractors. These agents were each responsible for finding their own health insurance, saving for retirement, paying taxes, and relied solely on commission.

That’s largely the industry standard, but that changed for 8z when its owner decided to make its top performers co-owners of the company.

Three years ago, the company created a partnership program allowing high-performing agents to become full-time W2 employees who earn a small salary and enjoy health care benefits, a 401K with matching business, a profit share, and a stake in the brokerage.

Ryan Carter | 8z Real Estate

The goal, says company president Ryan Carter, was simple: “Build an organization that lasts…beyond us – beyond me.”

To achieve this, 8z has created what is called a employee share ownership plan (ESOP). ESOPs are seen as a tool for companies to put in place a succession plan and provide employee benefits while retaining agents and recognizing top performers.

In real estate, where agents typically move to a new brokerage after four or five years, this ESOP could buy institutional knowledge that benefits the brokerage and its agents.

“You have this situation where they’re always looking, ‘Where can I get the most leads, where can I increase my potential and maximize my potential?'” said Brian Hock, managing director of Greenwich Capital Group. “When everyone is focused on the business or the brokerage in general, there is more incentive for teamwork and recommending business to others.”

Hock specializes in creating ESOPs and guiding businesses through the costly process of creating one. He did a search and found that 8z might be the only residential real estate brokerage that did. In a country with nearly 6,500 employee-owned businesses, 8z stands alone.

It seems the plan is paying off for 8z and its agents: the company has landed on the Real Trends 500 list for ratings and volume in consecutive years and has also won a number of local awards.

8z’s approximately 165 agents average 21 transactions per year and annual sales volume of $12.5 million, according to the company. Both are above average compared to agents nationally.

“A lot of times with brokerages, they’re built and the work is done on the backs of the agents,” Carter said. “Often the profits stay at the top. We think it’s broken in real estate.

Top performers become partners

A new employee-owner at 8z is Sergio Nazzaro, who joined the firm in 2017 as an agent and was made a partner this year.

Nazzaro, an Air Force veteran, had health care covered by the US Department of Veterans Affairs.

Sergio Nazzaro | 8z Real Estate

“I didn’t have it for my fiancee [and] it was a bit of a stressor,” Nazzaro said. “Now that I’m a partner through 8z, we have health care for me and my wife and for our child, who is coming in April.”

However, becoming a partner is not a given.

8z Agents must achieve $15 million in volume production for four non-consecutive years or $20 million for two. There is also a process to ensure that a partner fits the culture of the company. The benefits last as long as the employee remains with the company.

Partners receive a small W2 salary separate from the commission they continue to generate with transactions. The company also takes over health care and organizes profit sharing with partners.

Nazzaro said the benefits gave him a level of comfort he never had before.

“Now my level of survival and security, my salary, my health care and 401k and some future-looking things that might happen, I think my basic needs are being taken care of,” he said. . “Not only can I be in control and feel comfortable in my personal life, but it allows me to show up in a certain professional space for clients.”

How it works

ESOPs are highly regulated programs that, among other benefits, allow business owners to create a line of succession.

Brian Hock | Greenwich Capital Group

Once established, they also provide tax benefits to companies offering the ESOP.

According to the National Center for Employee Ownership, ESOPs are “commonly used to provide a market for the stock of exiting owners of successful private companies, to motivate and reward employees, or to take advantage of incentives to borrow money. to acquire new assets in pre-tax dollars.

Employees who participate in the program receive shares from the company’s trust fund, with awards made either based on compensation or seniority, and the shares vest over time.

“They can be used to defer their capital gains when they sell their business,” Hock said.

“It can be structured so that they don’t have to pay federal income tax when it’s 100% employee owned and the business is an S-Corporation,” he said. he adds. “You tend to have better employee retention, higher morale. Studies have shown that employee-owned businesses grow more than non-employee-owned businesses. »

“Your work pays you”

Angela Moss joined 8z and became one of its first partners when the ESOP was created.

Angela Moss | 8z Real Estate

She shared the idea that the program acted as an incentive not only for individual performance, but also for teamwork.

“It’s a nice carrot to say, ‘Look, if you work hard, it helps me. If I work hard, it helps you. We’re in the same boat,” Moss said. “It’s not that we’re trying to fight.

“Nothing is more satisfying than knowing that you are part of a bigger group, a bigger whole. It’s not just you in the trenches,” she added. “Your work pays off for you in the future.”

As for his solitary status, 8z Carter said he believes he puts agents in place to be successful at work and at home.

“One of my really fundamental visions is to support agents holistically, also in their lives,” Carter said. “Look at how they have financial well-being, work-life balance. These things in the partnership and the ESOP help support that.

Email Taylor Anderson