Opinions expressed by Entrepreneur contributors are their own.
Congratulations! You’ve had a good year of sales and leases, and it’s almost time for the annual office holiday party to celebrate. But you’ve also been having some thoughts: maybe looking at switching the real estate brokers you’re currently with, or perhaps that it’s time to fly the nest and start your own. Whichever is the case, picking your second brokerage firm is going to be a more important decision than selecting the first.
Why is that?
Everyone in your professional circle knows you work at that current firm. That means you’ll have to rebrand yourself with a new one, and switch over all current marketing, clients and prospective clients. Neither are quick, or inexpensive. Just a new box of quality business cards easily runs $50, so you better devote some serious thought before switching a license over.
If the decision is one of becoming a licensed real-estate broker, you’ll have to qualify to take the broker’s exam based on the number of years you’ve been licensed as an agent and the number of transactions closed over those years (this is based on a points system here in Texas). Then you’ll have to go through the legal state and local real estate commission paperwork of creating a legal entity (business), naming it, and then paying additional fees for licensing and errors and omissions (E&O) insurance.
I’ve been selling real estate for over 18 years in multiple states (Texas, Maryland and Virginia), and started by working at a large and well-known brokerage after getting my license in 2003. I went on to a number of other brokerages, ranging from medium to one- or two-person offices, and noticed that there are only four things that really matter when you are looking to switch, or create your own.
Related: 6 Business Models to Win With Real Estate
When it comes to commissions, higher is not always better, but most of the time it is. The higher the commission split, the more money you’ll have for online leads, brand building, buyer concessions, dinners with clients and social media marketing to drive in new business. The only downside with a higher split is the lack of mentorship and assistance from your broker. If you’re hard headed like I was, you throw caution to the wind and spend that extra money at the club for bottle service on Saturday night to impress your broke friends. Now that I’m older and somewhat wiser, however, I think the better move would have been to take a lesser split and gain a mentor and/or an available broker instead of feeling as though I was stuck on an island by myself with no one to call for help when a deal went sideways.
Brokerages, especially large and well-known ones, usually have fancy names for fees they charge agents as an excuse to take their hard-earned money every month. The term might be “office fee”, “technology fee”, “administrative fee”, etc., and are used by brokers to pay monthly overhead, including rent. I consider them absolute garbage, not least because they deter you (the agent) from spending for more marketing and online leads. At my brokerage, we have no office fees, and derive no small pride from that. We keep overhead low to allow more flexibility for trying new marketing and online lead solutions, which means more opportunities to close more deals and help more people.
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So where does the split given to the broker really go? I would ask myself that every time I received a commission check (and the bigger the check, the more I thought about it, and the more I resented my broker). Were they providing me with leads? How about providing daily social media marketing? Did they have any paid graphic design tools that agents could use? Were they helping to improve my brand? (Meaning something far more than office swag mugs and pens with the company logo on them.)
Mandatory office meetings
Other than a way of finding out which new company listings are about to hit the market and networking with other agents, I found mandatory office meetings to be an absolute snore fest. Let’s be honest: the best training is field training. For example, you might go out and get a house under contract, then hit a problem. What most people don’t realize is that there is always a problem in every single real estate transaction. Some are larger than others, of course, and usually a require a diversity of solutions, so instead of listening to an hour or two of “sales theory”, it’s far better to reach out to a mentor when a situation arises. At my firm, we have an optional online weekly training, along with an optional monthly lunch or happy hour. Agents can reach me between 7 a.m. and 11 p.m. every day, including weekends and holidays. There is also a legal support hotline that our commission provides to handle any questions regarding contract law.
Related: Why Meetings Are One of the Worst Business Rituals. Ever.
Lastly, if you’re looking to make a move to a new brokerage, it’s vital to know what you’re looking for and which brokerages are going to have it. Following your licensed friend to a firm simply because he or she loves it is not a predictor of a good experience, especially if you wind up closing sales and they don’t. (It’s your business and your money, not a feel-good story.) So, interview at as many firms as it takes until you find a good fit, or do what I did, which is to wait until you qualify to take the brokers exam and then create your own brokerage.