Real Estate Brokerage Tips
You might be the ideal candidate to launch your own real estate agency if you are a self-starter with a fantastic work ethic and can really bring out the best in other real estate agents. Before you can call yourself a broker-owner, however, there are a number of procedures you must complete, including meeting state licensing requirements, developing a business plan, and implementing lead generation tactics.
To find out what steps you need to follow on launch your company, read through our guide to launching a real estate brokerage.
1. Ask Yourself if You’re Ready & Why?
Starting your own brokerage is similar to starting a business because both involve significant risk with the potential for enormous gain. Anyone starting their own brokerage should be ready to put in a lot of hard effort and long hours, with no assurance of financial benefit. Therefore, it’s crucial to examine the benefits and drawbacks of starting your brokerage before taking the plunge.
Depending on your perspective, the glass may be half full or empty here, but it is also obvious that you are taking a chance that might go either way. If you believe there are more drawbacks, you can consider forming a real estate team rather than a brokerage. If you decide that the advantages exceed the drawbacks, you may want to think about whether you would make a good boss and whether your personality suits being in control.
The truth is that not everyone is cut out to be a broker-owner, so before taking another step toward being your own boss, you should ask yourself a few questions. Recall to provide an honest and sincere response. You risk losing a lot of money and potentially damaging your reputation in real estate if you don’t carefully consider the positives and negative aspects of your personality. Then you can look at:
Are You a Leader or a Boss?
Being a leader—someone who mentors and effectively communicates with others—is the first step toward becoming a great broker. Being a broker is not for you, though, if you are the “bossy kind” who enjoys giving instructions, directing others, or thinking that only your opinion matters. A good broker must support their agents, stand up for them, and most essential, be willing to offer advice.
Do You Need to Be in Control at All Times?
Agents aren’t clones or machines. They must be permitted the liberty to be who they are. This does not stop agents from breaking the law or accepted real estate practices. However, as a broker, you want your agents to be creative in order to surpass client expectations without continually seeking your approval for every deal or encounter.
Are You Well-organized?
You need to be well-organized and have processes in place to keep the business running well because you will be running both the front- and back-ends of your company. You should have expectations for yourself and your agents to have processes in place as a framework for how their business should operate, even while you want to provide room for flexibility. Good management is learned by doing.
Do You Have Connections in the Real Estate Industry?
Real estate is a sector where the proverb “it’s all about who you know” holds true. To collaborate easily with other businesses and agencies, you must ensure that you have a stellar reputation among your peers and clients. Building your clientele is crucial to your success as an agent, and a broker-clientele owner’s is no different.
Do You Have Strong Communication Skills?
Your communication skills must be excellent because you will be communicating with brokers, personnel, clients, and other parties as the owner. Building your brand and reputation requires diligent and effective communication with everyone involved in your brokerage. Agents will also look to you for mentoring and direction, so you must convey strategy and offer advise when necessary.
Do You Want a Partner?
You don’t have to start a brokerage on your own if some of the answers to these questions make you uneasy. Finding a partner to share the management of the team or the financial burden may be preferable. This does, however, imply that multiple decision-makers will be involved in the process.
Why Am I Taking on This Challenge?
Your final consideration should be: Why am I embarking on this challenge? if you believe your personality is prepared for it. If your purpose is purely financial, it probably won’t be enough to get you through the challenges of opening your own brokerage. On the other hand, you will be more successful if your primary reasons are independence, a passion of the real estate market, and overcoming a difficulty.
2. Ensure You Meet State Requirements
- No matter how prepared you may be psychologically, you must satisfy the state’s standards for broker licensure before you can even think about starting your own brokerage. So, unless you have already enhanced your license, you need to complete more classes and pass the broker exam.
- As part of this procedure, you can anticipate taking courses in real estate concepts, real estate practices, escrow, real estate finance, legal aspects of real estate, real estate office administration, real estate economics, and real estate assessment. Before you may become a broker, you may need to be licensed as an agent for a certain number of years and have completed a certain number of transactions in some states.
- Numerous states permit you to finish your training online and at your own speed if you are ready to become a real estate broker but do not yet have your license. Consider Kaplan if you’d prefer the comfort of home study but still value a classroom environment. This school provides choices for live instruction as well as peer collaboration opportunities.
3. Prepare a Business Plan
A successful real estate road map is a business strategy. In order to give your brokerage the best chance of success, you must decide on “the game plan.” Using the company strategy, you may focus on achieving your targeted results by putting them in paper. Using this method, you can determine your overall business and financial goals, divided into long- and short-term categories.
If you need assistance creating this written strategy for your business, visit our more in-depth guide on building a real estate business plan. But there are other factors to think about while you draft your business plan:
Mission, Vision & Values
You should create a mission statement for your brokerage that outlines the goals of the organization in order to inspire both customers and employees. The vision statement captures the inspiration for the long-term direction you envision for the business. The values outline the standards you’ll uphold while you carry out your purpose and vision. These assertions provide direction and guidance for the future of your company.
Company Name
It’s crucial to be recognized by your name. You shouldn’t use your office name as an opportunity to be adorable or humorous. You must consult the County Recorder’s Office when selecting the name of your brokerage, especially if you plan to use a DBA (Doing Business As). Make sure your name is memorable and associated with real estate.
Finding it difficult to come up with a name for your brokerage? For ideas, look at our article on real estate firm names.
Target Market & Branding Strategy
- Your brokerage will benefit from taking the time to pinpoint your ideal client in order to better focus your efforts, unless you are the only brokerage in the area. Would you rather work mostly with customers who have high spending limits, those who value paperless transactions, or downsizing homeowners? Finding a niche to target is a wonderful place to start when developing your branding plan.
- You will use your branding approach to keep your business “top of mind.” In other words, your brokerage’s name gets mentioned whenever someone in your target demographic seeks out a real estate agent. To achieve this, one strategy is to design a powerful real estate logo.
Finances
- You need operating cash to cover your brokerage’s beginning costs when you start your own business. Because you won’t be selling real estate when your office is open, you must take into account the possibility that you will make less money.
- Startup costs typically start at $10,000 but can go up to $200,000. You should also make an estimation of your running costs for the first six to twelve months of operation. You can consider consulting with an accountant to estimate your costs. Additionally, you should think about how much money and what kind of salary you require to live comfortably so that you may concentrate on running your brokerage without jeopardizing your financial security.
Plan for Retention & Storage of Legal Documents
For a brokerage, maintaining an accurate transaction file is crucial. You are solely responsible and liable because you are the broker of record. Agents need to be told to follow a list of documents that you, the broker, need. Thanks to technology, documents may now be stored in the cloud using services like Dropbox. You can access these documents on your tablet, laptop, or phone.
4. Choose an Office Location
- As a broker, you must offer your agents and staff the chance to work in settings that promote success, safety, and productivity.
- Here are your options:
- Brick-and-mortar: A real workplace
- Virtual environment: Home offices for agents
- You must determine the size of the office space if you intend to use a physical location for your brokerage. A real office also comes with other costs to take into account, including those for staff, furniture, computers, copiers, office supplies, phone systems, and other items that can be expensive. However, this configuration can support a greater broker-to-agent commission split.
It may be less expensive to operate in a virtual environment where all agents and personnel work from home. Agents can be liable for the cost of their own furnishings, phones, and laptops. The broker and agent would receive a smaller portion of the commission under this arrangement. Costs associated with computers and phones would need to be taken into account if staff were to work from home.
No matter what kind of office you choose, you need equip it with the most recent technology to make sure it functions properly.
5. Determine Your Staffing Needs & Hire a Strong Team
You don’t need to assemble a staff right away just because your brokerage has been established. You won’t have time to handle all of the work, such as bookkeeping, administrative tasks, training, marketing, operations, and so forth, as your business expands and you become needed in other roles. Additionally, you should employ agents to work in the field while you handle larger deals and your entire broker-owner firm.
Employees
Whatever the size of your brokerage turns out to be, you need to make sure you assemble a strong team of people who will uphold your standards and the purpose, vision, and values of your business. Any or all of the following positions could fall under this:
Manager of Operations, Accounting, and Listings
Manager of Transactions/Training
IT Customer relationship management (CRM) system manager for marketing administrations
Recruiter
No matter how you organize your team, success depends on selecting the right working environment. When choosing your team, consider personality and values, as groups with similar work ethics tend to work well together. In order to foster a culture of mutual respect at work, your staff should assist your workers and the other way around.
A pro advice : is to constantly have access to an accountant and an attorney who have the knowledge to help you when developing your brokerage even though it is crucial to “watch your pennies” when starting and maintaining a brokerage. Establish a budget for hiring system implementation experts as vendors and consultants.
Agents
The success of your brokerage depends on the agents you hire, as they will produce the transactions that support your company’s finances. A mix of experienced and freshly licensed agents is usually and profitably hired if you wish to engage agents to operate beneath you. You must also determine whether you desire to hire experienced or newly licensed agents.
Hiring Seasoned Agents vs Newly Licensed Agents
Experienced agents require less “handholding” and arrive with their own database of clients, so they may quickly establish a brokerage’s reputation and contribute to its financial success. That being stated, you must keep in mind that an experienced agent may have a different working style from you when selecting one.
Newly licensed agents are frequently more eager to succeed and are prepared to take on new challenges or put in more hours. They can also be trained to function in a manner similar to how your company does, as opposed to experienced agents who might have developed negative habits through time. However, you will need to have a training program in place and a team leader to teach it if you decide to hire recently licensed agents. As a result, prepare to invest more money up front with fresher agents.
Unfortunately, real estate agents, whether new or seasoned, have a high rate of turnover, therefore you might wish to partner with a consulting company to support your hiring initiatives. While you want to ensure that your agents succeed, you also need to be ready for additional challenges that could eventually lead to a decline in the number of agents on your roster.
Data intelligence is used by businesses like Conroy, a real estate information platform established in NYC that is expanding to other regions, to impact hiring choices and raise retention rates.
Create Marketing Collateral
It’s time to start building anticipation for your new brokerage once you’ve decided on your company name, branding strategy, location, and personnel plan. Various methods are available, depending on your marketing strategy. For instance, you might wish to hold a grand opening event or run ads on Google, Facebook, or Instagram. However, you should also produce digital and printed marketing products that last longer, such as the following:
- a credible website
- company cards
- flyers, brochures, or postcards
- signage for properties
- House-opening indications
- Visit Prospects PLUS if you don’t already have a neighborhood printer in mind. More than 100 real estate-specific templates are available through this service, which you can quickly customize with the name, contact details, and listings of your brokerage.
7. Establish a Lead Generation Strategy
As an agent, you may have found a variety of natural lead generation methods, as well as a network of connections you can rely on for referrals. However, as a broker, you will probably be required to offer extra lead sources to help your agents, whether they are seasoned pros or newbies, expand their clientele.
Lead generating businesses exist to assist agents in finding buyers and sellers they might not have found on their own. For instance, you may give your agents access to resources like Zillow Premier Agent, which places them in listings as featured agents. Agents and brokers can connect with potential buyers and sellers using automated solutions provided by a service called Bold Leads through its CRM. Each tool provides a variety of programs that can be tailored to the agent’s financial situation.
To sum up
Starting a business is a challenging undertaking that calls for long hours, a lot of devotion, and significant risk, especially for a real estate agency. The reward, though, can surpass your wildest dreams. The greatest quote is attributed to Benjamin Franklin: “By neglecting to prepare, you are prepared to fail.” It is no accident that Franklin is shown on the $100 bill. You are positioning yourself for success as a broker-owner by making plans in advance, creating goals, and laying the groundwork.
