Real estate and how it works is already confusing even before you decide to become an agent. I spent 20 minutes explaining what a brokerage is to my highly-educated friends and I don’t think they still got it.
What I tell most people is that it’s probably not as big of a decision as you think. You aren’t stuck with any brokerage and I think that is the hiccup in their thought process. By all means, don’t go skipping around but understand that the average agent changes brokerages 5 times. It happens.
With that said, what should you pay attention to when looking?
(I am writing “some” a lot because I don’t know every brokerage and what they offer. I have had my experience and don’t want you to think I’m listing the only companies that do some of these things. I just want you to be aware of what is possible.)
- Your split. Now I don’t believe this is as important as most people think but I put it first because it’s the consensus that it is the number one consideration. 100% of zero is still zero which is why the percentage isn’t as important. The support, training and protection is the value, not the split. Typical splits in my area are 80/20 and 70/30 with some variations based on experience. Some have limits (desk fees) to the split they take within a year, some don’t (which I think is crazy). Some have a flat fee you pay per transaction and that is it. I haven’t seen a well-known producer at that kind of company, but that might be my own bias. I’ve seen desk fees from $4,500 pre-paid for the year to $27,000. Some have royalty (franchise) fees (RE/MAX, KW, etc) of various sizes.
- Your Principal Broker is most likely the number one consideration when choosing a brokerage. Are they available? Are they knowledgeable? Do they support you and protect you? Are they on tons of boards and have outside obligations or are they running their own real estate business which makes them unavailable. Any time I changed, it was a look at who the Principal Broker was first.
- Large companies have more opportunities in general for new agents. You can run open houses, take their cast off leads or just help out. Most brokerages don’t want you working with agents in those kinds of endeavors at different brokerages because of liability reasons. So the larger the agent pool, the more opportunities. Though, over the last few years, I’m noticing a lot of agents aren’t even using their office much.
- Where are the producers? While I find it ironic that companies are killing themselves to get the high producers because they make less money off of them, it brings social proof to other agents and the community. It brings attention.
- Training is important. I’ve heard the stories of agents starting with a brokerage and the broker dropping a telephone book on the desk and say, “Start calling.” That brutal. Many companies have really upped their game and dug in on training. Better trained agents make more money for the brokerage. Genius. Some have lots of training, some have a good start and then you need to pay for everything. If training is your thing, have them show you and make sure what you want is the price you are willing to pay. Is the training free or cost extra?
- What opportunities do they offer you outside of normal real estate sales? Some have mentoring opportunities where you share your knowledge and get paid. Some have profit share or revenue share for helping to build the company. Some will give you opportunities to teach and speak. Some have stock opportunities.
- What connections do they have to people you need to know? Especially when new, it’s nice to have a list of resources you will need. Sign companies, mortgage lenders, title reps, handyman, photographers, real estate lawyers, inspectors, etc. What if you want to get into commercial or luxury, how do they support that?
So how do you pick? I created this questionnaire that will hopefully lead to a better understanding of your own needs.
Here’s a podcast where I talk about picking a brokerage.
