If you’re currently working toward receiving your real estate license, or you’ve recently obtained it, congratulations! You’re at the beginning of what could be a long, lucrative and fulfilling career in real estate.
Remember, however, that the brokerage you align yourself with will set the tone for the beginning of your career. So, keep your options open, set up multiple interviews and determine what type of office culture and business model will help you thrive in this new occupation.
Types of Real Estate Brokerages
First, you’ll need to understand the various broker formats available to you. There are two major types of real estate brokerages—franchise and boutique/independently-owned—from which various other models branch off, offering a multitude of options.
Franchise Brokerage – These are typically the big-name, national or international brands you’re already familiar with. The benefits? Brand recognition, for one. As they’re already widely known across the U.S. (and globally, some), you’ll be associated with a trusted name in real estate. This can help you get a jumpstart on building trust with potential clients. Keep in mind, however, that a powerful brand does not always equal consistent business. You’ll still need to work for your leads, and you’ll likely be paying for the brand name through fees and commission obligations.
An added convenience? With a franchise, you’ll often be eligible to receive effective tech tools either free of charge, for a small fee or at a discounted rate. These tools can include transaction management software, CRMs, website-building tools and other marketing tools. With these resources, you’ll often have access to top-notch support, which can help you get settled in faster and ready to start your business in a matter of days.
In terms of referrals, you’d have access to various other offices and agents across the U.S., making building a network of profitable contacts a bit easier. You’ll always want to vet agents if you’re considering them as referral relationships, however. Not all agents will have the same work ethic or business model as you, regardless of being affiliated with the same franchise. So, be choosy when giving out your business, as you don’t want to ruin your reputation by giving your clients the name of an agent who isn’t responsive or as diligent with their clients as you are.
Boutique Brokerage – While these run on a much smaller scale compared to franchises, often managed by a single broker, this might be a better fit if you’re looking for a more personalized experience. You may have to work a bit harder to get your name out there, as the brand may not be as easily recognizable, but these brokerages tend to have more of a family feel, often having stricter recruiting guidelines to focus on keeping the team successful, rather than working toward exponential office growth. Take a look at your local market, however, and you may find that a specific independently-owned brokerage is more well-known than you realized.
Since the majority of these do not run on a corporate structure as franchises do, you may have more flexibility, giving you more freedom in your marketing and how you run your business. If the ability to customize your business is a big draw, a boutique brokerage may be the best choice for you.
Although generally more work in terms of streamlining your business with technology, as these boutiques often have smaller marketing and tech budgets, you’ll have the option of building your resources from scratch, using systems that you think will work best for your style of business, rather than using the options provided to you by a franchise brokerage. While this may hike up your start-up costs, things may balance out if the boutique brokerage does not charge a technology fee, as many franchises do.
As a new agent, training should be your No. 1 priority. Both hands-on and classroom learning will help you get a feel for how the industry works and how you can best structure your business to make it successful. Brokerage choice may affect the type of training you receive, without going into mentoring/coaching that you can pay for on your own.
With a franchise, you are more likely to receive classroom-type training and access to educational and networking events. With a boutique brokerage, however, you may have better access to one-on-one coaching and mentoring with a successful agent because of the small, intimate setting.
Brokerages have their own commission structure, so you’ll have to decide which payment model makes the most sense for you. If you’re more comfortable with a concrete number, a larger, more established brokerage may charge you a set percentage off your commission—this could be anywhere from 10-30 percent, allowing you keep 70-100 percent of your earnings. However, with these types of high-split plans can come other charges. For example, these brokerages may charge you for specific services, such as a desk fee for using their office or other workspace.
There are also traditional splits, which will get you 50 percent of your commission, while the other 50 percent goes to your broker. These brokerages may not charge as many office-related fees as those with high-split plans.
Some brokerages also have cap incentives—if you earn past their capping threshold, you’ll get to keep more or all of your commission. This is most common with hybrid-style commission structures.
New Brokerage Models
You may have heard the term “disruptor” tossed around. There are various newer brokerages that offer a blend of the above, or a new model entirely. Some of these brokerages are completely virtual, offering no brick and mortar locations.
While brokers will want to assess if you are the right fit for their business, this should be a two-way interview. Ask plenty of questions and schedule multiple interviews with different types of brokerages so you get the full picture before making one of the most important decisions for your career. While you can always transition to another brokerage down the road, doing your due diligence at the beginning will ensure your career is off to a good start and will save you time and money.
So, what should you ask? Here are a few example questions:
- What are your core values? How do you ensure your agents are running their business according to these values?
- What type of technology do you offer and at what cost? Do you offer support for these services?
- As an agent under your management, what do you expect of me?
- Do you offer any type of administrative support or am I expected to hire my own?
- What is your commission structure and why will it be more lucrative than other models?
- Do you offer agent training? In what formats and at what cost?
- How can you help me to effectively market my business?
- How many teams do you have and how does your brokerage support the team format?
Remember, keep your options open and meet with as many brokers as possible before deciding who you are going to be working with. You can also reach out to agents in the marketplace you’re looking to work in and ask how they feel about their brokerages to get a better idea of local opinion. While all brokerages have their own pros and cons, there should be at least one that stands out to you as a supportive framework that will help you meet your business goals.
Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at firstname.lastname@example.org.