Anyone who enjoys selling real estate may also enjoy owning a brokerage. With multiple agents splitting their commissions with you, owning your own brokerage makes it easier to ride out fluctuations in the market, an appealing benefit of brokerage ownership. Of course, as a broker you will also take on supervisory duties that you don’t have as an agent, and you will also have to carry the overhead of running an office. But if you enjoy mentoring and have cash-flow management skills, the rewards can be great, psychologically and financially.
Save up enough money to cover your startup costs, which will include renting or buying space, office equipment, logo design, an office sign, yard signs, website design, insurance. You also need to set aside enough funds to cover operating expenses for at least three to four months, advises Tom Pleimling, broker-owner of Tom Pleimling Realty in Alexandria, Virginia. Operating expenses will include rent, advertising, dues, online fees, utilities and other miscellaneous items.
Learn what broker-licensing requirements are in your state, and obtain your real estate broker’s license. In most states you must take a state-approved course, be 21 years old and have practiced real estate as a salesperson for two years.
Choose a location for your office. Consider zoning restrictions, visibility and parking for your agents and clients, as well as square footage.
Set up a professional-looking website, and employ a service which allows you to display all the listings in the Multiple Listing Service as well as your own. Approximately 80 percent of home shoppers now begin their home search online, according to a Forbes.com article titled “How To Run A Real Estate Brokerage: Technology,” which cites a REAL Trends and Harris Interactive survey.
Buy errors and omissions insurance. As a broker, you legally take on vicarious liability for the actions of your agents. Errors and omissions insurance will cover you in the event that an unhappy client sues the brokerage.
Develop an independent contractor agreement that outlines your expectations of agent behavior and includes provisions for commission splits with individual agents. As independent contractors, you cannot require office time of agents, but you can expect that they will adhere to a code of ethics, and you can also describe your policies on the use of office space and when agents may take unsolicited incoming calls.
Equip your office. Essentials will include waiting area and conference room furniture, a reception desk and chair, fax, copier, phone system and at least one office computer. As independent contractors, agents can provide their own individual computers. If you provide desks for agents, you may choose to charge them a desk fee to offset operating costs.
Recruit agents. Established agents will have a following that will benefit you. New agents might bring a lot of energy and excitement to your brokerage, but you must carefully train them to ensure that they not make legal mistakes. They may also need sales training.
Develop clientele. Each agent you take in will probably bring some clients. But in addition, advertise your brokerage in newspapers, real estate publications, and on television and radio. Realtor.org also recommends conducting an office open-house, sending direct mail and raising your profile through publicity. Publicity might include sponsoring a charitable function or a Little League baseball team, for example. In addition, consider hiring a search-engine optimization company to boost your website’s visibility in the search engines.