Congratulations on passing the real estate salespersons licensing exam!
You have just spent weeks or even months studying, learning and probably memorizing important terms and concepts that will help you succeed in your soon to be real estate career. So now what? What’s next? The next step will be to affiliate with a brokerage firm and become a licensed real estate agent and REALTOR. Let’s talk about this next big decision in your new career. Warning – this could be a tough decision!
In most states, in order for one to have an active real estate license, you must affiliate with a brokerage firm. Brokerage firms are responsible for your actions as a real estate agent. They are responsible for educating and constantly monitoring their agents, reviewing paperwork to ensure compliance (contracts, agreements, etc.) and more. There is definitely considerable risk involved in owning and operating a brokerage firm. Before we get started, take a few minutes to write down your plans and what is important to you. There are many different brokerage philosophies, so thinking about what’s most important to you will help you reflect on your needs when interviewing potential brokerage firms. For instance, are you planning to be a full-time or a part-time agent? Do you want a mentor? Do you need an office/workstation, or will you do most of your work from home? Make your list before you start interviewing.
Hopefully, you read my first blog post (8 Things to Consider Before You Decide on a Real Estate Career), where I mention that you should have already started to research potential brokerage firms to join. Why? Because there are SO many to choose from and no two brokerage firms are the same. You will need to decide between a large, national firm or a smaller, privately owned boutique firm. Both have their positive and negative qualities to the real estate world. Some brokerages are known for offering significant training for their new agents; others cater only to established agents. Do your research! When I say research, I mean check them out online (their website and social media), see what their online presence and reputation look like. You can also reach out to them to ask questions about the firm.
I also mentioned there are numerous attributes you should look at when selecting a brokerage firm, here are my top six:
- Education, training and available mentor programs
- Branding, advertising and marketing services
- Technology offered
- Lead generation
- Compensation plans
- Company culture
Let’s break each of these down and talk about the questions you should ask potential brokerage firms regarding each of these attributes.
1. Education, training and available mentor programs
As a brand-new agent, this is a HUGE aspect that you should take into consideration. Do they offer a new agent training program? Do they offer a mentor program and what are the associated fees? Ideally, its best to find a firm that offers all of their training, education and mentor programs for free (you don’t need any more costs when you start up). In some cases, brokerage firms offer this training and a mentor at no cost, but with lower splits at first. I think this is reasonable as long as you are taking full advantage of the programs being offered and the firm is fulfilling their part by supplying these tools to you. Find a firm that is going to teach you how to sell – something you didn’t learn when you were studying for the exam! All the studying taught you important laws and rules that are required when you are a real estate agent, not how to sell a house or build relationships (this is a huge part of real estate success too). Find a firm that is going to help YOU reach and exceed YOUR goals!
2. Branding, advertising and marketing services
I believe this is where the larger, national firms may have an advantage over the smaller boutique firms. One of the great benefits of working for a large brokerage firm is name recognition and their large network of agents across the country (great for referrals). They tend to have national advertising campaigns and branded marketing material for their agents. Leveraging the power of the brand can be very beneficial for new agents. Some of these larger firms also have discounts with suppliers which are passed through to the agents (saving you money on well-known products and resources). When interviewing a brokerage firm make sure to ask them about any marketing services they offer as well. Are there in-house print services or any assistance helping you design brochures, flyers, and marketing packages. Are there marketing templates and what are the affiliated costs for these items?
3. Technology offered
In this high-tech society, a brokerage firm needs to stay ahead of the curve when it comes to the technology offered to their agents and clients. What platforms are included when you join the firm? A paperless transaction system? A website? Digital newsletter programs or CRM’s (customer relationship management system – full post on this in the coming weeks)? Video marketing platforms? Automated marketing? What about training for all of the firms’ offered technology platforms? Who will assist you in setting up your technology and database? Do they also help you set up social media accounts?
4. Lead generation
Not on the top of my list is lead generation offered by brokerage firms. As an agent, you need to be responsible for generating your own business. Most brokerage firms have lead generation on their websites where the leads are distributed via a “round-robin” system. A lot of the online leads don’t pan out. There are places where you can buy leads (Zillow, Boomtown) and some brokerage firms do this, then distribute the leads, but you still need to be out there generating your own leads.
5. Compensation plans
Ahh… the giant elephant in the room. Do you remember the old saying “you get what you pay for?” This definitely applies here. There are flat-fee firms, where you only pay one flat fee per transaction, which is typically a low fee but comes without a lot of the educational opportunities that are available at other agencies. Some boutique firms will say they offer 100% commission with no fees. This is not possible, seriously, think about it – how are they making any money then? How are they paying their employees, electric bills and rent? Be cautious of hidden fees!
Other traditional, national-brand brokerage firms will usually offer several different compensation plans. The firm I work for offers five different plans, ones that fit both new and experienced agent’s needs. These plans are all different. For instance, for the new agents, there is no monthly fee and the splits are lower to start but increase with each transaction. A split of 50/50 is not uncommon for new agents to start out. There are also CAP plans, these are plans where you pay a set amount into your CAP at a certain commission rate. Once you hit your CAP, you receive a higher commission rate. Don’t forget to ask about any additional fees such as transaction fees, errors and omissions insurance, management fees, annual dues, and any other administrative fees. Get all of the numbers upfront! Also, ask how quickly you get paid after a deal closes.
6. Company culture
I actually find this attribute to be the most important when selecting a brokerage firm. To be a success in this industry, you need to find a Broker with whom you are comfortable with. One you can build a solid relationship with as they will be the one who has your back in this new adventure. You need to be able to form a strong relationship with the management team, as they will be your lifeline to help you grow and be successful. Go with the Broker who truly cares about properly educating you, helping you succeed and grow! Find a firm that is successful and will teach you how to sell, generate leads and build relationships (remember, you didn’t learn this part in your real estate classes). Also, what is the attitude of the other agents in the firm? Are they friendly and are they willing to help you or are they competitive and disconnected? Also take into consideration the size of the firm, how many agents work there? Will you be one of the hundreds of agents and risk becoming “just a number” or is it a smaller firm where you will be on a first-name basis with the broker and management team. You need to decide which culture is better for you.
I hope you take these six aspects into consideration when interviewing brokerage firms. Find the best broker for YOU! Not all brokerage firms are the same or for you. Remember, don’t focus on the commission splits, they can be negotiated, your success cannot! Before you sign on the dotted line, make sure you get all of the fees and promises in writing from the broker. This will help you compare firms and hold your selected firm accountable.
Another thing to remember while you are searching for a broker is that YOU are the one doing the interviewing, not the other way around. Talk to the broker and ask as many questions as possible in your initial interview. Ask if you can sit in on one of their training classes or meetings before you make your decision.
Other questions to consider asking in your interview:
- What are the firms’ short-term and long-term goals?
- How many agents work at the firm?
- Are there full time and part-time agents at the firm?
- What a typical day is like?
- What kind of administrative assistance is offered?
- Who will train you on all of the necessary programs?
- What exactly do they provide and what you are responsible for?
- Is there any profit sharing?
- Is there an opportunity to change your commission split at any given time?
- Will you be able to do open houses for other agents in the firm?
- Does the brokerage deal with commercial transactions too?
- What are the office hours? Do you have access to the office after hours/weekends?
In some cases, it may be evident right away that certain brokerage firms will not be the right fit for you. Keep searching, you will find the perfect brokerage firm for YOU! And if it turns out the brokerage firm you select is not the perfect match for you, remember, you are not stuck. You can leave, just make sure to check the independent contractor agreement you signed for a termination clause.
Stay tuned for my next blog – when you have passed the real estate exam, but do not want to actively sell real estate … learn about referral status. Additional upcoming posts include: Should You Join a Team or Go Solo? And, All About CRM’s.