You’ve finally passed that real estate exam and are ready to hang your license. There’s just one question to answer: how do you know how to choose the right brokerage? There are a few main factors to consider when deciding which brokerage is the one for you, and in this article, I’ll take you through them. By the end, you should know everything you need to make the perfect choice.
The Type of Brokerage
There are several types of brokerages out there to pick from as you choose the right brokerage. The most common are:
- The Commission Split Model. The broker takes a percentage of the commission off of each sale. Usually, this ranges between 20% to 40%. The agent takes the rest.
- The Per Transaction Model. The agent pays the brokerage a flat fee every time they make a transaction.
- The Monthly Model. Though this is very rare, some brokerages run on monthly payments made by agents whether or not they’ve sold anything in that month.
The Commission Split
The most common model is, of course, the commission split. The agent takes the larger chunk of their commission and pays the rest to the broker. Many models run at a 60/40, 70/30, or 80/20 commission split. Some are less, some are more, it just depends.
When taking into consideration how much of a split you’re going to get, it’s also essential to know when you cap. At many brokerages, you cap when you have paid a certain dollar amount into the company. As soon as you reach that dollar amount, you cap and can take home your whole commission.
For example, at my brokerage, eXp Realty, the commission split is 80/20. The cap is $16,000 or $2.66 million in sales volume. Once you’ve paid that much ($16,000) into the company, you get to keep 100% of your commission. Also, If you go on to reach ICON status, you get to convert that $16,000 into stock shares. NOTE: The ICON program does NOT happen at ANY other real estate brokerage!
Of course, not every brokerage runs on a commission split. In some cases, you might run into a transaction fee. This usually ranges from $250 to $1500 per transaction that you pay to the broker. The flexibility of paying when you get paid is appealing to many real estate agents. However, the downside is that there is no capping under this model and you do not get much support (if any). In the commission split model, you do pay more but you also get more.
The monthly model is by far the rarest. You will not find this in most markets because a real estate broker is taking a HUGE risk in allowing agents with little supervision to practice real estate under their license for a monthly fee. Fees vary but can range from $250-$1250 per month. Again, this model is a set fee per month, regardless if you sell 0 homes or 20 homes in one month.
The Resources
If you’re faced with a hard question, do you have the help you need? Unfortunately, you’re not going to learn everything you need to about the real estate business through real estate school. Most of that information is primarily for passing the test and getting your license.
If you need more information, say, on how to write contracts, do listing presentations, or do buyer consultations, who can you turn to? Or maybe you run into an emergency and need help with a showing or appointment. Is there anyone besides your broker alone that you can turn to for some help? To choose the right brokerage, you need to know where to find answers to those questions.
It’s essential that you have someone who can guide you along the process. Plus, you’ll need access to high-quality advanced training on the details of running a real estate business from professionals who have had success. Many brokerages offer some training in return for the commission split, but some offer very little with no extra support. If you’re with a transaction broker model, you likely won’t get any training at all.
In addition to the training and help, you’re going to need access to technology. When you’re looking to choose the right brokerage, consider carefully what each offers. Will you get the tech you need? Some things you want to look out for include:
- CRM software
- Email and text autoresponders
- Marketing templates
- Branding support
These tools are essential for creating a thriving business, and it’s super helpful if your brokerage provides them for you so you don’t have to spend all that time and money trying to find them on your own.
The Lead Generation
Most brokers offer some sort of lead generation, but it’s not always the best kind. Often, it’s merely phone time, where you get the chance to talk to callers and try to “convert” them to customers. That’s not the most effective tactic and is limited in opportunity by the amount of hours you get for phone time.
Real lead generation involves a lot more than just talking on the phone with people (most people don’t like phones anymore anyway). It’s all about connecting with people who are interested in what you’re selling on the platforms they care about and engaging them in “conversations” in new ways. If you’d like some real help with lead generation, for FREE, you can partner with me and I’ll help you get the leads you really need in a way that other brokers just won’t.
The Future
It’s true–brick and mortar businesses are struggling to survive. Many of the typical brokerages you find are hanging on by a thread, especially after all the craziness of COVID-19. You don’t want to build your career on a foundation of sand that will be easily swept away–you need to choose the right brokerage to stand the test of time.
In the rising technological age, the best thing you can do is tap into a worldwide network rather than trying to build your own little island in the middle of the ocean. You need a brokerage with opportunities for reaching out to new places, one that’s founded on creating relationships with people all over the world. That’s the best way to ensure you make it as a real estate agent.
In addition, keep in mind the brokerage reputation. Look at reviews, not just those on the broker website, but those on Google Business or other sites. Make sure that they have good reviews and are trustworthy. You only want to work with brokers that have good reputations or your business isn’t going to get very far.
The Expenses
In any business venture, you need to know what you’re going to make off the top. That’s what you NEED to know to make the best life decisions for you and your family. In any brokerage, there will be fees, but some are trackable, some are not.
Before you sign on, ask about desk fees, the E&O Insurance fees, franchise fees, and any fees that come with making sales. Those, you can track. However, once you’ve got those marked down, you’ll also have to think about the hidden fees such as getting a website, adding a CRM, completing any additional training, etc. These fees can really add up if you’re not careful.
Also, if you have to figure everything out on your own, that’s going to cost you more money and more time that you’ll have to take into account. If you like being on your own, that might work for you, but it can be a LOT easier to succeed if you can follow clear, A-Z steps that will get you going and show you how to grab success by the horns. That’s something you have to decide for yourself, of course, but no matter what, you don’t want to do this on your own.
The Brokerage For You
Well, there you have it. When you’re looking around for a brokerage, keep the above things in consideration. It’s essential that you have a good brokerage behind you to truly succeed in your business venture. If you’re looking for a brokerage that offers you the best in flexibility, support, resources, and stability, get in touch with me and I can tell you a little more about eXp Realty and why I believe it’s one of the best. Whatever you do, make sure you choose a brokerage that will help you fulfill your business goals and become the success you know you can be.