I have been a real estate agent for four years and just recently got my independent broker's license. Currently, I work for a large national real estate company, but I would like to head out on my own and start my own real estate business. Do you have any advice for starting a new real estate business? Thank you, Bill B. -Boulder, Colo.
Thanks for the question Bill and congratulations on passing your broker's exam. It is a noticeable achievement when you become a real estate broker and you are no longer just a sales associate. You now have the option to work independently without the required oversight of a managing broker. If you have earned the status of an employing broker, as recognized by the state of Colorado, then you also have the option to supervise and employ other real estate agents, which means you can now become a managing broker yourself. Of course, your question is what to do?
Let's look at your first option, which is to become an independent real estate broker. The benefits of this option are that you can operate independently as a one-man show, and no longer be required to split your earned commissions with a managing broker or real estate office. Many independent brokers work out of a home office, relying on past clients and word-of-mouth referrals for future business. Although this option allows you to keep more of the money you earn, because you will no longer have a "desk fee" or commission split, keep in mind that you may miss out on the potential business that comes from being associated with a real estate office that has a storefront location and a nationally recognized company name.
Your other option is to start your own real estate company, which employs other sales agents and operates out of an office. If you are going to go down this road, one of the first things to consider is whether or not to join a recognized real estate franchise(such as Century 21, Coldwell Banker, etc.) or to operate your office independently (such as Bill's Wild West Real Estate). Franchise affiliation has many benefits that include:
- Name brand recognition, recognized trademarks
- National marketing campaigns and media presence
- No need to reinvent the wheel, you follow the lead of the franchise
Of course, many of the best known franchises charge upfront fees and monthly dues, so you need to make sure that you are getting your money's worth when you enter into a franchise agreement. If you have never operated your own business, then it can be a real benefit to have the helpful oversight of a successful and experienced franchise, plus a recognized franchise can give you instant name recognition, which may help establish your company's presence in an already competitive real estate market.
If you decide to start a real estate office that has employees, then you will have to establish some employee guidelines, negotiate commission splits with your agents, and help educate newly licensed real estate agents. You also need to consider the financial overhead of running a real estate office, as well as the initial start up costs of getting established. In fact, many brokers who own real estate offices don't have the time to earn commissions for themselves, because often they are too busy overseeing agents who have just earned their real estate licenses, in addition to keeping the office running smoothly while helping grow the business. Of course, the benefit of owning a real estate company is that you can create a valuable business that generates continual income for you or can possibly be sold sometime down the road.
Before you decide what type of real estate office to create, you should prioritize your personal goals and determine what type of work environment you want for yourself. Obviously, as an independent broker, you could have a more flexible schedule and could spend more time working directly with real estate buyers and sellers. Conversely, if you were to start a real estate company with employees, then you would probably spend more of your time managing the other agents and running the day-to-day operations of the office. Regardless of which path you choose, your future successes will only come with hard work and determination, so give it your all and go for it!