The question of picking a broker has been presented to me may times by students from all ages and walks of life. Let me first start by saying this is not an easy question to answer. You must first start by asking yourself who am I and what is my financial situation? You must be honest with yourself because the answers to these questions will determine, to a large degree, where you fit in with a brokerage firm.
Many new salespersons are coming from an employee-employer relationship and have interviewed for many jobs in the past. You should understand that you are NOT applying for a job, YOU are interviewing the broker or company more than the company is interviewing you. The choice of where you decide to “hang” your license is an important decision, keeping in mind that if you choose the wrong brokerage firm it could cost you valuable time and money.
Let’s start by answering the question; Who am I? Am I a self starter? Can I work and stay on task with little or no supervision? Am I a social type of person and do I need or want to be around other people in the real estate sales business? Do I need or want more formal training before I am comfortable moving forward with my career or would I rather go ahead and get started and learn as I go? Do I like going to the office everyday and having a place to work or will I be working from home? Do I have a “spear of influence” large enough to start my real estate career or will I need to widen my contact base? If there is another person, such as a spouse, do they understand and are they willing to support me in my new career? Am I planning on working full or part-time?
The next question that you must answer is: What is my financial situation? Do I have enough reserve to maintain myself for the next six months? You have to be realistic; you may not make a true income from your new career for up to six months. Do I have a spouse or another party that will be able to financially support me until such time you are making it on your own?
I have designed a chart that may help you answer these very important questions? You may not fully understand where I am heading with this but it will come together shortly. Please use the chart on the next page a take a few minutes to complete.
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Who am I? Remember be honest with yourself |
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Column 1 |
Column 2 |
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1 |
Am I a self starter? |
YES |
NO |
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2 |
Can I work and stay on task with little or no supervision? |
YES |
NO |
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3 |
Am I a social person? |
YES |
NO |
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4 |
Do I need or want to be around other real estate people? |
NO |
YES |
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5 |
Do I feel that I need more formal training? |
NO |
YES |
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6 |
Do I want to get started right away and will learn as I go? |
YES |
NO |
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7 |
Will I be working from home 90% or more of the time? |
YES |
NO |
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8 |
Do I need the security of having an office to work from? |
NO |
YES |
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9 |
Do I have a large “spear of Influence”? |
YES |
NO |
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10 |
Do I have a spouse or partner that is supporting? |
YES |
NO |
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11 |
Will I be working full time? |
NO |
YES |
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12 |
Do I like recruiting other people to do what I do? |
NO |
YES |
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13 |
Do I prefer to work with a “team”? |
NO |
YES |
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Number circled in each Column |
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What is my financial situation? |
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Column 1 |
Column 2 |
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1 |
Do I have reserves to maintain myself and family for 6 months? |
YES |
NO |
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2 |
Do I have a spouse or other person that will help me financially? |
YES |
NO |
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3 |
Will I be working another job that can support me during my start-up? |
YES |
NO |
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Did you answer YES to any of the questions? |
YES |
NO |
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How does this help me make a decision on choosing a broker or brokerage firm?
Let’s start with the first set of questions; who am I?
If Column 1 has the most circled answers; you are a self starter who does not need the structure of an office and more than likely will not use an office or the resources even if they are available to you.
If Column 2 has the most circled answers; you are the type person that needs or wants the structure of an office with systems in place to guide you.
The second set of questions: The final question “Did you answer YES to any of the questions” is the only question that is of concern. YES – You are in good financial standings and a good commission structure will be a great factor when choosing a broker or brokerage firm. NO – The commission structure should not be the primary discussion in choosing a broker or brokerage firm.
The national average of salespersons that remain in real estate as their primary source of income is only 20% after one year and the average by the second year is only 10%. The primary reason is the lack of income. Why do so many fail? The answer is a complicated one but mainly from lack of planning. The new salesperson is lured in with high commission splits when they are not financially secure.
Let us talk about the different type of brokerage firms and how they are operated. The following are only examples and are not the only way brokerage firms may operate. There are many combinations that may be available for a new salesperson to choose from.
Brokerage A: (Usually a midsize local company with traditional values. 75-200 salespeople)
The commission may be something rather low compared to other brokerages. For the sake of argument let us say a 50/50 split. Normally the firm will pay for most of your signs, lockboxes, flyer boxes, copies, faxes, company email, and do some advertising to promote your business. Other items that the firm may pay for in your behalf would be business cards, door hangers, printing, website and other small daily needs. They normally provide you with free training or a low cost training program. The firm usually will have great support for the new salesperson. Who would be a good candidate? A Column 2 person that answered NO to the financial question
Brokerage B: (Usually a national company with traditional values. 50 -100 salespersons per office)
The commission split may be somewhat more, let’s say 60/40. The firm will pay for many of the items listed in brokerage A, but you may be expected to pay for your own advertising. Who would be a good candidate? A Column 2 person that said NO to the financial question but may have some money to invest in their career
Brokerage C: (A national mega company with aggressive marketing with 1000’s of salespersons)
The commission split may be even more, let’s say 70/30. This is by far is the most popular of all the firms but also where it gets real tricky. The brokerage firm pays a higher commission split but the salesperson is now absorbing a lot of the cost themselves. The salesperson is expected to pay for advertising, signs, lockboxes, flyer boxes, printing, and door hangers. The salesperson may also be required to pay for copies, faxes, website, company email, business cards and in some cases a monthly fee of $50-100. The salesperson will normally pay for any formal training. Who would be a good candidate? A Column 2 person that is at least financially sound enough to maintain for 3-4 months without receiving any income.
Brokerage D: (Usually a local small to midsize company with traditional values. 25 -50 salespersons)
The commission splits may be 70/30 and increase to as high as 85/15 depending on production. Normally have small office or work from home. Salesperson is expected to pay all of their own expenses but receives good broker support. Very little formal training, salesperson is expected to “learn by doing” with help from broker. Who is a good candidate? A Column 1 person who answered YES to the financial question
Brokerage E: (Usually a state wide company with 1000’s of salespersons)
The commission split may be as high as 90%. There are several brokerage firms that are going to this type of a system. The commission is high but there may be no office and the agent will be required to work from their home office. There is normally very little support and the salesperson is expected to pay all of their own expenses. There may be transaction fee for each closing or a monthly fee required even if the salesperson does not have any sales that month. Who would be a good candidate? A Column 1 person, who answered a strong YES to the financial question, I do not believe this is a wise choice for most new salespersons.
Brokerage F: (Usually a state wide company with 1000’s of salespersons)
The salesperson receives 100% commission. There are requirements to pay a monthly fee, or a transaction fee for each closing. There is normally NO support and the salesperson is required to work from home with no help from their broker. The salesperson pays all of their own expenses. Who is a good candidate? An experienced well seasoned agent, I would not recommend that a new salesperson go with a brokerage with this system.
There are many other brokerage firms that operate under different systems and may be a combination of any of the brokerages stated above. Some brokerage firms have more than one commission structure to offer their salespersons.
In conclusion, who you are and your financial position should be the greatest factor in choosing a brokerage firm. If you go with a brokerage that offers good commission splits but requires that you pay all your own expenses and may even charge additional monthly fees when you are not financial able to maintain for 4-6 months this may be the mistake that lands you in that 80-90% of salespersons that do not make it in real estate. Remember, choosing a company that does not “fit” you could cost you time and money. For example: a company that requires that you attend meetings when you are not a “meeting” type may once again be your downfall. Choose a brokerage that “FITS YOU”
Play 20 Questions
When you interview with a broker or brokerage firm; remember you are interviewing them more than they are interviewing you. Most brokerage firms will offer you the opportunity to work with their brokerage firm. The choice is yours! As I stated earlier, you are not interviewing for a job, you are deciding if this brokerage is a good fit for you.
Check around and find other salespersons that work for the brokerage firm and ask how they like the company. Make sure and read between the lines, a lot of salespeople do not want you to know they are unhappy or not doing well in the real estate business. Decide on at least 3 or 4 companies that you may be interested in based upon your situation. Set a time for the interview and be well prepared. After interviewing 100 of salespersons for my brokerage firm I am always surprised that the salespersons ask so few questions. My suggestion is to play 20 questions each time you go to interview the broker or brokerage firm. Write down 20 or more if need be and make sure all your questions are answered before leaving the interview. Here are some suggestions:
1. What is your commission structure?
2. Can I reduce my commission to help make a sale or get a listing? How does that effect my commission?
3. Are there any additional fees or cost? Transaction fees? Desk Fees? Monthly Fees?
4. What expenses would I be expected to pay? Lockboxes, signs, printing and ECT
5. What expenses does the company pay?
6. Are copies, faxes, websites and the like free or is there an additional fee?
7. Will you provide me with a webpage or site?
8. Do you have a company email?
9. Do I have a desk of my own or will I be sharing a desk?
10. Do you expect me to come to the office a certain amount of time?
11. Do I have access to the office 24/7?
12. What kind of broker/office manager support can I expect? Contracts? CMA’s? Listings? MLS?
13. When is the broker/office manager available?
14. Can I call after hours and expect to get help/support? What is too early or too late?
15. Do you have “phone time” or a call center? Am I required to participate? How often can I expect to get “phone time”?
16. Can I do open houses for other agents in the office? If so how likely is that to happen?
17. Is there any formal training and if so what is the cost?
18. Do you have a mentor type arrangement and if so is there a fee or reduced commissions?
19. Do you do any advertising for your company? Where do you advertise?
20. Will you do any advertising for me personally?
21. Will you or another agent go with me on my first listing appointment? Buyer appointment?
22. Does the company do leasing? Property management? Apartment locating?
23. Can I do property management?
24. Can I brand myself? I have a DBA, can I set-up my own company within this company?
25. Do you have teams?
26. What is your policy when buying or selling my personal home?
27. What is your policy if I was to buy or sell rental property for myself or spouse?
28. If I was to leave your company in good standing, would I be able to take my buyers and listings?
29. What is your policy if I was to get my broker’s license and remained with the company?
30. Are there company meetings? Am I required to come? When and how often?
Good luck with your search for your broker. I hope this has given you some insight into what to look for!