Here we are at the end of another year, thinking about the year that was and about what we want next year to be like. People start searching the internet to learn how to become real estate agents, while real estate agents search for information on how to start their own real estate company.
- There are no step-by-step instructions on how to get started, but there are rules and the license applications, plus resources at the Department of Commerce.
- The process is mostly about filling out forms and paying fees and doing it all in the right order.
- Decide on a business structure (consult a professional), make a list of everything you need and set a start date.
Here we are at the end of another year, thinking about the year that was and about what we want next year to be like.
Taking the leap
When I had a regular-type job, I used to dream about being self-employed. That was mostly all I thought about during the 1990s, but I was afraid to leave what I though was a secure job.
I took the leap 15 years ago, when I first became a real estate agent and an independent contractor all at the same time. I was terrified for months.
A little less than two years ago, I started my own brokerage. Maybe I did it for all the wrong reasons — but I felt like I had to do it or I would regret it. Now I wish I had done it sooner.
What you need
In Minnesota, we need a broker’s license, a business name and a tax ID number to get a company real estate license. Once the company license is obtained, the broker’s license is transferred to it and a real estate company is born. After that, it is a matter of getting the company set up in the MLS if the company is going to be a member.
There are no step-by-step instructions on how to do it, but there are the rules and the license applications, plus people at the Department of Commerce who can answer questions. In most (if not all) states, someone in the real estate company will need a broker’s license, and there will need to be one broker of record.
The process is mostly about filling out forms and paying fees and doing it all in the right order — and there is a fee for everything.
To get a Minnesota broker’s license, a person must have had a real estate license for at least three years and take 30 hours of classroom training, pass a test and pay a fee. (No experience selling real estate is required, but I have found it to be very helpful.)
How much does it cost to get started?
Getting started as a brokerage doesn’t have to cost much, but it can.
We did not start with planning sessions and logo design contests and then go out and look for the most interesting hip office space and buy a bunch of equipment.
Instead we have a mailing address in the collaborative workspace that I call the worldwide headquarters of Boardman Realty.
There were a couple of things that I did right away that I thought were important.
I sent out letters to my past clients introducing my new business, opened a couple of bank accounts for the business, opened a line of credit and bought some insurance. We had to have a trust account, too.
I pay for space as I need it and rent conference rooms by the hour. The internet and social media make my company look bigger than it is. When someone needs to see my office, or see an office, I have someplace to bring them. Some people just cannot accept the idea of work getting done without an office.
Planning is good, but overthinking something can lead to inaction and to more thinking, which leads to less doing. I have met with wannabe entrepreneurs who have been in the planning stages of their next big move for years. They get hung up on the little things, like the colors they want on their business cards.
A friend asked me why I did not just buy a franchise. I did try that once, and after losing some start-up money I decided that I am not franchise material. We can just leave it at that and remember that innovation often comes from small companies and even the franchises had to start someplace.
I believe in doing, and I’ll admit I love to experiment and am rarely satisfied with the status quo.
Steps for taking action
If you are reading this and are interested in starting your own real estate company, go to the Department of Commerce website for your state and find out what you will need to do. That is the beginning of your plan.
You may also want to decide on a business structure. For that, you may want to talk to a tax adviser or lawyer.
After that, write a list of everything you will need, where you can get it and how much it will cost.
Once that is done, set a start date.
It has been a few years since I have seen anything that looks like a new business model for a real estate brokerage. I only see variations on the same model with modern office designs and more technology and less administrative help. I have not invented a new model either — but I might.
I recently had a conversation with a woman who told me she was afraid to leave the relative security of a large brokerage where she isn’t happy and go out on her own.
I was fascinated by the concept of security and why she thought she had it. It seems like an illusion. We all wake up unemployed every day and spend much of our time hunting.
Maybe none of this is as easy as it sounds — but it isn’t as hard as others have made it sound, either.
If you have always wanted to start your own real estate brokerage, why not take that first step in 2017 and read up on how to start a brokerage in your state?