Inman

You have 3 brokerage models to choose from. Which works for you?

Join the movement at Inman Connect Las Vegas, July 30 – Aug. 1! Seize the moment to take charge of the next era in real estate. Through immersive experiences, innovative formats and an unparalleled lineup of speakers, this gathering becomes more than a conference — it becomes a collaborative force shaping the future of our industry. Secure your tickets now!

You just passed your real estate exam, and your ultimate dream has come true. You finally have the opportunity to run your own business, be your own boss and have unlimited income potential. Congratulations! Your future looks brighter than ever. 

Now you will have to make an important decision that will ultimately decide what type of business that you do, how much business that you get and, in fact, this decision may ultimately decide if you make it in this industry or not. 

Each brokerage model offers a very different real estate experience, so let’s break down three different types of brokerages, what they offer — good and bad — and give you the inside scoop so that you can make the best choice for you, your business and your future.

Choosing a brokerage model can be challenging when entering the real estate business as a new agent because your knowledge about the industry is limited. Experienced agents will know exactly what they will be getting when they make their brokerage selection. The important thing to remember is that you want to choose the best place for you and your business to thrive. Let’s get started.

1. The 100% brokerage 

This one sounds good because who wouldn’t want to get 100 percent of anything? Truly, though, there is no such thing as a 100 percent brokerage, as they have to make money somewhere. They don’t exist just to pay you all the money that you bring in. These offices hire a large number of agents and require you to pay them a set fee every time you process a deal through them.

When you sell something, for example, you pay them, say, $500. Sounds easy enough. You will be giving up some things with this model, but it may work for you if you do a moderate amount of business, maybe flip homes or just want a very no-frills experience.

These offices usually have one broker handling hundreds of agents, so getting help and support will be tough. You won’t have elaborate offices to work out of or to bring your customers to, and training will be limited or non-existent.

You will have to come up with your own marketing systems and lean on your local Board of Realtors for needed tools for your business, as these kinds of things don’t come with this model. The revenue just isn’t there to provide them.

This is how they get by with just collecting a fee on every deal. Their model relies on very low expenses and large numbers of agents doing a large number of deals in total. For those of you who are lone wolves and don’t need any support, it could work, but this model is usually better for long-time agents who are set in their business.

2. The small independent brokerage

These can vary a lot, but basically, you have a broker-owner who has one, or maybe a few, offices and who has built up their own brand. Sometimes, the broker of these offices sells real estate, so they may be competing with you. 

You can probably secure a decent split here, but the support and training may be minimal, with each owner running their business differently. I have seen some really professional independent brokerages and some that are just focused on the broker-owner, with little care going into their agents or their reputations. You will need to vet each one of these out for yourself.

Some of these don’t really have a lot of support geared toward new-to-business agents. Experienced agents may or may not get along with the competing broker-owner. Indies can, generally, only provide so much to their agents as margins are slim.

Most of these brokerages will offer a simple way of doing business with some resources available to you. These can work if you get along well with the broker-owner and can take care of most things on your own.

3. The national big brand brokerage

The big brands are in a financial position to offer the agents who affiliate with them the most tools and resources. They tend to stay in front when it comes to having all the latest tools and technology for real estate. These companies can be very large and have hundreds of offices across the country. They also have more agents, so you may be competing for mentorship and one-on-one time with your broker. 

Doing business may be easier for the agents who wish to partner with them as the brokerage’s name recognition will help win business. This is especially true if you are brand new to the industry with no previous track record.

Education, a big support staff and, in most cases, access to the non-competing broker will be big benefits for support and problem-solving.

Global reach, use of multiple offices and a large number of agents to refer to around the country or the world are all things that can benefit an agent and their business.

These big players will be more selective when bringing on agents to their offices. Too big of a stage for you? You will have to decide. A lot has to do with how the broker runs the individual office, and this will vary depending on the brand.

Big busy offices with a lot going on and a big focus on support, training and culture can positively impact your business. These brokerages are great for career-minded agents who want to build their businesses with every resource possible in the marketplace.

Some of the most successful agents in your market will be found working at the big national brands as they combine everything they offer with everything the brokerage offers to provide their customers with a top-rate real estate experience. To be a big agent, you may want to join with a big company for that reason.

These three models all offer a very different experience for the real estate professional. There is no right or wrong model for a brokerage, just different, but what is important is that you choose one that fits the type of business that you want to do and that supports the kind of income that you want to make.

The fact is that you can make money selling real estate at all three models, but a lot of times, we see agents fail simply because they did not get started in the right way or they did not have the proper support. Nobody took the time to show these agents how to be successful in real estate. Often this is solely because of where they were and not really because of them.

Anyone can sell real estate, but getting started takes knowledge and doing the right things consistently and effectively. Learning what you need to know to start relatively quickly will keep you in the game.

Take your time, do your research, and interview many brokerages so that you know you are in the best place for you when you make your choice. Get ready to be a business owner and to be a part of a great, fun industry. 

Joseph Santini is a managing broker at Coldwell Banker Realty in Boca Raton, Florida. Connect with him on LinkedIn.