There is a lot of mythology around the idea that real estate gets to do all of their own work on their own time and while being their own boss. There is some truth to the idea that real estate agents do in fact have great flexibility in their work. And that they are capable of creating an environment where they are the ones calling the shots. That said, virtually every new agent who completes his or her real estate exam will have to look for a real estate broker to work for.
What is a Real Estate Broker?
You may not realize it, but you likely have encountered a real estate broker at some point in your life. They go by names that we are all familiar with such as Keller Williams, Remax, etc. However, there are also plenty of smaller independent brokers that one may go to work for as well. The reason to sign up for one of these brokers is that they provide a brand name to operate under. And they provide a wealth of other resources to their agents as well.
One big benefit of working under a broker is that they will likely provide errors and omission (E&O) insurance to their agents. This insurance protects the agent in the event that an unsatisfied client decides to sue. It happens often enough that agents will surely want to keep themselves safe from such costly litigation.
Brokers do charge fees or split commissions with their agents. That means that it is not all upside for the newly-minted real estate agent. However, the benefits outweigh the costs for the vast majority of those who sign up to work under a brokerage. And that is why they continue to choose to do so. Here's a look at some of the ways that one can select the very best brokerage to meet their needs.
A Broker with the Heart of a Teacher
A real estate license doesn't entitle one to all the knowledge there is to have about real estate. The license is truthfully just the start of one's education in this world. A quality broker will help educate their agents on the ins and outs of real estate law. But also on how to make the most consistent and profitable sales. In fact, biggerpockets.com suggests that the educational opportunities that a broker can provide should be one of the biggest upsides that a new agent looks for when selecting a broker:
If you're just starting out in real estate, consider the education a brokerage makes available to you. Whether they offer online courses, pamphlets, or actual sit-down classes, having access to education should be a factor in your decision. Your broker wants you to succeed—after all, it puts money into their pocket when you do!
Much of the real estate market is sink or swim. But you will certainly sink every time if you are not provided with the tools that you need to succeed. Brokers want to see their agents succeed. They should put in the investment to get those agents educated on the best way to do business.
Examining Their Fee Structure
What exactly is the cost of joining a brokerage you might ask yourself. Unfortunately, there is no simple answer since brokerages have a variety of fee structures that they may use to charge their agents. It is fairly common to see these fees break down one of two ways:
- Flat Fee - This one is pretty straightforward. The agent simply pays a flat monthly fee in order to continue to fall under the broker's umbrella and receive all the benefits that this entails.
- Commission Split - This structure has the agent paying a certain percentage of any sale that they make to the broker in order to retain broker benefits. The math of this can vary, but a 70-30 split is the most common in the industry right now. This plan has the agent keeping 70 percent of their commission when they make a sale. The brokerage then takes the remaining 30 percent. Some people are scared off by this structure because they don't like to give up any of their commission. But it is one way that helps keep the interests of the broker and the agent in alignment (i.e. the broker wants the agent to be successful in order to earn more commissions).
It is really important to go through the contract carefully before agreeing to it. You are allowed and encouraged to compare brokers against one another and see which one actually makes sense for your particular needs. After all, it is up to you to figure out which brokers have your best interests in mind and to work with those brokers.
Does Selecting a Brand Name Make Sense?
Should you spring for the brand name real estate broker every time? Probably not. There are upsides and downsides to either decision. Yes, the big names like Remax do provide certain clout with new potential clients. However, they can also make you feel as though you are lost in the crowd. You might feel more like a number than you would at a smaller broker.
One of the biggest advantages that smaller names have over the larger companies is that they are more likely to offer more career support for you on your journey. This means additional educational opportunities and more one-on-one support. This is to help you understand how you can best power your career forward. The downside of course is that you will not get the name recognition that you otherwise might have with a larger brand. You have to wait out the pros and cons for yourself to see which of these brokers makes the most sense in your situation.
Selecting the right broker is a major first step in becoming a successful real estate agent. Make sure you settle down and do your homework and due diligence on the different brokers available to you before settling on which one you will join. This could be one of the most consequential decisions you make in your career.
Contact us! Get additional information regarding how to select the ideal real estate broker to launch your career. We'll also tell you what factors should go into that decision.
