I just incorporated my own brokerage...NOW WHAT?

Question

I am an attorney with some real estate brokerage transactions under my belt.  Recently, I decided to partner up with my wife (yikes!), and about 2 months ago we purchased a home to fix and flip.  We are still under construction, but I decided to incorporate my own RE brokerage company (as i can do that in NY bc i am a licensed attorney).  The objective is to list this particular property as the agent, and split the commission between the buyer's broker (if there is one), and my company.

So now i have a NY licensed brokerage company sitting dominate until I'm ready to list my property.  I'd like to try to do some transactions, and was wondering what the best approach would be.  My initial thought was to seek out RE sales associates and try to entice them to partner up (offering them bigger commission than they're currently earning).

Was just looking for some ideas and advice.

Thank you all in advance!

Seth Ferguson · Answer

Hi @Sal Fichera,

I think you'll find that recruiting agents is a full time job. I'd be careful about undercutting other office splits, as the type of agents that sort of plan attracts aren't usually the ones you want...plus they'll jump when a cheaper options comes available. Plus, at this point, you have no market share, systems, support, etc.

Just throwing it out there...unless you actually want to be in the brokerage business (with its thin margins), you might be better off just doing your own transactions.

Eli Lederman · Answer

If it wont be a "active brokerage", I believe it will be a epic failure.

Agents need hands on support.

Agents need leadership and motivation.

Otherwise a bunch of useless goons will just park their license by you, and not generate you any real $

Iv'e seen it all, literally.....

Andres Baena · Answer

@Sal Fichera, I believe that the MLSLI application will automatically make you a member of LIBOR and NAR. Also, i'm thinking of checking out Hudson Yards the 16th during the day. We should link up if you're free.

Sal Fichera · Answer

@Andres Baena.  Sounds like you have your hands full.  I hope things are working out well for you.  I guess my initial concern, since I'm already incorporated, is how do i get listings up on MLSLI.  I called them and they are sending me a membership application.

Wondering if I need to be part of a Realtor Association in order to be eligible?!?

Next time you're in NYC, reach out and we'll meet for coffee or something...would love to chat!

Andres Baena · Answer

Hello @Sal Fichera, also an attorney recently turned broker, trying to grow a real estate team. I can agree and attest that growing the business is full time as well. I was fortunate that I was able to convince 16 agents from the brokerage I used to be under and im now in the process of recruiting and redoing the marketing  for the team. It’s a lot of work and it’s been an interesting experience balancing a growing flipping business and growing a brokerage. Would love to connect one day to chat about how we can help each other.

Sal Fichera · Answer

@Scott Wolf, yes, I agree.  I'll just pay to 2% or 3% commission to the buyer's broker, and keep the rest for myself, individually.  I think that is the best approach.  Thank you.

Sal Fichera · Answer

@Charlie MacPherson.  Thank you Charlie for the insight.  Its nice to learn from other people's experiences.  Thank you for taking time to comment.

Scott Wolf · Answer

I think Jason's point is that you should not pay yourself a commission.  Being able to offer buyer's brokers commission is a great idea, but you should just keep the profit for yourself, instead of paying commission and additional taxes on that commission.

Charlie MacPherson · Answer

@Sal Fichera  I had my own brokerage for 2.5 years.

I built the company to 10 agents - all part timers, because that's who I could attract.  If someone is at a big name brokerage and banging out 50 deals in a year, what could I offer them?

I was paying a very competitive 75% split and covering E&O, websites, CRM, marketing and doing a ton of training.  And like most part timers, they produced next to nothing.

First, I cleaned house and worked on my own for a few months.  Then I signed on with C21.

WAY too much time, effort and money spent on things that didn't produce income.  It just didn't make sense to keep chasing after things that weren't working.  I went back to focusing on selling real estate.

I have a lot less stress, I'm a lot happier, my expenses are down and I'm making more money.

Sal Fichera · Answer

@Jason Lee, in New York, brokers are less inclined to show their buyers homes that are "for sale by owners".  The idea is that those home owners are not willing to deal with brokers and are not willing to pay a broker commissions.

If I list my fix and flip as a home "for sale by owner", I will eliminate a whole audience (the audience that brokers will bring).  If I list my fix and flip via my RE company, I capture all those buyers currently using brokers, AND I only pay half the commission.

Thoughts?

I just incorporated my own brokerage...NOW WHAT?

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