Advise/Tips for Opening RE Brokerage

[Zachary Crosby]

Hello BP Network,

I will be admitted to the NY bar soon, which means I can bypass most of the requirements for opening up a real estate brokerage. I am interested in doing so. However, I am in the very early stages of the business plan. Does anyone have any tips or suggestions that they wish they knew before they opened a brokerage? 

I appreciate any tips, comments, suggestions, etc. Thanks!

Zachary

[Abel Curiel]

Quote from @Zachary Crosby:

Hello BP Network,

I will be admitted to the NY bar soon, which means I can bypass most of the requirements for opening up a real estate brokerage. I am interested in doing so. However, I am in the very early stages of the business plan. Does anyone have any tips or suggestions that they wish they knew before they opened a brokerage? 

I appreciate any tips, comments, suggestions, etc. Thanks!

Zachary

 Hello Zachary and congratulations on this major career milestone!

While I don't own a brokerage, I have been managing a team of RE agents for over 5 years. 

Some things I wish I would've done sooner:
- Find out the requirements for each local MLS you intend to join. They each have different fees, applications, and processes for admitting new brokers
- Consider co-working spaces for office location (regus, wework, spaces, greendesk, etc). Gives you flexibility + exposure within a small community. Depending on your office location, co-working spaces may open you up to more 'walk-in' business than any storefront or traditional office space.
- Evaluate the best tech platforms to subscribe to. i.e. skiptracing, RE data sites, CRMs, etc.
- Create Standard Operating Procedures (w/video) for every repetitive task on the admin, sales, and marketing sides of the business. Loom is a great platform for adding all SOPs to video form - huge timesaver when it comes to onboarding, training, and familiarizing your staff with current systems
- Create a tiered compensation structure for agents to incentivize the high-performers

Hope this helps!

[Bruce Lynn]

One idea is to be an agent in another brokerage like Keller Williams if you think you are a great recruiter.  Build your whole team within another brokerage.  You can run it like your own brokerage in many ways without all the risks and headaches.   No signing expensive leases that you personally guarantee typically.  All the tools already in place, you don't have to reinvent the wheel.  Staffing key people already there, front desk person, accounting person, all the third party vendors you need, all the training you need for your agents.

All you do is recruit and sell.  You don't get bogged down by all the crazy stuff you would have to do running a brokerage.   I think it is pretty darn tough from what I see to start and run your own brokerage, either day 1 or day 3001.  Get an agent complaint from the licensing authority and then you spend days, weeks, time, money fighting the complaint vs focusing on the business.

Also in places like Keller Williams you can get paid profit sharing not only on the profits of the agents you personally recruit, but on their efforts as well, around the country and around the world.  If you are a very dynamic recruiter and want more direct influence on those agents you can also build expansion teams again without all the risks and headaches.  So lets say you notice 50% of your sellers are moving to Miami or LA or Dubai, you could set up your own team of agents there in other KW offices to have them develop a business in those cities.  You don't have to get licensed in those states, you don't have to sign expensive leases, you don't have to learn their systems, you just recruit and hire to your team and let our local office handle the day to day so you can focus on what makes the most money.

[Russell Brazil]

Buy a franchise

[Peter Tverdov]

Man...it's a lot of work. I opened up one 3 years ago. I own a boutique brokerage. Thought I would just huge commission and get agents flocking to me. Wrong!

It's very competitive to recruit realtors, you have to train everyone, you have to create your culture, processes, a ton of stuff. I enjoy it but it's not for everyone. 

[Jonathan Greene]

Why would you open your own brokerage right now? The larger brokerages are all paying $20-$80m settlements and small brokerages have no protection if this ever comes for them. The only reason to open your own brokerage would be to just use it for yourself because recruiting agents will not happen for someone new to the business as a whole. And if you open your own shop, there are hours in the chair required to be open to the public so basically, it's a terrible idea.

[Zachary Crosby]

Quote from @Russell Brazil:

Buy a franchise

I've been looking into this. Which franchise would you rec? It seems like KW is the most expensive to purchase, but one of (if not) the most reputable. Other franchises are reputable, but a fraction of the cost. 

[Zachary Crosby]

Quote from @Jonathan Greene:

Why would you open your own brokerage right now? The larger brokerages are all paying $20-$80m settlements and small brokerages have no protection if this ever comes for them. The only reason to open your own brokerage would be to just use it for yourself because recruiting agents will not happen for someone new to the business as a whole. And if you open your own shop, there are hours in the chair required to be open to the public so basically, it's a terrible idea.

As of now, I am a law clerk in a relatively busy transactional law firm. Upon admission to the NYS bar, I'll be serving as an associate here. As a former attorney, you know there are restrictions that apply to marketing for attorneys engaged in other businesses, however, there is a decent amount organic growth that would occur. 

Additionally, I'm not afraid of starting the business and building from the ground up. I understand the risks involved. And there are certainly things I can do to mitigate the risk. Insurance, proper legal protections, etc. 

I am unfamiliar with recruiting and managing agents. It is something I need to educate myself on. Do you have any recommendations? Is this something your podcast addresses? I know other resources like the Real Estate Rookie and the Bigger Pockets podcast have episodes on this. 

[Zachary Crosby]

Quote from @Peter Tverdov:

Man...it's a lot of work. I opened up one 3 years ago. I own a boutique brokerage. Thought I would just huge commission and get agents flocking to me. Wrong!

It's very competitive to recruit realtors, you have to train everyone, you have to create your culture, processes, a ton of stuff. I enjoy it but it's not for everyone. 

Peter, do you have a moment to chat next week? I'd love to get some insight from someone who is a few steps ahead of me in this process. 

[Zachary Crosby]

Quote from @Abel Curiel:

Quote from @Zachary Crosby:

Hello BP Network,

I will be admitted to the NY bar soon, which means I can bypass most of the requirements for opening up a real estate brokerage. I am interested in doing so. However, I am in the very early stages of the business plan. Does anyone have any tips or suggestions that they wish they knew before they opened a brokerage? 

I appreciate any tips, comments, suggestions, etc. Thanks!

Zachary

 Hello Zachary and congratulations on this major career milestone!

While I don't own a brokerage, I have been managing a team of RE agents for over 5 years. 

Some things I wish I would've done sooner:
- Find out the requirements for each local MLS you intend to join. They each have different fees, applications, and processes for admitting new brokers
- Consider co-working spaces for office location (regus, wework, spaces, greendesk, etc). Gives you flexibility + exposure within a small community. Depending on your office location, co-working spaces may open you up to more 'walk-in' business than any storefront or traditional office space.
- Evaluate the best tech platforms to subscribe to. i.e. skiptracing, RE data sites, CRMs, etc.
- Create Standard Operating Procedures (w/video) for every repetitive task on the admin, sales, and marketing sides of the business. Loom is a great platform for adding all SOPs to video form - huge timesaver when it comes to onboarding, training, and familiarizing your staff with current systems
- Create a tiered compensation structure for agents to incentivize the high-performers

Hope this helps!

 This is the type of information I was looking for. Thanks for your input. Sending you a DM now. 

[Jonathan Greene]

Quote from @Zachary Crosby:

Quote from @Jonathan Greene:

Why would you open your own brokerage right now? The larger brokerages are all paying $20-$80m settlements and small brokerages have no protection if this ever comes for them. The only reason to open your own brokerage would be to just use it for yourself because recruiting agents will not happen for someone new to the business as a whole. And if you open your own shop, there are hours in the chair required to be open to the public so basically, it's a terrible idea.

As of now, I am a law clerk in a relatively busy transactional law firm. Upon admission to the NYS bar, I'll be serving as an associate here. As a former attorney, you know there are restrictions that apply to marketing for attorneys engaged in other businesses, however, there is a decent amount organic growth that would occur. 

Additionally, I'm not afraid of starting the business and building from the ground up. I understand the risks involved. And there are certainly things I can do to mitigate the risk. Insurance, proper legal protections, etc. 

I am unfamiliar with recruiting and managing agents. It is something I need to educate myself on. Do you have any recommendations? Is this something your podcast addresses? I know other resources like the Real Estate Rookie and the Bigger Pockets podcast have episodes on this. 

Wait, you think you are going to go to work as a new associated at a law firm in NY and also open, run, and recruit for a brokerage? This is like having 8 jobs. It is a terrible idea in every form of it.

[Bruce Lynn]

Quote from @Zachary Crosby:

Hello BP Network,

Just out of curiosity, how many agents do you think you need to be profitable?

At my first franchise I would always ask, why don't we have an office here or there.  The answer was typically we want to hire a broker/team leader that will bring a minimum of 35 agents and ideally at least 50 from the last brokerage. If they couldn't find that person,   I'm guessing that probably pays for basic office rent, receptionist, accounting person and a broker/recruiter.  At least 20 of those agents probably need to be selling $3mil or more a year at 70/30 split.   Maybe you can adjust that model as you see fit...get rid of receptionist.  Take no salary as broker.  Get 100-200 agents paying a flat fee.

Have you built out your model yet to see how many agents you need?

[Zachary Crosby]

Quote from @Bruce Lynn:

Quote from @Zachary Crosby:

Hello BP Network,

Just out of curiosity, how many agents do you think you need to be profitable?

At my first franchise I would always ask, why don't we have an office here or there.  The answer was typically we want to hire a broker/team leader that will bring a minimum of 35 agents and ideally at least 50 from the last brokerage. If they couldn't find that person,   I'm guessing that probably pays for basic office rent, receptionist, accounting person and a broker/recruiter.  At least 20 of those agents probably need to be selling $3mil or more a year at 70/30 split.   Maybe you can adjust that model as you see fit...get rid of receptionist.  Take no salary as broker.  Get 100-200 agents paying a flat fee.

Have you built out your model yet to see how many agents you need?

Sending you a DM.