START-UP vs. ESTABLISHED FRANCHISE brokerage.. WHO SHOULD I JOIN?

Question

Good Evening fellow BP members,

Tonight I call on you to help me choose the best brokerage to sponsor me as I begin a career in Real Estate sales. Without getting into the whole spiel, about a year ago my business partner @Tommy Mejia and I decided that we wanted to become financially independent and decided RE would be the best way for us to reach this goal. Part of that involvement in RE includes me learning the business from the inside out while becoming a successful agent along the way. Of course the extra income from being a part-time agent will give us more access to capital for our own deals.

Last night I was informed I passed my state RE exam. This morning I went out and interviewed with 2 franchise brokerages (whose branches are privately owned as most of you may well know). To my surprise, they both impressed me.

On the other hand, I've developed a good relationship with a broker who just branched off from a franchise to open a start-up brokerage... On their own!! I am impressed with this broker's business approach and philosophy.

GET TO THE POINT ABEL!!!...

OK, here it is:

Assuming that all fees, commission splits, policies, etc are the same across all brokerages (the 2 franchises and 1 start-up); Which would help me better become a successful agent and broker (in a few years)?

Do franchises have better resources (trainings, broader MLS access, experienced colleagues,etc) to translate into more potential commission for me?

Does working for a start-up present challenges that a NEW RE agent might not be ready for?

I'd appreciate any advice or insight!

I wish you all much success!!

-Abel

Joel Owens · Answer

Hi Abel,

Best of luck in your new venture. I hope you are one of the ones that make it. I have heard rah,rah thousands of times over the years from new agents. Some brokerages will tell you sweet nothings because they know your sphere of influence will likely produce a couple of sales before a new agent peters out.

Just as important with a brokerage is shadowing someone at the brokerage performing at a high level. If you get that opportunity when they say be there at 3 you show up at 2:45. When they say do 10 steps instead of saying (Can't I do just 7 this is so much work? You would say I did all ten steps now I want to learn more.)

You have to show a hunger and willingness to learn that doesn't fizzle out in a few weeks or a month like most new agents. I used to have agents but not anymore. Too much of a time drain on my life with the drama and they are low producers compared to what I can close on my own spending time directly with clients. Some of my friends like having 100 agents at a firm even though just a few will close something and basically be a babysitter for 80k to 100k profit a year because they do not want to sell anymore.

I love the art of the deal so love transacting. I have worked with agents in the past who said they would do what it takes to succeed and then flamed out in a week or two. I wasted all of that time.

These days I say 25,000 non-refundable with a 50/50 split. Then off of the first commercial deal of say 50k commission I have already received the 50% split so they get the full 50k. From then on it is 50/50 etc.

I do not really want agents for commercial but if someone has  a lot to lose then I will consider it. Some agents that initially contacted me I gave my terms. They went to another brokerage with a low fee and 1 year later they are still working that JOB and have not closed anything. 100% of zero is zero folks just remember that. They have to show skin in the game and something big to lose just like putting money down for a hard money loan to rehab and resale a house. If that investor doesn't do what they say then the fees start piling up with the HML lender.

John Thedford · Answer

@Joel Owens...he knows the facts! 80% or MORE are gone within five years. Everyone thinks RE is a fast path to wealth. As to your post, if you believe company x has better training, you can work with them for that benefit. As Joel pointed out, it all on you. Best of luck whatever your decision.

Abel Curiel · Answer

Thank you for the responses gentlemen!

@John Thedford I realize they are a more familiar name and therefore would be more easily accepted especially in communities where they have successfully listed and sold property. I will seriously consider a franchise and may very well go with them. I have a follow-up and I'm attending one of their trainings this weekend to learn more about them.

@Joel Owens I've read those staggering numbers a few times. Definitely a bit intimidating for a newbie but I'm learning as much about mediocre/unsuccessful agents as I am successful ones. I'm hoping to put myself in a position where I get some decent training and support in order for me to learn some of what it takes to succeed. After that, ITS ALL ON ME. I'm anxious to equip myself with the tools necessary to meet this challenge with confidence. These are indeed some rough market conditions and I, like many, feel that somethings gotta give and it could all come tumbling down very soon. As for focusing on commercial property, thats a goal of mine as I recognize the benefits of working with investors vs. homebuyers. Way more number based! Must be nice!

I wish you both continued success and thanks again for the input!

-Abel

Joel Owens · Answer

You determine alone how well you will do. The brokerage can give you the tools but it is not a magic wand to make the money roll in.

90% of new agents fail the first year and leave the business.  The first 5 years in business about 80% of those agents that survive the first year will be gone.

I was at the bank today and the teller said everyone I know coming in is saying they are getting into real estate. I have been doing this about 13 years. I saw the last cycle downturn. When times are good everyone jumps in. During the downturn they drop off like flies.

I only do commercial so what I do is highly specialized and the herds do not work in that space like houses.

At first most sellers for SFR will not let you list their home. New agents get stuck with first time home buyers as the move up buyers tend to work with the listing broker they have known for awhile that sold them their original house way back when.  If you work on a power listing team then you might get some listings.

If you choose to work with investors on SFR the price point is very low in most markets under 100k a house. The larger properties most investors will want to use a highly skilled and seasoned broker or agent for a purchase they are putting a lot of money down on.

John Thedford · Answer

There is a lot to be said for the benefits of name brand recognition. A startup business won't have that advantage. People tend to go with names they recognize. Think Coke. Think Pepsi. You KNOW those names. Think KW or Century 21. You KNOW those names. People often will go with a name they recognize.