Broker-Broker or Broker-Agent Partnership?

[Craig Garrow]

I’m a 32 year old associate real estate broker, and I work for a small broker here in town who is 69, and getting close to retirement. I know that before too long, he is going to at least want to slow down, so I am thinking of offering up some sort of partnership where I could take on more responsibility, get some equity in the business, and eventually buy him out upon his retirement. I’m just looking to see if anyone has done anything similar to this? How did you set it up, and how did it work out?

[Seth Nadreau]

I bought out my sister's appraisal company in 2016 after working for her for 7 years. This was primarily done so I could have more control over my own career/earnings, but I retained every aspect of the company (including it's 4 employees) and re-branded with a new name and mission as she was a great appraiser but not much of a businesswoman.

I didn't have the liquid assets to buy the business outright, and it was a bit wonky in the math anyway since I was a top producer, my gross earnings couldn't really be factored in to the totals as I would have made that anywhere. I ended up putting about 20% down and then offered her an equity split on GROSS earnings for 2 years to cover the rest. (No ownership... just debt servicing a percentage of gross receipts.) It was ballsy, but it worked out well. I owe her three more checks and then I get an automatic raise of her percentage.

I partnered with her during the last 6 months of her ownership as she handed over the books and we worked together to transition her out and me in. My NUMBER ONE piece of advice is to get EVERYTHING on paper. We discussed who was going to do what during the transition, but then she sorta lame-ducked me.  

Congrats (in advance) of your big move. Good things coming!