How to run/manage a successful Real Estate Brokerage Office?

Question

Hi BP Family,

Curious to know if any realtors have become a broker and started your own firm?

How was the transition?

What do you do as a broker on a day to day basis, and what do you delegate to others?

Was it worth it?

What do you wish you knew then that you know now?

How was it building your team?

What are the titles/responsibilities of your team members?

I appreciate any input I can get. If I missed anything important (which I'm sure I have lol) don't be shy with recommendations.

Best,

Nathan Gesner · Answer

I've had my management company for ten years. We manage 350+ rentals, 200 storage units, and do some sales. Last year I netted $250k. Not bad in a town of 9,500 people. If I could find a decent sales agent or two, those numbers would be significantly higher but I'm stuck doing most the work myself so I don't even market sales because I can't handle the extra business.

If I were in a different market and starting over, I would be very selective in the number / type of properties managed. If you can get 80 - 100 single-family homes that are A/B class properties, you could manage the entire thing by yourself from home with a computer and cell phone. Very low overhead, good profit, not real demanding on your time.

Wayne Brooks · Answer

Open my own brokerage?.....I’d rather let you hit me in the head with a sledge hammer, repeatedly.

Nicholas Smith · Answer

This is a very broad question in which you are going to get a wide range of input on because their are a ton of variables to consider. First is, what type of person, how do you want to run your business and scale.

1. Type of person - are you planning on doing a lot of sales yourself? If so, you will need to hire someone to handle all the day to day operations business of running a brokerage. If you don't plan on doing sales, you need to have have some anchor agents to rely on for commission. Regardless, you will need to look at the team of agents you will be recruiting and pro-forma out whether you commission incomes can cover the spread of expenses

2. What type of agents do you want to attract (if any). Are you planning on opening a brokerage just to cover your own book of business and not rely on attracting other agents to your brokerage. If you do want to scale up by attracting talent, what is your differentiating factor and what type of agents will you be looking to recruit (seasoned or rookies).

If you are considering opening your own brokerage, I would first find a very good broker owner in your area and go work for them to see what they have to go through and how they have modeled their business. Also, I would try and form a team under that brokerage so that you can find out whether you like managing other agents, and whether you are a good team leader. Not all agents and brokers are good leaders, and that is OK. Most of the time, the top agents are poor team leaders because they are too busy with their own book of business. Also, speaking from experience and to be quite frank, managing agents is sometimes equivalent to herding cats. The barrier of entry into become an agent is quiet low (almost non-existent) so you get a very wide spectrum of capability. I was a sales manager for a spell at a local large brokerage, it drove me nuts. I now manage a 12 person team that is constantly in the top echelon nationwide. We focus on only hiring seasoned agents. Lets us run lean and focus on the types of problem solving that I like to do.

Further, to answer your initial questions:

Curious to know if any realtors have become a broker and started your own firm? - I am a non-competing broker for a team. Right now we have decided to leverage and work under another brokerage (a ton of factors in this). We still contemplate going at it ourselves as a backup plan (always have contingencies). Even though we work under a brokerage, we are completely autonomous and insulated for the most part from them (we don't rely on any of the tech and such). We just leverage their wonderful staff which allows us to cut our overhead cost

How was the transition? - N/A

What do you do as a broker on a day to day basis, and what do you delegate to others? - As a non-compete broker, I manage all the operations for our team which include, but is not limited to, risk-management, planning strategy, escrow coordination, client interaction, analysis, and all around problem solving. I have a counterpart that handles all the marketing aspects of the business and we work hand in hand to make sure that our marketing has a reasonable ROI.

Was it worth it? - How we operate, very much so

What do you wish you knew then that you know now? - Be slow to hire and quick to fire. Vet out your potential agents and make sure they know our expectations. Culture is huge for us, so if someone isn't who they were on the first and second date, get rid of them.

How was it building your team? - interesting. You have to manage personalities and make sure that additions to the team fit withing the team culture. I consider our team family and friends, they are all quirky in their own way and that is what I find attractive.

What are the titles/responsibilities of your team members? Me - operations. Counterpart - Marketing. Principals (team leaders (2)) - making sales and hopping in to drag transactions across the finish line as needed.

Hope that helps, I tend to get long winded and opinionated on this topic. That is because I have a passion for it. Feel free to DM me if you have any other questions.

Bruce Lynn · Answer

@Brandon Carlson    I am a broker, but have chosen not to start my own firm.   We have a number of brokers in my office at KW.  I think what I do best is assist buyers and sellers.   I think as a great broker you have to wear a number of hats.  #1 is be a great recruiter and salesperson to attract people to your firm.  You can hire someone to do this for you.  I think most positions you can hire.   You also need to have someone do compliance for you....checking agents, checking contracts...again you can hire this.  You need to be a great coach and trainer to encourage, motivate, and improve the agents in your organization.  You can hire this position.   You need a bookkeeper or accounting person to pay your agents and manage your finances.   You can hire this position.   You probably need an assistant to help you hire and lead all these people and do a lot of things you don't have time to do....like marketing and advertising and day to day stuff.    At some point normally in the beginning you are doing all these things...until you have enough agents and income to support hiring.  That's one of the reasons I do not want my own brokerage with my name on it.   I like working within the KW system as they provide support with all these areas, so we can focus on recruiting and sales.   I think if you are a great recruiter you can make a lot more money working inside one of the systems like this vs doing it on your own, but of course there are a lot of people who want to run their own shop.   I am guessing this number holds true as I see a fair number of brokerages come and go...but my old broker at Prudential used to tell me they would never open an office unless they could hire a team leader from another brokerage who would bring 35 agents with them.  That was the minimum and starting point.   As I look at our financials now, I see how that probably makes sense.   I'd put your own numbers together if you want to do your own thing with your name on it....then work backwards to see how many agents you need to support that model.  Then think about how fast you can get there.   Can you build a team inside your brokerage now, so that when you buy your own sign you can take 10-15-35 team members with you.

Russell Brazil · Answer

Brokerage is a business with incredibly thing margins.  Most small brokerages, typically need to either own a mortgage company or title company, and will make their profit there with the brokerage as a loss leader.

Marian Huish · Answer

I have a very unstructured team @Brandon Carlson in that each agent maintains their own identity and control over their own business.  By sponsoring and mentoring agents, I have a vested interest in their success and also have agents to assist me in servicing my clients as I operate in 2 markets:  Washington DC metro are as well as N. Nevada (Reno/Tahoe).  I'd been wanting to start a team in order to scale, however, didn't want to be responsible for managing agents daily.  I simply offer them a share of commission based on level of effort, or refer client leads to them for a fee which is working well.  There are many ways to structure a team, however, this arrangement affords me the ability to utilize my 'team' to better serve my clients while supporting agents in growing their business.  It's a win-win!

Brandon Carlson · Answer

@Marian Huish how was your transition going from a single agent to building a team? Any best practices you recommend? How do you now feel being a broker and managing a team?

Marian Huish · Answer

Unless you bring in a large team, all agents start at 80/20 splits but with only a $16K cap so you get to 100% rather quickly-  no negotiating as it’s built into the business model @Brandon Carlson.  I came in as a single agent but have since built my team.

Brandon Carlson · Answer

@Marian Huish I like the idea that you have your own team and brand, but on the financial side

how we're you able to negotiate that with your broker?

Marian Huish · Answer

After 16 years as a sales Agent I had considered opening my own Brokerage @Brandon Carlson, however, after weighing the expected cost, effort, risks and headaches as mentioned by @Russell Brazil, I opted to go with a Brokerage that handles all that for me while I can build & manage my team, have the option of keeping my own team brand, and receive the financial benefits of commissions from the sales of other agents which is generally only available to Broker-owners.  This allows me to continue to focus on my own sales while mentoring & supporting my team.  So it depends what your current experience level is and what your long-term goals are.  Like any business owner, you can end up so tied down running the day-to-day operations that you can’t fully enjoy the fruits of your labor!  If your goals are sales and or investing, I would align with the right Brokerage that allows you to achieve your goals while they take care of the onboarding, training, technology, liability and everything else that comes with running a Brokerage.  Good advice @Nicholas Smith-  I would like to hear from others who’ve been successful in starting their own Brokerage!  Best of luck!

How to run/manage a successful Real Estate Brokerage Office?

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