How to Choose a Real Estate Brokerage As An Agent
Passing the real estate exam is a significant milestone for many aspiring real estate professionals. Some feel as though they are 90% thereafter passing the exam. However, passing the exam is just the first step to enjoying a successful career as a real estate agent. You still need to find a real estate brokerage to ease you into the real estate business, which can be easier said than done.
Real estate agents can’t work alone, they need to be under the guidance of a broker or a team, as it is called. So, the agent must ideally work for a big real estate brokerage. But there are independent options worth considering which add to the confusion.
Many find that working for a brokerage makes them less appealing. That’s because it adds reporting to their investments, but it may cost them money through a split fee or commission. However, anyone interested in taking up real estate as a long-term career, or wants to ramp up their investment game, should join a brokerage.
Now that we’ve established the importance of joining real estate brokerages, we’ll dive into how to choose one.
What Is A Brokerage?
In the US, a brokerage is mainly managed by a sponsoring broker. This person or business holds an employer’s license. Usually, they have years of experience and excellent coursework, tests, and similar proving their understanding of how things work. The sponsoring broker is also responsible for the actions of their agents or any brokers they are associated with within the industry. The brokerage's job is to guide newbie agents through the initial years and help agents fulfill real estate needs about which they may be uncertain.
Most, if not all, brokerages will have E&O insurance. The policy protects the broker and the brokerage if a client sues the company. This is also true for local boutique brokerages.
Real Estate Agents, Broker, and REALTOR® – What’s The Difference?
It is essential to define these terms correctly before moving forward.
A REALTOR® or real estate broker – Even though every state has its own broker licensing requirements. Getting a broker’s license isn’t easy. Brokers need additional hours of education and need to pass more stringent tests. Brokers can work as buyers, listing agents, and all the other responsibilities associated with managing a brokerage. They can also run local boutique brokerages.
Real Estate Agent – Real estate agents must fulfill education requirements and pass the licensing test. However, they need to work for a broker. In other words, you can’t go solo with a license.
REALTOR® – This is a term used by the National Association of Realtors. Becoming a REALTOR® is different from becoming a broker or agent. Professionals are required to adhere to a strict code of ethics and complete their NAR orientation. After which, they can work at a real estate office.
Once you are licensed, the next step is to choose a real estate firm to work for. Think of this as a reverse job interview. It is worth finding a brokerage that’s in line with how you like to work as an agent or investor in the local market.
Know Your Location As A Real Estate Agent
If you want to invest in a particular neighborhood or maybe a city, you need to choose a brokerage familiar with that location. This will mean that the supervising broker can provide you with invaluable information that can be used to conduct real estate transactions. Plus, those insights will help with working in that area you hope to invest in. In other words, you will have a finger on the pulse.
Find Out About The Real Estate Broker's Educational Opportunities
Having a real estate license does not mean you know how to do the job. Sure, you may be familiar with the laws, real estate terms, and regulations. But do you know how to fill out a purchase agreement? Can you conduct a market analysis? Know how to work with the MLS? Do you have experience marketing and advertising homes, shops, and apartments for sale?
If you are a newbie to the real estate industry, you will want to choose a brokerage that educates you, whether it is via online courses or a regular series of classes. Getting that education should be part of your decision-making process. Since brokers want their agents to succeed, they pour their own money into training and expect returns in the form of better performance from their real estate teams.
It is worth mentioning that no two brokers are going to be alike. Every broker has its structure and its own set of policies. Though most still rely on the traditional brokerage model, it is worth approaching different brokers and doing your due diligence. You will want to meet with at least three brokers before deciding.
Think of it this way: brokers compete for you, which is why they will sell their business and themselves to you. So, there is no need to sell yourself to the brokerage. But that does not mean you shouldn’t be dressed as you would for a job interview. It is imperative to act professionally. However, asking questions regarding their education, fees, and other matters is just as important.
What Is The Cost Structure?
How much a brokerage or real estate company pays is irrelevant since you can either make a lot of money or no money at all. The thing you should know is the structure. There are two business models that sponsoring brokers use.
Flat fee – The agent pays a fixed amount each month. This fixed number makes your cost planning a lot more predictable.
The commission split – This will vary from one broker to the next. The most famous split is 70-30. This means that you get 70% of any commission earned, and 30% goes to the brokerage.
The best path for you will be different from others. A flat fee may be suitable if you are selling a lot. If you just got your license and want more freedom, but have access to data, then the commission split should work.
Consider The Brand
Should you choose a major brand name? Honestly, there is no wrong or right answer. Every decision has its own set of pros and cons. Brand name places can be expensive, but the brand can help you in more ways than one, like making a good impression when handing out your business card. If you don’t care about brand recognition, you should care about career support and connections, which is easier with a comparatively small brokerage.