Advice for Choosing a Real Estate Broker
Too many new real estate agents think a real estate broker choice is primarily based on commission splits. It's not all about the split, as the final in-your-pocket income has to do with many variable services provided by brokers.
First, remember that you're an independent contractor and own your own business. You may have to hang your shingle with a broker, but it's your business and your success is up to you. However, the brokerage you choose can make a major difference in your lifestyle.
It's Not All About the Split
New agents shouldn't focus too much on the commission split aspect when choosing a real estate broker. There are so many services that are available from brokers and they may be things that you really need to get your start in the business. The end income result can be more in your pocket with a lower split depending on leads provided and service fees.
In today's Internet-dominated world, you're in a bit of a dilemma. There's something to be said for choosing a broker who is going to give you good exposure or a segment on their brokerage website. But, now the longer you stay, if it's working for you, the more dependent you become on it. Even if you are offered a site, you really should be building your own that you can take with you as well.
Don't assume that you'll always be with that brokerage. In fact, the odds are that you will not. Just always remember that it's your business.
Determine Your Expenses so You'll Know What You Need for Income
Before you can accurately compare the service offerings and commission splits of two real estate brokerages, you first should know your income needs based on personal expenses and projected new real estate agent business expenses.
Using the link to the free spreadsheet, get an idea of what you'll need to survive and move your business forward. Then you have the knowledge to make better brokerage comparisons.
Is the broker going to give you some print ad space in regular large brokerage newspaper and homes magazine ads? They may be contracted for large ads and you can get some of that space, especially valuable for your listings when you get some. Print advertising is expensive.
Compare Broker Lead Referrals With a Prospect Income Funnel Approach
Using the income funnel approach and the spreadsheet in the link, you can ask real estate brokers how you'll receive leads and prospects. What are their projections for floor time leads, phone leads on up-time, website leads, etc? Use these estimates to fill in your funnel sheet and see what income will come out the bottom.
As you'll see, a 50/50 split in one place might be better than a 60/40 split in another based on the prospect leads you'll be getting.
Don't Forget Incidental and Office Expenses
Even some of the traditional real estate brokerages are now beginning to charge for things like copies and certain phone services. That's because they're having a harder time with profitability in today's market. Make sure you factor in what they're going to charge you for those items as well as Errors and Omissions Insurance and any other per-transaction charges.
You may work with a more virtual oriented brokerage, doing almost all of your office work at home. You may get fewer services, but you may get a better commission split as well.
Mentoring and Training
Most new agents definitely need training in contracts, negotiating and procedures that are predominant in their market area. However, when it comes to sales/marketing training or motivational things, your needs can be quite different than those of the next person.
Generally, mentoring comes with a cost. It could be a temporary lower split or even a per-transaction charge or percentage. Determine your needs in this area and make your decision with this in mind. The most important thing to remember is that you are an independent contractor and running your own business. At any time you could decide to move your license for any reason, and you'll want to have your own business presence on the Internet and your own marketing in place. So, never just accept broker marketing and do nothing else.