Definition of Independent Contractor for Real Estate
Maintaining independent control of one's business functions, such as work schedules, accounting, and all other activities associated with operating a business, is the basic requirement of being an independent contractor. The "contractor" portion indicates some type of written agreement or contract executed between the independent contractor and the company or person who is hiring them to perform a task, job or function.
Though some definitions of independent contractor state that the person/entity hiring the contractor is not liable for their actions, most state real estate laws make the broker in charge of an agent responsible for their actions. This is one of the reasons that a special treatment of real estate agents was adopted by the IRS. As regards real estate, the Internal Revenue Service has declared real estate agents as "statutory non-employees" for all tax purposes.
What You Need to Know About Being a Real Estate Contractor
There is a lot of information about the status of an independent contractor. There are the legal aspects, and there are the duties and tax considerations. There is also a unique opportunity that the IRS gifted to the real estate agent by creating a special status of independent contractor just for the real estate industry. With the benefits come some obligations, but mostly opportunity if you take advantage.
First, It's a Business and It's Your Business
It's true that most agents must work under the supervision of a broker, but that doesn't change the fact that as an independent contractor you are in business for yourself. While you may get some advertising, a desk and a phone from your broker, they are not the owner of your business.
The best way to think about this is to move five to ten years into the future and think about where you want to be in your real estate business. You could still be with the original broker, or you could have moved around a bit, a common situation. Or, you could be a broker yourself, working independently or sponsoring your own agents. Think like the owner of a business if you want to grow and prosper.
Who Has the Most Invested in Your Business?
You have studied, paid for classes, taken your exam, paid for your license and now you're out there trying to get those commissions running. The broker you're affiliating with is providing you with a desk they already own, a phone they already own and maybe some advertising space they've already contracted at a bulk rate.
One of the reasons brokers are not hesitant to take on new and inexperienced agents is because there really isn't a large investment to do so. They set you up and send you out, maybe giving you some floor duty as well so you can get a lead or two. If you succeed, it will be because you worked for it and learned. If you don't, the desk is ready for another you.
Marketing for Your Future
Along those same lines, it's nice to get a spot on the brokerage website and maybe some free space in their contracted print ads. Let's say that you're satisfied with that and look into the future. You decide you want to change brokers or go out on your own. All of the goodwill and business marketing stays there. Sure, you can contact past clients and tell them you've moved, but you have to start at zero with your new broker's marketing.
You need your own website and preferably a blog at a minimum. You also need to establish your own presence on the social site; Facebook, Google+, LinkedIn, Twitter, Pinterest, and Instagram. Constantly think of your marketing as your business presence, not your broker's. Just keep doing it, and in the future when you decide to move, you take your business online presence with you.
Being an independent contractor in real estate is an opportunity; seize it.