You’ve been building experience in real estate for years, and it’s time to take your career to the next level. Figuring out how to start a real estate brokerage from the ground up can be daunting, but it is completely possible with the appropriate research and preparation. Considering the kind of brokerage you’d prefer to start, potential competition, budgeting, building a team, registering legally and getting the word out are all important when deciding how to start a real estate brokerage. The good news? There are countless resources, both in person and online, that can help you understand the steps to begin the process.
Learn how to start your own real estate brokerage
Take your career to the next level by becoming a real estate broker.
Step 1: Obtain the right license
You probably already have a real estate license if you’re considering starting a brokerage, but make sure you do any appropriate post-licensing, including obtaining your broker’s license. Depending on the state, you will need a real estate agent license and a broker’s license. Check online for the exact regulations in your state as requirements vary by location.
Step 2: Set up a meeting with a broker in your area
Before starting the process, consider the steps and challenges of starting a brokerage and talk to industry professionals who have successfully started brokerages themselves. They might have insight into the process that can only be encountered through experience and will know the nuances of the area. If you’re uncomfortable talking to a broker within your market area, find one from out of town who is willing to give you some tips of the trade.
Step 3: Consider the competition
Depending on where your brokerage will be listing or purchasing properties, it is reasonable to check out the competition. Gauging the market in the surrounding area might be a deciding factor in the part of town where you decide to set up shop, so make sure to research both the market and the other major players in real estate.
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Step 4: Budget
Budgeting for your brokerage is crucial. Can’t afford to pay everything yourself? That’s completely normal. Securing a small business loan or partnership with an investor are ways to pay for your company as you’re getting it off the ground. Consider the following financial responsibilities as a new business when negotiating funding.
- Employee wages
- Security deposit for office space
- First month of rent
- Unexpected daily expenses
Step 5: Choose a brokerage model
There are two main types of brokerages to consider: franchise and independent.
Franchise Brokerage: Like any chain, franchise brokerages provide standard training and get assistance from sister franchises across the country for support. They follow a standard protocol for financial decisions like commission splits between agents.
Independent Brokerage: You could think of independent brokerages as boutique. They offer increased flexibility, more control over operations and don’t have the fees attached to bigger franchise brokerages. With that freedom comes more of individual responsibility to keep the business afloat.
There are a lot of different ways to structure a brokerage when you’re starting out. Factors to consider include agent compensation, legal organization and franchise in comparison to independent. The National Association of Realtors breaks down these decisions in a helpful infographic to show what other brokerages are choosing.
Step 6: Register your business
Short for “Limited Liability Company,” registering as an LLC is the standard way to protect yourself when starting a brokerage. An LLC can be owned by a single person or multiple, and its main purpose is to ensure that your business is only taxed when appropriate and to protect it from lawsuits. Legally, a brokerage can fall into other categories, but the most common is LLC.
Other legal registrations could include:
- Sole Proprietorship
Step 7: Find an office space
It’s time to find an office space! Whether you are working from an office building or from a spare room at home, it is important to have a designated space to work. Being able to bring potential employees and clients to a vibrant work environment allows them to take your brokerage seriously, and for you to take pride in your work.
Step 8: Build a superstar team
Your team represents your brokerage, so make sure you assemble a group of professional and well-liked agents. Before hiring agents, you will probably want to secure other key members of your team to help. An assistant and a listing specialist would be good first additions to keep things running while you are on the hunt for the best agents to bring on to the team. Once your team is set, put all of your forces into forging relationships with the surrounding community.
Step 9: Spread the word
Advertising your new brokerage comes next. It’s estimated that a business should spend about 10% of revenue on advertising, and for a brand new brokerage, you should be putting noticeable effort into raising buzz around your company. Venture into your target area with business cards, buy ads in local publications or even put your face on a bus bench. It all contributes to brand awareness.
Start a real estate brokerage now
Now that you know the basic steps of how to start a real estate brokerage, it’s time to use them. Kicking things off on a positive note is key in any business venture, so make sure to communicate your vision with your team. Stay organized, encourage positivity and communicate with your co-workers so that everyone is on the same page as you go forward in business. In doing so, your reputation as a broker will flourish, your employees will have a productive work environment and your new brokerage will benefit.