Whether or not you will want to open your own real estate brokerage someday, you should go get your real estate broker’s license. It takes work- extra education and an exam, as well as filling the experience requirement set by your state. In takes time and money to meet these requirements, but the benefits are totally worth it. If you already know that you want to open your own real estate agency, it’s a no brainer. Getting your broker’s license is the easy part because the path is already laid out for you. Simply check with your state to find out the requirements and make a plan and get moving.
What to do with that broker’s license is the real challenge.
The number one question to ask yourself when you get your broker’s license.
You have to do soul searching and dig deep to uncover your goals. Weigh the options to decide what route is the best for you to take. There are so many decisions to make and it can be overwhelming. Let’s begin by deciding if you want to be a real estate broker solo operation or open a real estate company that hires agents.
1. Starting your own Real Estate Brokerage – Solo
Once you become a real estate broker you can open your own company.(Check with your state to find out the requirements for a real estate office.) Having your own real estate company allows you to either just work for yourself or to hire agents under you.
Be your own boss and only worry about yourself. If you had a pretty successful sales agent business, becoming a real estate broker and working for yourself has so many benefits. You keep your overhead low and are only responsible for yourself. You can do the kinds of deals you want to do and have authority to make decisions without reaching out to anyone else for approval. All of the overhead costs are yours alone, but you can do a lot to keep overhead low if you are only having to take care of yourself. And remember, there is no one you have to split your commissions with. This economic factor of becoming a real estate broker is one of the main drivers of real estate agents deciding to become brokers.
Going Solo might be good for you if:
- You have a steady sales business and a strong sphere of influence. You have systems in place to create a steady stream of income and do not need to rely on other agents. For example, if you work in a real estate agency, you might sit another agent’s open houses to generate buyer leads. Although this is a great way to build your business, if you go solo, you can no longer rely on this tool.
- You are organized and the details of running a real estate company are in your skill set. Going solo means you do it all, from writing up contracts to going to the bank. It is you and only you, and you need to be organized to keep all of the moving parts running smoothly.
- You are independent and enjoy the freedom and flexibility that having your own real estate brokerage offer. Being a solo real estate broker is a way to travel light. You are responsible only for yourself and your clients, just like when you were an agent, but only better because you have no one other than yourself to answer to.
- You want to keep selling. The difference between a real estate agent and a broker is that the agent has to close deals in order to make money. Being a broker means that although you still close deals, you don’t have to. You can hire agents to close deals and you can step into more of a manager role. Do you see yourself still working with clients? If so, then being a solo broker may work for you.
The benefits of going Solo with the Broker’s License are:
- You get to conduct your real estate business however you want. So long as you are ethical and legal, you have all the freedom you want to conduct your business how you see fit.
2. The commission is all yours. No splits. Other than bills and overhead, that commission check is yours. All yours!
Downside of going Solo after getting Broker’s License are:
- The overhead is all yours. There is no one to share it with and you are obligated every month to pay the bills. Getting up and quitting isn’t an option. In order to make a change, you would have to shut the whole thing down.
- You are responsible for all aspects of the business from accounting to taking out the trash. There is a lot more responsibility. Not only are you in charge of running your brokerage you are required to run the business. The brokerage is often it’s own entity and all of the work for running it and keeping track of it falls on you.
- The only income you can rely on is from the deals you bring in. It all falls on you.
2. Build a Real Estate company and hire sales agents after you get the Broker’s license
This is where the opportunity to scale your real estate business is! By opening your own real estate agency and hiring agents, you are creating a business where agents are bringing in business for you. This is an amazing way to grow. Whether your goal is simply to run a business your own way, or to create the best brokerage firm ever, the possibilities are endless and you can grow as large as your imagination allows. Despite the many benefits, there also is a cost. It is important to look at the pros and cons so you can make the decision that is best for you. Let’s break it down here.
Yes! I want to hire Real Estate Agents!
- Every deal an agent closes brings revenue to your company. Hire real estate agents who produce and close deals and you can scale your business as large as your dreams allow. Scaling is one of the best ways to create wealth, and hiring real estate agents to work for your real estate company is one of the ways to do it.
- You get to create the culture. You are the broker, the boss, the owner, and you get to create the kind of culture that feels right to you. You will attract agents who share the same values as you because the company culture will set the tone.
- Help agents build their business and be a part of their success. Helping others is fulfilling and will keep you motivated and engaged in your business. You feel great about helping people achieve their dreams and get paid for it as well. It is a win/win!
The scary side of being a Real Estate Broker with sales agents
- Legal responsibility. Real estate brokers are legally responsible for all real estate activity that their agents do. If they mess up, it is legally your responsibility.
- Overhead can be really high. Opening an office suitable for agents is expensive and the overhead is all yours. Some real estate companies spread the cost and have their agents pay a share, but ultimately, it is the broker’s responsibility.
- Al the details involved with running a business, like accounting, taking out the trash, permits and payroll.
- Other people rely on you for their livelihood. Really, really think about this. Agents who sign with your real estate company are counting on you for guidance and support in order to run their business. You have a moral obligation to them. You are responsible to them. They are people, not cash cows, and in order to be successful and sustainable, the agents have to come first. They need to be valued and nurtured, just like clients, because now, they are your clients.
But what if you know you never want to be the boss? What if you never want the overhead and responsibility of owning a company? There are plenty of benefits to getting your broker’s license. Check out my post here.