Starting your own brokerage may seem like a daunting task, but with the right information, it can be surprisingly easy to get started. We’ve put together this guide on the 7 Steps to Starting Your Own Real Estate Brokerage to help guide you through the ins and outs of getting off the ground. Once you’ve got all your ducks in a row, then it’s time to start looking for office space and hiring your first agents! Good luck!
1) Research your market
Part of the process of starting your own real estate brokerage is researching the market. Find out what others in your area are doing, who the other players are, and which areas might need new brokers most. You should also make a list of all of the service providers in your area that you can call on for advice and support as needed. The list will help you decide which products and services you’ll offer from day one, as well as figure out how to charge for them. For example, if you want to sell investment properties then your commission rates will be higher than if you’re just looking to sell houses.
2) Establish your business plan
Establishing a business plan is critical in any new business. Real estate brokerage can be a rewarding and prosperous industry, but it is also one of the more expensive to get into. To make sure your idea for starting your own brokerage succeeds, here are 7 steps you’ll need to take before opening your doors:
1) First, make sure you know what type of real estate broker you want to be.
2) Find out about education and training requirements for becoming a broker (there are different courses required for general brokers as opposed to corporate brokers). 3) Determine if there are any licensing restrictions in the area where you would like to start a brokerage.
3) Meet with an attorney
Start by meeting with an attorney and setting up your business. Next, create a name and logo for your brokerage. If you’re just starting out, you should also set up an LLC or corporation as an additional layer of protection against lawsuits. Once that’s completed, purchase the required insurance for your brokerage so that it’s fully protected from all liabilities relating to agent misconduct or damages on property or homes in any way. Finally, hire brokers who will be working at the brokerage and make sure they are licensed if necessary. You’ll need one broker for every 10 agents, and then one supervisor per 20 agents. It is recommended that you also have an administrative assistant on staff, but this can vary depending on the size of your company. For example, if you want to grow past five offices, then yes – this person would be important.
4) Organize office space
1. Choose a Business Name There are many options for what type of business name you want your brokerage’s name to be, such as The Central Rockingham Group LLC. It is a good idea to include the state in the name so people will know where you are located. Consider keeping your own last name in the company’s name and adding any designations like ‘real estate broker‘ or ‘designated broker’.
2. Search for Temporary Office Space that can be rented on a day or month-to-month basis which allows flexibility as your needs grow. Renting office space doesn’t have a commitment of three years, six months, one year, etc., which gives more freedom and independence when it comes to investing in the future.
5) Hire employees
Not sure how many employees you need? Consider the following: what is your specific niche? What are your goals in the short-term and long term? Are you just starting out, or do you have experience in the industry? How much time will this venture take up for you each day? In which area are you qualified for your job function (for example, what does a licensed broker need to know about contract negotiation)? Is any training necessary for that position? Which costs will be incurred by setting up an office (lease, cost of living in that area, payroll taxes)? Which other licenses or permits are required for each employee (driver’s license, social security number, etc.)?
6) Get your license
1. Get your broker license from the state you want to operate in. For example, Florida requires two years of experience for a broker license. If you don’t have two years of experience, an examination may be required.
2. Consider getting the preferred title (Realtor) or certified licensee (CRB) designation that is offered by the National Association of Realtors and Certified Residential Brokers (CRB). These certifications will provide credibility with potential clients, your peers, and customers if they are looking for a referral agent.
3. Formally establish your brokerage company by either incorporating or forming an LLC as a legal entity.
7) Start marketing!
Most people start a real estate brokerage for the financial benefits of being their own boss and working in an industry that has a such high demand. While this is true, there are a few other things you should consider before making the jump into the business.
Do you have any technical skills? Do you know anyone who can give you an inside scoop on how to find commercial clients? What kind of equipment will you need, and how much will it cost? A single deal can put food on your table for months at a time. If it sounds like something you want to do, don’t hesitate – to put some work into thinking about what might go wrong. That way when it does happen, you’ll be ready.