Always lots of debate on BP about whether REIs should get their real estate license. Well as a newbie, I made it a priority to do so and I'm pleased I went through the process. I'm now interviewing brokers to determine where to hang my license.
Many brokers offer at least basic training but some go above and beyond, including mentorships, advanced training, etc. Of course that all comes at a cost, so do you feel it's worth the additional fees and less of a commission split to be part of such a brokerage? Or find an inexpensive broker, take advantage of the basic offerings, and bank the fees for investments?
Appreciate your thoughts.
It depends on your goals with real estate. Are you planing on being a realtor first and doing investing on the side, or spending most of your time doing investing and being a realtor part time? The bigger brokerages usually have more to offer you as a beginning realtor in training, website help, and paying for some of the fees and costs that the smaller brokerages don't. So even though they take a bigger cut of your sales, you have less expenses per month usually. The smaller companies that offer you a higher cut won't pay for much for you so you will have more costs per month and maybe even a desk fee. when starting out it is usually better to go with who offers you the best training and least amount of upfront and monthly fees since you probably won't be selling too much your first year. Once you have a lot of clients and do a lot of sales then find someplace with better commission split. Where I work the commission is determined by how many sales you had the year before. The higher amount of sales you do the better your split will be. I know a few companies that do it this way and it works pretty well.
It is also important to find a broker that you get along with and sees eye to eye with you on your business plan. Talk to as many places as you can and see who you feel the best about and offers what is important to you.
I agree with Derek; it really depends on your business objective. If you're serious about selling real estate than a large brokerage might be your best option. It will give you company name recognition and put you in touch with a lot of associates that can benefit you. A large brokerage will also provide you with more opportunities to build a customer base with floor time and potential open house opportunities. Of course, you should feel absolutely satisfied with the brokerage and their reputation in the area. Good luck.
Sorry for not clarifying - I will be an investor first (buy and hold / flipping), agent second. I'm looking for the advantages of MLS access, viewing properties on my schedule, and of course saving on commissions. My agent activity will be limited to personal properties and investor referrals.
I'm currently leaning toward the broker that offers the best training, as it seems like an upfront investment but also another good opportunity to network and learn the markets better.
Great point about seeing eye-to-eye too...good advice.
I'd go with a higher split. 50 vs 70% really adds up when your buying and selling for yourself. You can also find some flat fee brokers that you pay a desk fee and per transaction fee.
@Mike Dmuchoski Congrats on getting your RE license! I'll elaborate on your question based on my own personal experience...
When I got my FL license I interviewed with a few larger, well known brokers and then a few small boutique type brokers. I was of the mindset that I didn't want to have to pay a monthly fee to hang my license so I ended up going with the smaller brokerage as there were zero fees besides business cards (which the broker ended up paying for). For me & my situation at that time, it was a huge mistake! There was almost no training, no assistance from the broker or other agents. I was thrown to the wolves and left to fend for myself. That alone cost me more than I would have spent going with the big brokerage that offered training, floor time, etc. It seemed like a good idea to go with the smaller broker who was giving an 80/20 commission split but with no deals in sight that meant that my 80% was zero dollars.
For your purposes with investing, I'd try to find a brokerage that works primarily with investors. You'll undoubtedly learn from some folks who've been doing what you plan on doing & the networking will be more catered to your business plan. Good luck with everything man and let us know how it turns out!
Most of the brokerages tell me they have investor/agents on staff (and they are accessible to me) and agents sometimes work with investors but I haven't yet found a brokerage that primarily works with investors.
The "80% of zero dollars" is something I keep coming back to. @Brandon Turner mentions this all the time re: partnering and I think it applies here too. The training and networking seems like a worthwhile upfront investment.
@Michael Jobe makes a great point in his post.
Im kind of a firm believer though its a street smart business and the only way you really will know it is to get out and hit the pavement start writing offers and figure out how this business works.
What kind of splits are the bigger firms offering these days? When I was looking it was 50/50....run those #'s on a total 600-700K transaction cost and you'll see that extra 20 or 30 % adds up really quick.
I can't argue having a supporting managing broker who is easily accessible would be invaluable when you are starting out.
@Mike Dmuchoski - I always advise newbies to become a Realtor. Now, as far as where to hang your license, that depends on so many things - many of those things are not money related. For example, how's the atmosphere in the office? Does everyone get along well? Are there people there with similar personalities and interests to you? I was once at a brokerage where the owner and I had a lot of similar interests. I could go into his office and talk hunting, guns, politics, etc. There's more to the decision than just the money and the training.
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