New Broker - How to do learn Brokerage Operations

29 Replies

Originally posted by @Llewelyn A. :

@Joel Owens

@Russell Brazil

Thanks for the information.

I was already suspecting that Brokerages shift costs onto Agents.... or for that matter, Associate Brokers.

It's the one reason I decided to open my own Brokerage because I don't trust other Brokerages to add enough value to my training versus making money using my sphere of influence.

I happen to have a large Sphere of Influence in consideration that I have a large Friends and Family network, I have over 65 current tenants, 100s of former tenants, and lots of Students from a Real Estate Investor Education program I ran for 8 years prior to 2014.

One of my Partners just started as an Agent at one of the big firms. He hates it and he was given an open rental listing to market with his own money of which 50% of the commission was going to his Broker.

This Particular Partner is an expert at Rentals and manages 2 of my buildings. He's having a difficult time competing against experienced Rental Agents for that commission.

In NYC, the Tenant Pays for an Agent to find a Rental, not the Landlord. So when he runs ads for our properties, it's always a NO FEE listing. That NO FEE listing is the one that draws in the Leads.

Had the Rental been an Exclusive Rental Listing, he wouldn't be wasting time and money on trying to rent an apt that all other Agents can also rent.

I suspect my Partner will burn through his budget for the listing and not be able to sign a Lease.

I consider Brokerages treading new Agents this way setting them up for failure.

Because the Brokerages normally give the best leads to their best closers, the worst leads and worst jobs will go to new agents.

These are reasons why I wanted to just start a Brokerage. I'm completely avoiding wasting my time, money and the time for anyone within my Sphere of Influence.

Many of my Partners and their friends as well as my family members know that if something goes wrong and it's my fault, I have more than enough Capital to make a loss whole. I never had to test that because I've never lost money on a deal yet.

The reality is that I don't need to make Money from the Brokerage firm. I'm already set financially.

Those in my Sphere of Influence know that as well. They know I'm not desperate to sell anything just to put food on the table.

Any Agent that joins my firm will have to live up to my very high ethic standards. I intend on building my Brokerage based upon Ethics and Honesty first, Hard Working second, whether or not I make money.

 No good leads come from the brokerage.  If your friend is relying on leads fron them, he simply will not make it in the business.

You mentioned earlier part of the reason you want your own brokerage is to keep the whole commission. If that is the primary motivator, then really your best bet is joining a brokerage that charges you a flat fee per transaction. I guarantee you that the amount you have for a flat fee per transaction will be lower than your overhead in running even a solo brokerage. 

One thing to check out too is disciplinary actions from your real estate commission, if they publish them all. A lot of solo brokers in my state get fined for non compliance with their home based offices if they are not renting an office some place else.  In our state you have to have an office that is locked not when in use, client files locked, and a space where you can meet with clients. What the REC does is send their investigators out, wait til they see you coming home, they invite themselves in and see your office door isnt locked then hand you a huge fine.

@Russell Brazil

Thanks for pointing out the Home based office.

I actually have a large home here in Brooklyn which would normally belong in the Suburbs. It even has a 2 car garage and a 100 foot driveway.

I have a dedicated room for my Property Management so adding the Brokerage shouldn't be much of a problem.

In reality, I'm thinking more in terms of going through We Works since they have excellent office locations and I can rent a space very cheap and still have access to office facilities like Conference Rooms.

CALIFORNIA has 134,000 brokers and have slightly more salespersons.  It did not require work experience and needing little studies to be ready for both tests than profession like hairdresser. Almost all attorneys have a real estate broker, esq designation.  99% work in a broker-associate capacity. If one has the desire to endorse his own convictions, willing to spend high rental and have the tolerance to fend off legal intruders then realtor firm ownership is a natural choice. It is realtor or broker associates choice whom they want to hang their license with.   Often it is leads, commission office location etc.

My suggestion is learn the business first before the ultimate dream owning a brokerage.  You probably get noticed better joining a nation wide brokerage at the cost having to gave the commission back to corporate.


@Sam Shueh

Thanks for the advice.

I have already started the Brokerage.

I just secured my Broker friends, one of whom owned his firm for 15 years and he said he would oversee my transactions until I'm ready to be on my own. No cost to me. He owes me for helping him out when he needed it most.

Since I won't be taking on an Agent, it will be easier on my Broker friends when I do get into my first Purchase as Buyer who is a Broker.

So it looks like I'm all good!

Originally posted by @Llewelyn A. :

@Russell Brazil

@James Wise

@Joel Owens

@Darren Sager

@jay hinrichs

Well, I find myself in a bit of a dilemma.

I decided to get my Broker's License and start a Brokerage Firm. I now have my NY Real Estate BROKER's License (Note, Broker's License, not Salesperson's License) under my own Brokerage. I even have my Broker's Pocket Card! haha!

I qualified based on personal experience which means buying, selling, renting, mortgaging, etc. of my own Properties.

I opened my Firm and will probably purchase a property sometime this year in the $2 Million range which should give me a 3% Commission or around $60k.

HOWEVER, I am also thinking that I would like to offer friends and family my service as well and to give them a discount on my commission... at least in the beginning few years until I really understand all the things a Broker really needs to know.

I'll probably just concentrate on being a Buyer Broker rather than listing as I don't have experience YET at selling.

I won't take on an Agent just yet either until I fully learn all the normal operations of a Residential Brokerage Firm.

The dilemma I am having is that because I have not worked as an Agent, I am now tasked with understanding how to run a Brokerage firm from scratch.

So even simple things are unfamiliar to me including:

1) Associating/Disassociating Agents. File Agent's Licenses until they disassociate.

2) Insurances like General Liability and E&O

3) Forms such as co-Broke for Listed MLS Properties

4) Which Disclosures are needed for what circumstances... ie. Lead Paint Disclosure for Properties build before 1978

5) Keep all documents for 3 years.

6) How to conduct a proper CMA

7) How to conduct a proper BPO

etc.

I have both the Salesperson and Broker's License Study Guides which gives me a lot of information. However, to be honest, a lot of the material references are pre-2008. I don't trust that the Official Study Guides and Exam Questions and Answers are actually up to date.

I tried looking for Real Estate Office Management Books... there are several but I don't know which would be detailed enough for me to actually pick up the business processes and steps needed to run a Brokerage Office so that I conform to NYS/NYC laws.

I am planning on joining our local board, the Real Estate Board of NY (REBNY) and to have a NAR membership.

I will be asking them about education on how to run the Brokerage.

I want to keep it as a one man Brokerage until I understand exactly what I need to know.

Any suggestions would certainly be welcomed.

 This is why most states require a licensee to work for another brokerage for awhile before starting their own. Kinda shocked that your state will let you start your own firm from scratch actually. May not be a bad idea for you to work under someone for a little while. The small amount of commission you need to pay to the broker is pennies in the grand scheme of what you can learn from working in their business. That said, if you don't go that route this is what I would do...

1) Associating/Disassociating Agents. File Agent's Licenses until they disassociate.

Contact the Division of Real Estate.

2) Insurances like General Liability and E&O

Google search should bring up several providers. Talk with them.

3) Forms such as co-Broke for Listed MLS Properties

Not following what you mean by this one? You typically just place the Co-Broker info into the MLS. The MLS you are joining usually offers training, so probably a good idea to look into that.

4) Which Disclosures are needed for what circumstances... ie. Lead Paint Disclosure for Properties build before 1978

Your Real Estate Law classes should have went over this.

5) Keep all documents for 3 years.

Your Real Estate Law classes should have went over this.

6) How to conduct a proper CMA

Comps. Run comps & make an educated opinion of value. The more experience you have the more weight your opinion will carry. Everyone's got an opinion. It's all about whether or not yours is right.

7) How to conduct a proper BPO

Comps. Run comps & make an educated opinion of value. The more experience you have the more weight your opinion will carry. Everyone's got an opinion. It's all about whether or not yours is right.

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