Steps and costs to start a Real Estate Brokerage?

Question

Hi Bigger Pockets Community,

I'm a licensed MA broke. I've been a licensed RE sales person since 2004 and I am now a licensed attorney so I have my broker's licenses as a result. I am wondering what are the steps, process and cost to open a brokerage. I know I should start an LLC which will cost somewhere north of $500. What else would I need and what are the costs?

Thanks!!!

Greg K. · Answer

Hi An,

I just started my brokerage this year and it cost me $3600 for the basics. I'm an attorney broker as well. Its a side hustle for me so my primary residence is my office and I've put sweat equity into building my website . Some of these expenses might be lower if you are a Realtor but I've started from scratch so these are the prices I paid.

Here is the breakdown:

$500 LLC

$100 salesperson bond and broker bond

$450 salesperson and broker application fees

$450 ZipForms

$500 MLS ($125 billed quarterly)

$300 BiggerPockets

$1200 liability insurance

$50 website and e-mail with Bluehost/Wordpress

$50 logo design on Fivver

Russell Brazil · Answer

Office space, e&o insurance, general business liability insurance, equipment, staff, operating capital, contract with your local MLS.

To give you an idea, most franchises require you to have about $250k in working capital to start up.

Jonathan Bowen · Answer

I've been running my own shop since 2003. It's not easy... and, sometimes, I'm not sure it's worth the hastle.

Russell Brazil · Answer

No e&o insurance? No increase in auto insurance? Continuing education?

Greg K. · Answer

@Russell Brazil Fortunately attorney brokers are exempt from CE in the Commonwealth of Massachusetts. E&O is what I meant by liability insurance. I live and work in Boston so don't own a vehicle. Certainly, there are variable costs associated with running the business but for start-up expenses, that's what it cost.

An Duong · Answer

@Greg Kanarian This was EXACTLY what I was looking for.

Im an attorney broker as well so looks like I can get rid of the $450 salespeson and broker application. I already pay for MLS so it will be roughly $3000.

Jonathan Bowen · Answer

@An Duong Are you recruiting? If so, you will spend time herding cats unless you make your service compelling. You will worry about things you didn't know you ever had to worry about. I can't think of anything specific because there are so many little things that pop up all the time. Your individual productivity, if you're being a good broker, will drop.

An Duong · Answer

@Jonathan Bowen what are the major drawbacks? Thanks!

Tory Keith · Answer

Lots of small costs that really add up - LLC/legal, accounting, marketing, website, dues, etc, and if you're going to bring on other agents it all gets more complex. I made a similar decision and am glad that I did but if I was only doing a couple deals a year it wouldn't have made sense. Feel free to PM me. I also have a couple of options that are appealing to agent/investors if you're interested in other possibilities.

An Duong · Answer

@Russell Brazil I plan to do it no frills. Right now I'm at a brokerage that gives me 90% of commissions. I'm an investor/flipper as well. If basic startup costs LLC, E&O, Liability insurance, other brokerage fees/costs (trying to find out what these might be) is less than 1 or 2 Gs it might be worth it o open my own brokerage. If I sell 2 or 3 house per year (whether my own flips or taking sales clients) I'd make back my money and then sum. I'm just not sure how much it would cost so I am not sure it is worth it.

Steps and costs to start a Real Estate Brokerage?

Steps and costs to start a Real Estate Brokerage?

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