As you finalize your real estate education and licensing, you’ll need to sign up with a broker to do business. A sponsoring broker can be far more than a spot to simply hang your license. This relationship can be key to developing success and a good reputation.
Some states require you to have a sponsoring broker before taking your final real estate exam, but many, such as Texas, California, and New York, don’t. Check with your state licensing department before your final real estate licensing exam to figure out when you need to apply with a broker. When you’re looking for the right broker, keep these five steps in mind.
Step 1: Ask About Training and Mentorship
If you’re new to the field, you may hear a lot about commission splits. That’s important, but put that conversation on the backburner at first. You’re looking for a real estate culture that suits your personality and style and also helps you grow. Ask about mentors, who you’ll go to when you have questions, and if there is an actual training program in place.
“Above all, you want someone who will help you grow as an agent,” said Cyrus Vaghar, a Coldwell Banker real estate agent in Boston. “Real estate is a marathon, not a sprint. The vast majority of those who are successful have spent years perfecting their system and have worked under other high-achieving agents.”
Step 2: Tackle the Commission Split Conversation Differently
When asking about the commission split, there is more to it than numbers. You should look for a trade-off between the service and training they offer agents and the percentage they ask for in a commission or other fees.
“Generally speaking, the more services a brokerage offers, the higher the commission split will be. Of course, this isn't always the case so you have to do your homework,” said Bill Samuel, owner of Blue Ladder Development, a Chicago-based brokerage and real estate investment company.
If you already have a strong network, you might consider a brokerage that splits less of the commission and offers minimal support, the pro added.
“However, if you are starting out and need help building a strong client base, then aligning yourself with a higher commission split brokerage that offers strong support is probably the best fit for you,” Samuel suggested.
Step 3: Ask About “Hidden” Fees
Beyond the commission split, a broker may charge other fees. Some may or may not be worth it. If you feel you don’t need a particular service, ask if you can decline the fee for it.
Some fees you may hear of include:
- Transaction fees
- Desk fees (monthly rent on a desk in the office)
- Administrative fees (to cover the expenses of an office assistant for the whole team)
“At my office, there is an admin who is an employee, therefore the agents do not have to contribute,” said Lisa Bonhotal, a Coldwell Banker agent in New Jersey.
In addition, there may be certain advertising fees that come with listing a property that either the broker covers or the agent must cover. Ask about listing costs and who covers what, Bonhotal added.
Step 4: Don’t Forget About Lead Generation
Even if you’re a seasoned pro with a solid network, Samuel emphasized that you’ll always be looking for new leads. He says you should ask about how leads are generated and funneled to those starting out. If someone calls a number on a sign, for example, which agent gets that lead? The more detail the broker can give you about how he or she generates leads and distributes them, the better.
Step 5: Talk to Other Agents
Before signing on with a broker, get the opinion of those who have been hired with an office in the past six to 12 months, adds AJ Chinn, owner of Phenomenal Homes with AJ Chinn in Kansas. The pro also says you should avoid brokers pitching a “hard sell.” Talking to agents should also tip you off to the types of agents your broker looks for.
“[Some] brokers are only focused on experienced agents that already have well-established businesses and do not provide as many training opportunities for new agents. Be sure to interview with several brokers and think things through before signing on,” he cautioned.
And remember, if you’re new to the field, don’t sell yourself short just because you lack experience, says James McGrath, principal broker and founder of Yoreevo, in New York.
“In today’s real estate market, agents drive much more value than their broker, so it’s up to the broker to prove they’re the best option, not the other way around,” he noted. “The number one question I would ask a sponsoring broker is what can they provide that other brokers can’t or won’t?”
Finding the right broker can feel like a big task. Take your time and don’t rush your decision. And if after some time, it doesn’t feel like a good fit, you can always change offices.
“I actually switched brokerages after a couple of years because I realized I had started at the wrong company,” Samuel added.