You might be an independent contractor, but real estate agents can’t do it alone. If you want to help clients buy and sell homes, you’ve got to have a broker.
Choosing a broker is one of the biggest decisions in an agent’s career, and it isn’t always an easy choice. No two brokerages are exactly alike, although they can share many similarities. But which type of brokerage is right for you?
Your three options are national, boutique, and virtual brokerages. They vary in four main ways:
Commission splits
Work culture
Reputation
Support and technology
National Brokerage
A national brokerage has a presence across the country. They’ll be the names you recognize, like Keller Williams, RE/MAX, Coldwell Banker, and Century 21. These companies often handle thousands of transactions a year and have sizable budgets. They are also usually at the cutting edge of technology to stay competitive. That helps agents work more efficiently.
Pros of a National Brokerage
One of the biggest benefits of joining a national brokerage is name recognition. This is especially helpful for new agents that haven’t made a name for themselves. While you're building your reputation, you get the benefit of being associated with a trusted name. That helps attract clients.
National brokerages also spend money on brand advertising to help bring in more home buyers and sellers. This can include local advertising and national advertising from the parent company. A national brokerage should also have significant resources to help agents advance their careers, learn the ropes, and work leads.
Cons of a National Brokerage
The resources of a national brokerage help agents save some money upfront, but these brokers usually offer a smaller commission split — particularly if you’re a rookie.
Think of it as trading income for education and more exposure to clients.
Boutique Brokerage
A boutique brokerage is a small, localized company that offers a personalized experience for agents and clients. Not surprisingly, a boutique brokerage is a small group where everyone works together.
Boutique real estate brokerages offer custom services for clients. They often specialize in particular types of real estate. They don't have as much support or marketing help as big-name national brands, but many boutique brokerages have strong local reputations.
Pros of a Boutique Brokerage
For an agent that’s just starting and wants a true mentor, a boutique brokerage may be the way to go. The brokers at a boutique firm will find creative ways to help you be successful during uncertain times.
Unlike national firms, boutique brokerages have a small number of agents. One-on-one training is common. They're also a good career move if you want to specialize in a particular type of home sale. This training and experience can help you become an expert in specific types of real estate transactions.
Unlike national brokerages, boutique agencies don’t have to pay franchise fees. All of the revenue generated remains within the brokerage. In some cases, the lack of franchise fees can be significant, allowing boutique firms to sell homes at slightly lower prices without sacrificing commissions. Even a small decrease in price can be a competitive advantage.
Cons of a Boutique Brokerage
Boutique brokerages sometimes have less structure. There might be fewer leads coming in, too. There’s also a higher possibility that you’ll have to pay monthly office fees, and the commission split might not be much better than a national brokerage.
Virtual Brokerage
Virtual brokerages, also known as cloud brokerages, are online only with no physical location. Since most agents do the bulk of their work from a home office, a virtual brokerage makes a lot of sense. This is especially true for seasoned agents that have a large contact list and don’t need as much training.
“Virtual brokerages are the future of the industry,” said Sam Sawyer, CEO of Pinnacle Realty Advisors. “Agents can work from wherever they want on their own terms and still get the service and support they need to run their business.”
Pros of a Virtual Brokerage
The benefits of joining a virtual brokerage include:
A better commission split
A large community of agents and brokers to tap into
All your tools and paperwork are available on your mobile devices
Investment in the latest technology
“Pricing in virtual brokerage models is also better when compared to legacy brokerage firms that have high overhead fixed costs such as office space that agents hardly use," said Sawyer.
You don’t have to be the most tech-savvy agent to jump on board a virtual brokerage.
Cons of a Virtual Brokerage
There may be a learning curve by completely moving to paperless transactions. Since the concept is still relatively new, some clients may be a little hesitant to sign with a virtual brokerage.
Proptech Is Boosting Virtual Brokerages
The pandemic gave virtual brokerages a huge boost. When shutdowns started, all brokerages essentially became virtual. It proved that real estate agents using Proptech could work 100% remotely and still close deals.
Real estate agents have always had a hybrid work schedule, splitting time between the office and on-location. For real estate agents that act as independent contractors, the virtual real estate office is an effective model since agents are on the move.
Brokerages that understand how to leverage Proptech and support remote work are more prepared for the future of work. We expect to see a rise in virtual brokerages and hybrid models that combine the best of traditional and virtual brokerages.
In fact, 90% of real estate agents said they invested in Proptech as a result of the pandemic, and 82% are incorporating it into their business strategy to remain relevant.
Which Brokerage Model Is Right for You?
At the end of the day, there’s no right or wrong brokerage model. It depends on the type of support you need — and yes, the commission split you want.
Another option is to get your own broker license and create your own brokerage business. If you’re looking to start a real estate career and aspire to be a broker, you’ll need to:
Complete a pre-licensing real estate course
Pass your state exam
Gain some real-life experience
Complete a state-approved broker course
Pass the real estate broker exam in your state
Looking to jumpstart your real estate career and get your agent’s license? Aceable’s online pre-licensing course can get you started.
Updated 1/20/23