Flexibility and nimbleness are often touted as the top advantages of independent brokerages. All this November at Inman, we’ll explore what indies are doing to meet the moment as the market shifts. And we’ll consider how alternative brokerages are impacting the landscape. It’s Indie Broker and Alternative Brokerage Model Month!
New markets require new approaches and new tactics. Experts and industry leaders will take the stage at Inman Connect New York in January to help you navigate the market shift — and prepare for the next one. Meet the moment and join us. Register here.
It is true that not all companies in the real estate sector will make it through the next year or two, partly because there is no such thing as continuous growth or unlimited growth and in 2021 home sales peaked. There will be another peak, but we all have to get through the valley first.
Some of the larger companies are laying off employees after disappointing earnings. Others are abandoning new creative ways to extract more money from housing.
As large real estate companies struggle with profit margins, real estate agents need to stay focused on their local markets and on their income and expenses and make some money.
Most real estate agents are independent contractors who should be able to move to another company or maybe even start their own company with the greatest of ease.
Being an independent contractor means that real estate agents are taking on most of the risk that a business takes when they hire employees. With that responsibility comes a great deal of freedom.
Always be prepared to move. Put yourself first, and do what is right for you. Company culture and parking lot barbecues won’t pay the bills or all of those fees and splits for stuff you might not even use.
Take some time to work on an emergency rebranding plan so that it is easier to get up and running after a move. Changing phone numbers, and email addresses can be hard on a business. How will you let your customers know where you are?
Real estate licensees should consider getting a broker’s license this winter, especially if business is slow.
What a brokers license can do for you
A licensed broker can continue selling real estate under another broker but can also go out on their own and start a real estate company. Real estate agents must work under a licensed broker.
Depending on the laws in your state, there may be opportunities for brokers to act as consultants. There are also various government contracts and even jobs where a broker’s license is needed.
Get started by going to your state department of commerce website to find out how to get a broker’s license. For example, in Minnesota, a person must be at least 18 years old and needs to have had a real estate salespersons license for at least three years.
The applicant must take 30 hours of classes and pass a test and, of course, pay a fee for the license. Brokers are required to take continuing education classes and renew their licenses. The renewal fees can be higher than those for a real estate sales license, but neither are very expensive.
What you’ll need to create a brokerage
Real estate companies need a trust account. Several brokers I know learned all about trust accounts and decided they didn’t want the responsibility. They have title companies that will hold the earnest money when needed.
Even if you don’t need a trust account, you will need an operating account and a business credit card. It pays to shop around.
Find out how and where to get errors and omissions insurance and any other types of insurance you should have.
There are also decisions to make about business structure. Some real estate companies are LLCs, some are corporations, and others are sole proprietors.
There is no single business structure that is right for every situation. Buying a franchise might also be an option.
Technology has leveled the playing field between large companies and small ones. With everything online — scheduling appointments, seeing houses, electronic contracts and signatures — it’s possible to have a successful real estate business run out of a home office.
There are people who like to work with small businesses or even woman-owned and operated businesses.
Office equipment is getting smaller and less expensive all the time. It is also more user-friendly. If you are fortunate enough to live in an area where high-speed internet is available and affordable, you can have a state-of-the-art office in your home.
Additional resources for would-be brokers
The National Association of Realtors has some information for real estate companies, including templates for procedure manuals and policies. Insurance companies also have document libraries, and your local or state association may also have some resources.
There is a lot to be said for being flexible, resilient and creative. The companies that are large today were once small, and before that, they were just an idea.
Teresa Boardman is a Realtor and broker/owner of Boardman Realty in St. Paul, Minnesota. She is also the founder of StPaulRealEstateBlog.com.
