Can you Make Money With a Real Estate Brokerage?
I started my own real estate brokerage a few months ago. I was planning to start my own shop not to make a ton of money, but to have more control and save money over paying another broker. I make most of my money from flipping houses. Before starting a brokerage I talked to many other office owners about thier business and how they ran their office. I came to realize that not many of them make much money either. A lot of them started offices so they would not have to pay another broker as well on their own deals.
I looked at many scenarios on how to make money with a real estate brokerage. I could not come up with a structure I liked. I had to let good agents keep a lot of their commission to attract them to the office. I could attract new agents, but they would take much more training and may not produce. There did not seem to be a winning solution. Then I thought of something. Why am I so worried about the office making a ton of money when that was not my original goal or my bread and butter. I should be focussing on my core business.
How did I rethink my business model?
I thought how can I make the office help my core business? It was actually Nikki (my project manager) who came up with the idea; entice agents to find me deals. I could charge desk fees for agents which wouldnhelp with expenses and make me a little money. If the agents were able to get me a deal I could flip, I would wave 6 months of desk fees. I realized if an agent got me one deal, it would make me as much as 1.5 years of commission splits and desk fees from that agent.
I knew that was the answer to my problem. Use the agency to help my core business. Now i need to find some more agents and tell my current agents the new structure. https://investfourmore.com/2018/04/09/my-real-estate-brokerage-blue-steel-real-estate-is-open/
I could if I had Nikki running it. lol
I think most businesses are hard to get going and be successful at. Have you ever considered going big time and incorporating and selling stock?
I am incorporated,but going public is another animal. I would have to be much bigger and essentially when you sell stock you sell part of the company. I like have 100 percent ownership
Congratulations on the brokerage - it's a big step. I clicked the link and read your story - it's very inspiring. I'm also an investor and I became an agent in 2012 and just moved to a new brokerage myself. Congrats on starting your own brokerage! I think you picked a great name - I'm no fan of the movie - but had no idea that the name was derived from it. As long as you are happy and it has meaning to you -
All the questions you had about growing a successful team, I was asking myself also - I spoke with other brokers who started out on their and heard a lot of the same things - spending too much time training new agents, thin profit margins, etc. I still wanted to build a team, but I was getting discouraged from the bleak outlook - and honestly not sure about wanting to get a brokers license and dealing with more continuing ed and extra responsibilities.
Then I found eXp Realty - a cloud based agent-owned brokerage that has a revenue sharing program. I wasn't thinking of leaving my broker at the time, but when I learned that you can earn revenue by recruiting other agents, it caught my attention. When I found out they give you shares stock when you close your first deal of the year, my ears perked up. When they said the commission was 80/20 with 16K cap and then 100% after that - I was pretty much sold on it. I could get all the advantages of building a team, without having to become a broker. Because eXp is a cloud based brokerage - they don't have any corporate offices, leases, building maintenance, and many of the other costs associated with brick and mortar businesses. This allows them to save millions of dollars a year that can be passed on to the agents in the form or revenue sharing and stock bonuses. Think of the difference between Blockbuster and Netflix - it only took 5 years for Netflix to usurp and shut down Blockbuster - the #1 video store. eXp is like the Netflix of real estate.
When I read your story - I saw that you are exactly the kind of broker who could really benefit from eXp - more so than me - you have a very high production and as you build your new team, you'd be awarded stock as each new member joined and made their first deal. You could still sell desk space and eXp has over 20 hours every week that your new hires could attend so you don't have to spend your time training.
They provide all agents with Kunversion( now called KbCORE) or CINC as their lead generating CRM on the back-end of the website to funnel leads from - it's a whole package and it blows me away that a program like this exists. They had 1,400 agent a year and a half ago and now they have over 14,000 agents - and it's no secret why they are growing so fast.
In any case - it probably sounds like I'm trying to recruit you and if we are being honest - then yes - I am - but it's only after reading about your new office and your internal questions about growing your business that it occured to me to reach out to you with this. And to be fair - you asked first
to which I have a resounding YES - yes you CAN!
Please do both of us a favor and watch the following quick 6 minute video and let me know what your first impressions are. I plan to start recruiting more agents to my team so I would love to get some honest feedback from others - it'll help me to know what objections agents and brokers might have and will help me to overcome them.
I have heard of exp. It be interesting for certain agents. I am not sure how it work for someone who wants a physical office since they mention shared space options. Who is the managing broker? Is it one per state or region?
It's great if you want to have an office - Many of our agents do. The brokerage itself is officeless - it doesn't mean that you have to be. -the whole "Officeless thing" is more about the technology behind the company that allows you to do business from anywhere. So even though you have an office - maybe you are out of town or something and you still have total access to your back office and transaction coordinators , tech support , legal services and what not. Some of the key features are not having to pay a franchise fee like some of the larger companies like Keller-Williams and instead you actually get to own company stock of eXp so it completely disrupts the typical brokerage business model. Also, I believe it is one broker per state -my broker is in San Ramon , his name is Ray Marquez, but I do business in Fresno - about a 3 1/2 drive - however I never have any reason to go to my broker in person as everything is done online or on the phone.
I was never going into my physical office at my old brokerage except to pick up checks, so I was used to not being there. I usually meet people at Starbucks or at the house we are looking at - I also have a meeting space that I use to hold my bi-weekly investors meetup group and I meet a lot of people there as it is a much more interesting space and people usually get a kick out of if.
Let me know if you're interested in learning more - I'd be happy to help answer any questions I can. I just signed up this month cause I recognized the long term potential I have with this company so I'm still learning a few of the ins and outs. What I did was to look at what I did last year and ask myself "would you have made more money last year if you were with eXp?" and the answer is ABSOLUTELY - im going from a 50/50 commission payout to an 80/20 payout and after 16K cap it's 100% commissions for the rest of the year - plus I would have at least 50 shares of stock in the company already which grew from $3 to $14/ share and would be worth over $700 today.
As you can tell - I'm real excited about joining - I probably won't be doing a lot of heavy recruiting till I get more time in - for now my focus has been on getting acclimated to the tools and switching over all my contact info and getting new business cards and marketing materials. When I start trying to attract agents, I will be holding lunch and learn events in the day, and mixers in the evening as my wife and I really enjoy putting on social events like that.
Here is a link highlighting their recent growth and attracting top agents:
http://expworldholdings.com/2018/04/30/exp-realty-adds-top-agents-across-country-april/
Make it great day!
I think it is an expansion of what you were doing before. Do you advise people regarding real estate IRA's?
I don't advise but i have some article and podcasts on the subject.
Hi,
Always best to think out side of the BOX. Good thinking. Much success to you.
Thank you
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I admit that I have not been reading your articles. For some reason I decided to read this one and now realize that I've been missing out on a well-spring of information.
Thank you for sharing this. Its the challenges overcome that present the sweetest dividends (even if I cannot be business-minded).
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