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It’s been a few years. You’ve had success as an agent, and now you’re considering the idea of opening your own brokerage. Or maybe you’re already a broker and eager to advance your career or the careers of those on your team.
Before beginning on that path—or starting an agent down it—consider and convey the realities. Being a broker is a “huge responsibility—you’re liable for what your agents do and need to take it very seriously and doublecheck everything,” says Karen Hatcher, AHWD, CPM, C2EX, CEO and head broker of Sovereign Realty and Management in Atlanta.
Fortunately, obtaining a broker’s license doesn’t have to mean starting your own brokerage immediately. Instead, you can always begin the the process by obtaining your broker’s license and then deciding which level of leadership is right for you. There’s a hierarchy to the broker path, and you can choose which level best suits your goals and experience.
For example, if you’re not yet ready or interested in managing agents, you can be an associate broker and continue to work under a managing, principal or designated broker. Opening your own brokerage can, of course, take you to the next level in your career, but, Hatcher says, there are many factors to consider, including significant overhead costs, administration and regulations.
“There’s a difference between getting your broker’s license and being successful in that career choice,” says Ben G. Schachter, GRI, the Florida-based broker and president of The Signature Real Estate Companies and co-founder and head of sales of TotalBrokerage Software. “It’s not easy to be a successful broker.”
To help you or others on your team get off to a good start, here’s a step-by-step guide to becoming a broker.
Gain Ample Experience as an Agent First
After earning your real estate license, you need to attain a certain amount of experience in the field to qualify to become a broker. Since this requirement varies by state, check on the requirements with your local or state real estate board in the state or states in which you plan to open your brokerage. “Most states require an average of two years of an active sales license before you’ll qualify for your broker’s license,” says Schachter. While you put in that time, try to work with a mentor, who will help you gain wisdom, confidence and experience, he advises. They can also help you write a business plan, which will come in handy once you’re a broker, he adds.
Take Steps to Earn the State Broker License
Once you know how much experience you need as an agent in your chosen state, verify the amount of continuing education credits you need. Find out how many hours and which courses, certificates or trainings count toward those requirements and where these education resouces are offered. After completing the required classroom hours, you’ll need to pass your state exam. To find the right school, consult your local or state real estate board, Hatcher says. You can also ask your peers where they got their broker training and licensing, says Steve Snider, the managing broker for Aventura, Sunny Isles and Bay Harbor for One Sotheby’s Realty in Florida.
Make a Business Plan
After you’ve earned your broker’s license, write a business plan, counsels Schachter. In the plan, record your goals and objectives. “Are they purely economic or are you trying to correct something in the industry?” Do you want to focus more on buyers or sellers? How will you define success as a broker?
Next, determine how you’ll monetize your business, whether through commissions, fees you charge your agents, or other services beyond selling or renting properties. Also ask yourself whether you’ll continue actively selling real estate yourself. “Most brokers do because they need that stream of income,” he notes. Once you answer that question, reflect on how much time you’ll devote to cultivating new business, serving existing business, and conducting clerical work, management and marketing. Remember: If your plan is to become a managing broker, these responsibilities will be largely yours or yours to outsource. Devoting adequate time to these tasks is cruicial to your success, so create a preliminary schedule, recognizing you’ll likely adapt it over time.
Also put together a budget for achieving your goals. “The number one reason for failure is the expense [it takes] to start a business,” Schachter says. Even if you’re not launching a brokerage, you may still incur marketing expenses, professional fees and the like. “You can keep expenses to a minimum, but you need to figure out how long you can survive financially until your business is profitable,” he continues. Plan on no income for six months and little income for one year, he advises. As you evaluate expenses, try to take advantage of the free tools and resources available through the National Association of REALTORS® and your state and local real estate boards. “Be as frugal as possible and don’t overspend,” he counsels.
Finally, come up with an exit strategy in case business doesn’t go as you’ve planned, and set measurable benchmarks to assess your progress. If you don’t achieve those goal, such as a certain income by a certain date, transition to your exit strategy.
Hire Your First Agent
“Everyone wants their first agent to be a top producer-moneymaker-powerhouse, but it never happens,” says Schachter. “That top producer-moneymaker-powerhouse doesn’t want to work with a brand new person in the business—they want to work for someone who can offer them more.” So, accept that your first few hires won’t be bringing in seven or more figures off the bat. Consider applicants who’ve worked in related fields, like real estate development or financial services. For example, Snider recently hired someone with extensive cold-calling experience in the financial services industry. In that agent’s first seven months on the job, he generated more than $5 million in real estate sales.
Invest in people with true potential. After all, it’s your own bottom line you need to consider. For Schachter, that means they possess intelligence, professionalism, and ambition.
Get to Know Your Agents
For the first several months of his first year as a managing broker, Snider took agents to lunch every day, asking them what they needed from their broker. Among his many insights, he learned that not every agent shared his mindset and goals. “As someone who’d worked as an agent for 25 years, all I could think about was how to make more money every second of every day,” he recalls. “But when I met with agents, I found some were okay with making much less. Maybe they owned income-generating investment property or wanted to keep their life the same and support their spouse or spend time with their grandkids.”
Successful brokers can balance their own desires and goals with those of their agents. Get to know your agents so you know if you can work together successfully to make the goals both of you have a reality.
Find a Coach or Team of Advisers
For insights on being a successful managing broker, Snider relied on senior executives at his brokerage for advice, especially during his first year in his new role. If you’re at a smaller brokerage, you might consider working with a real estate coach. “It’s far too easy when you’re self-employed to not have accountability,” says Schachter. “Invest in yourself so you can be better at your job, which will allow you to be a better mentor and coach to your agents,” he says.
