Are you ready to pursue a career in real estate but don’t know how to choose the best company to work for? The first step is to understand whether you prefer to work in a franchise agency or in an independent (often called boutique) agency. What is the difference between the two?
Franchise vs Independent.
Franchise brokerages are large international companies that sell the rights to use their name and business model to brokers. Brokers are the owners of the agencies who contract autonomous agents. The main benefits of a franchise are instant brand recognition and credibility – the franchisers have already done a great work in building the brand, so the customers in most cases know and trust the company. Another reason to work for a large national franchise is the fact that they have tens of offices all over the country. This means that you can use offices in other cities if you have clients that are looking for properties there. The franchise would normally provide an good-quality training to the new agents. The downside of a franchise is that the broker must always follow the strict rules and will demand so from you as an agent. Any alternation of the business model at a franchise is not welcomed. For example, the brokers are not allowed to have their own web sites, to use their own marketing materials or to modify the business model according to the market situation in the area. On the commission side, the franchiser charges you so-called royalties – a set percentage of your profit in each sale you make. Franchise also requires a corporate dress code, your presence at there are obligatory brand meetings that might imply travelling to headquarter cities at your own expense.
The independent agencies are normally run by a single broker, who has a good reputation in the area, but is not known around the country. Boutique agencies would normally be smaller in size, but it does not mean they are less profitable. Some of the most successful brokerages in the US, for example, are boutique brokerages: Rodeo Realty in California generated $5 billion in sales in 2017. Since they’re much smaller, an individual agent’s contributions to the company can be more important for boutique firms. This means that brokers at boutique firms may spend more time coaching and nurturing newer agents. Less burocracy and less red tape always means more flexibility: a change in the policies and best practices could be decided overnight, without the need of an approval from the corporate office. What is always appealing to agents is that they can often take part in the decision making, being able to vote on important issues, which is unheard of in the franchise companies. Guidelines for marketing and advertising at boutique agencies are always open to innovation – agents have more creative control over their own brand. Another important issue is that the team spirit within a smaller organization would normally be better and more family-like in comparison with the larger entities where the environment is more competitive and less cooperative. The dress code is smart casual, and there are no royalties to be paid from your commissions.
Royalties and Desk fees.
If you haven’t been on an interview at a real estate agency before, you may end up pleasantly surprised with the commissions you can get. But when an offer from a broker seems very appealing, don’t let emotions overwhelm you. As said earlier, all the franchise companies will deduct royalties from your commissions. In Spain the royalties are usually around 9%, that means that from every 10.000 euros commission you get, you have to pay 900 euros to the Franchiser.
Some franchises, as well as some boutique agencies, also charge so-called desk-fees for the use of the office equipment, advertising and marketing material. Desk fees are fixed costs every agent has to pay to use the office space, technology and marketing tools. Can vary from 100 to 1.000 euros per month. Desk fees are like rent or your mortgage – you need to pay them no matter whether you have sales or not, no matter how well you’re doing financially.
At the job interview be sure to ask your interviewer about ALL the fees that come out of your bottom line. Your goal is to get cold hard numbers. There are the expenses you have to take into consideration:
- What are the royalties at this brokerage?
- What are the desk fees?
- What is the cost of the training?
- What is the cost of your personal marketing?
- Are there obligatory company meetings or reunions, and what is the cost of participation? Do you have to travel for brand meeting and who pays for it?
After you have decided what kind of brokerage suits you better, it´s time to look at the money side. Generally speaking, there are two types of commission plans offered by real estate brokerages: traditional split plan without a desk fee and a high-split plan with a “desk fee”.
Here’s how the commission plans work:
Traditional Split Plan for a real estate deal is from 25/75 to 50/50. That means you start off with a 25% of the commission and the brokerage gets 75%, but after certain production goals are met, your commission grows to 50% and equals that of the brokerage. With these plans there are generally very low desk fees or no desk fees at all. While you may technically get a smaller split, you’re also not reaching into your pocket every month. A fair trade off for many agents.
A High-Split Plan means you will get a higher percentage of the overall commission paid to the brokerage. High-split plans range from 30% at the beginning all the way up to 80% after achieving a certain sales volume. Sounds great, right? Not so fast. In order to recoup their expenses high-split brokerages charge monthly “desk fees” to agents on high-split plans. A 80% commission would imply an average of €1.500 desk fees every month.
The Firm’s Reputation.
Whether you choose a franchise brokerage or a boutique brokerage, reputation is critical. In order to establish trust with potential clients, you need a great reputation. Do a quick Google search for the agency. See what people say. Negative reviews might be a red flag. If the company is in the press, odds are they have a great reputation. Word of mouth is an easy way to vet a potential brokerage to work for. Have you heard of the company? Have your friends or family? What’s the first thing that comes to mind when you think of them? Chances are, many potential clients feel the same way. Finally, does the company have any awards listed on their website? Do they belong to any national associations besides your local board or realtors? Being listed somewhere is a great indicator of success.
Training for New Agents.
If you’re a brand new agent, good training, coaching, and mentoring can mean the difference between a successful first year and a mountain of credit card debt. If you’re just starting out, this should be at the top of your list when selecting a brokerage to work for. Even if you have a year or two of experience, you should still weigh training heavily when selecting the right brokerage to work for. You may think you know it all, but trust me on this, you don’t. Even top agents can benefit from coaching. While every agency claims to have the best training in the business, when at interview, ask about what kinds of training are offered to agents, and how often.
What the Offices Are Like?
What’s their office like? Where is it located? Does it look or feel like a place you want to spend time working in? More importantly, would you feel comfortable here as a client? Is it clean? Do they have nice conference rooms? Friendly receptionist? While a mediocre office shouldn’t be a deal killer, it’s still something you should pay attention to.
A good online presence means more views for your listings and more leads. Check the quality of their web, the amount of product on offer, the number of pageviews per month, the number of leads generated per month.
Often overlooked by newer agents, company culture can actually be very important to your success. Happy agents are successful agents. If the office culture doesn’t mesh with your personality, you might find yourself avoiding going into the office. If it’s a good fit, you’ll never want to leave. To get a sense of the brokerage’s culture, check out their website, their blog or their Facebook. If you’re looking for an office that is a pleasure to work at, and their page has dozens of pictures from their latest football tournament, then it’s probably a good fit.
Agent´s Personal Recognition.
Feel unique and important is one of the 6 main human needs. Recognition is even more important in your professional life. Do you see the agent´ prizes displayed at the office? Any diplomas or achievement recognition that can show that the people´s effort is valued at this company?
Help to the Community.
Business is not only about making money. It´s about helping people and helping the community where the business is based. Does this company does anything to make the world a better place? Contribution to the society is something that makes a good company to be a great company, a firm that you would definitely want to work for.
Bottom Line: How To Choose a Real Estate Company to Work For?
Choosing the right brokerage can have a huge impact not only on your first year bottom line, but your future in the industry. The decision is an important one, so before you choose a real estate company to work for, be sure to weigh the pros and cons well before signing the contract.
To find out the job offer and the commission plan at Asten Realty® please email to victoria@astenOnline.com or fill in the form.