Hello Everyone

I am setting up a new brokerage and wanted to hear your thoughts on some of the policies I will be implementing.

Experienced Agents - I want my brokerage's foundation to be on the best of the best agents out there. I have already recruited some really good agents but haven't setup a commission breakdown as of yet. Here is what I was thinking:

The associate broker/agent split will be a small transaction fee($300-$400) and a desk fee. They have the ability to pay for a full office space or just pay for a desk. Desk fee would be $300 and personal office space would be negotiable. They can bring in agents below them to train and take a split off their commissions if they have a brokers license.

Each agent that is under an associate broker will have the option to become an associate broker. Once they get their brokers license they can then bring in agents under them, they are able to pay the transaction fee/desk fee, and can negotiate a split of their choosing with their new agents.

There will be plenty of room to grow, every associate broker pays exactly the same as the other, they have access to printer and supplies, internet, and phones. Each agent is responsible for their own signs and their own advertising costs. Basically the company makes no money. The transaction fee is for taxes, internet, phones, E&O insurance, and a small fee to me for being liable. Each agent will also have access to my admin to help with setting up appointments, closing coordination, paperwork filing, inputing listings, and my runner.

Basically the whole reason I want to setup this brokerage is to gain market share with as many sings as possible. We will all have the same sign with each agent's rider for their own advertising. I don't want to get rich off of agents, I just want to create a place that experienced agents who don't want to setup a brokerage can hang their license and still make money off of agents they train.

Would you be interested in this setup?

Not me but I am my own brokerage

To find what works you test on a small scale in your local market and then tweak it. Once you have a winner then go big.

I have a couple agents interested, and if it works out, hopefully we will be the biggest!

What kind of upfront investment is it going to take to get such a business started? One day I might "go it alone" but I fear the cost might be steep.

Well, setting up the LLC is about $400, E&O is going to be varied depending on how many agents we get, signs are $17 each, but that's about it. It's not too much to get started, the hard part is just getting the name out with advertising, that's where the money starts to add up.

It's much more that that. If you are going to be a REALTOR your brokerage will pay a fee. If not you still have company license fess by your real estate commission. Everything you pay more for as a broker. Then you have to pay deposits to your mls's to join plus whatever other fees they charge which vary from mls to mls.
Also you will need a company website and will use more faxes,papers,calls,etc. working with your agents and closing deals.

Here for example one mls I had to pay 1,500 as a security deposit and a 500 non-refundable application fee. The 1,500 is refundable if I ever closed down in good standing with no fees owed.

If however I owe a bunch of money they deduct that from the 1,500.



Just like agents go out at a high rate so do brokerages. The MLS knows this and takes a big deposit upfront in case of default so they don't have to go to court to try and recoup money from a defaulted brokerage.

Now these costs are for a virtual brokerage and if you get into renting or owning a building,utilities,secretaries etc. the cost gets way higher.

All of those fees have been worked out already, I am pretty much staying exactly where I am but just changing the name. Our MLS doesn't charge extra fees for a brokerage setup, which is nice considering they charged you that much, ouch! All the agents will pay their own expenses such as copies, advertising, faxes and such so I don't have to worry about that.

I still don't see how you will make money just to run the business. What if your copier breaks? or the electricity doesn't get paid one month?

These are questions I have of brokers who have these great set-ups for established agents. Not that I'm knocking it. I just wonder how will you make a living. Will you be selling as well?

Suburban - I have a unique setup I guess I should have stated. The building is owned by my current broker, and he will receive part of the transaction fee for the office amenities, it's tied into the contract I signed when I moved in. He is on board with the new brokerage as he is a builder, and doesn't sell existing real estate. Yes I sell homes, that's how we make money in this business isn't it? I just don't want to make money off of agents, I want them to have a place to grow, and make money themselves without having to pay a broker split.

Why would you want to invest your time in this and take away from your own production if your personal production would still be your primary income source?

I don't have to invest much time into it. We are only recruiting experienced agents, and only associate brokers can recruit agents under them. They are responsible for their agents, and if something comes up, we will handle it that way. I have my own agents I am training, and I am taking a split off of them, so it's worth it to me to take a little time to train them. The main thing is the amount of signs our company is going to have in the market. Brand awareness is the key to my business plan, not making money off of agents.

You do realize don't you that under the laws of agency that the people that any broker associate puts under them are agents for you, and it is your responsible under the law for supervising them and their acts, and your legal responsibility cannot be delegated.

Bay Area - Yes I know what agency is, but an agent with an associate broker's license should be more responsible then a brand new agent. I have done my research on agents that I am wiling to hire, and I know they know what their doing. If they screw up, yes it's on me, but I have faith we can work it out with the people I am targeting.

Don't forget the risk you take as the broker-make sure you adequately compensate yourself for this. You need to look at this as a business. For every agent you hire your personal production will decline regardless of how good they are. End up with 100 agents and you will be nothing but the broker-will you be getting enough income without your own sales? It should be more. Think exit strategy here.You need to have something to sell when you decide to give up, be it next year or in 50 years this could be your retirement fund.

Yes, i also don't understand why you would do it without making money. However, I would be interested in it as a broker-associate.