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#448617 - 11/02/15 01:33 PM Should I make the jump to broker?
jimmyk Offline
Junior Member

Registered: 11/01/15
Posts: 4
Loc: indiana
So my situation is I have been an agent for three years, full time for about a year. I started by getting my license because I was (and am) buying a lot of investment homes and wanted to remove the middleman. Now I am I guess what you would call "full service" where I do my own investments and sell residential real estate. I like doing both because it adds some variety. Some days I am in the office, some days in the field, sometimes swinging a hammer.

Anyway, the broker I work for is extraordinarily nice and helpful. He has about twenty years experience and runs what I would call an "investment brokerage", mostly employing agents who do their own thing and don't require a lot of guidance/resources. It's a small, efficient outfit, not REMAX or Keller Williams or anything. I negotiated a deal when I started full time last year where there would be a $30,000 cap on his commission (basically my first $60k would be taxed and then I am home free). I thought that was a good deal at the time, but now I am thinking that is still way too much.

[i]The services he provides are:[/i]

1) Obviously taking care of the licensing stuff, absorbing the liability, etc
2) Occasionally providing me with advice on ethical standards, salesmanship, etc
[i]
What I pay for and do myself:[/i]

1) Paying for postcards, advertising, etc
2) Use my own office
3) Do my own paperwork, listings, photos
4) Generate all my own leads
5) Pay my own E and O insurance
6) Buy all of my own signs, lockboxes, other equipment

The company has moderate name recognition in the area but I don't get any leads from it. So I guess my question is two fold..one, [b]does it make sense to get my broker's license and go out on my own and, two, what costs are associated with being a broker?[/b] I know MLS membership costs more as a broker, plus E and O insurance, etc but not sure what else I need to prepare for.

One thing I thought of was renegotiating the deal and offering $10k a year commission. I think that would be worth it because I really like him and the other colleagues, what he has done for me schooling me so far, and it would forgo the hassle of me taking the required broker's education and the administrative headache of functioning as a broker. I don't think that is worth much more than that.

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#448620 - 11/03/15 12:27 AM Re: Should I make the jump to broker? [Re: jimmyk]
Bigtoe Offline
Major Contributor

Registered: 10/14/07
Posts: 2277
Loc: Outer Banks
Does your e&o insurance cover you when you sell your own deals? Most brokers here require agents to list their personal properties with another agent in the company to keep their coverage.
_________________________
Your Outer Banks real estate agent. Helping people buy and sell OBX real estate since 1989.

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#448628 - 11/03/15 05:30 AM Re: Should I make the jump to broker? [Re: jimmyk]
Vermont Offline
Major Contributor

Registered: 04/12/08
Posts: 7911
Loc: Vermont's North-East Kingdom
I became an independent Broker about 20 years ago . . . . and I have to admit to missing the camaraderie, or maybe the symbiosis that working in a group can often provide. I had that benefit with the two Firms that I was previously associated with; I miss it now (a little).

I have a good relationship with the other Licensees in the, and my Wife is a Broker with me; but there's a little something missing that can only come from inter-acting with others who are close enough to be in the same Office . . . . but still far enough removed to be part of your competition.

I guess this Forum serves as a partial substitute.
_________________________
Dale C. Hittle of GOLDEN RULE PROPERTIES in Glover, Vermont
Where We're Always Striving To Put Together "THE FAIR DEAL"

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#448737 - 11/08/15 05:18 AM Re: Should I make the jump to broker? [Re: jimmyk]
John_Myers Offline
Member

Registered: 08/09/12
Posts: 43
Loc: NM, USA
I started off the same way you did, my main goal was to purchase investment properties, rentals and flips.

Then I transitioned to a broker helping mostly buyers.

I had the same concerns, I was paying my broker too much of my commissions.

You have three options, negotiate a lower max commission per year, find another brokerage with a lower cap, or start your own business.

If you start your own business, you need to find an office space or work from home. Your office will cost money and you may need an assistant.

I decided to go on my own and start up a brokerage and work from a home office. I am in the process of looking for an office. The commissions I keep more than cover any additional costs.

Good Luck
_________________________
Myers & Myers Real Estate






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#461806 - 07/05/18 08:08 PM Re: Should I make the jump to broker? [Re: John_Myers]
dial1010 Offline
Member

Registered: 01/19/09
Posts: 432
Loc: CA
I'm in real estate for the past 12 years and its a time to take broker license. I'm in the process so I thought this forum will be a good place to ask. My broker deduct $800 E&O from my first transaction every year but I don't know how much it cost to my broker to have an E&O. The coverage is $1M. I'm from CA if someone wants to share their wisdom.

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#461866 - 07/12/18 05:00 PM Re: Should I make the jump to broker? [Re: jimmyk]
estatereal Offline
Major Contributor

Registered: 01/27/07
Posts: 3219
Loc: LAND OF THE FREE!
in my market you can find a 100% shop and give them as little as 2k per year to 4k per year and be at 100%
e and o is about 200-300 bucks

tbh, for what they offer its hard to beat

if i were paying 30k to a broker i'd just be a broker

for what i pay its worth it to hang my license with them.



im still considering getting a broker license though as you never know and it hurts nothing except for the income i could generate while sitting through the broker class

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#461885 - 07/14/18 08:23 PM Re: Should I make the jump to broker? [Re: estatereal]
VABroker Offline
Veteran Member

Registered: 11/02/10
Posts: 1093
Loc: Virginia
My E&O insurance is $855/year for $1 mil coverage - it hasn't changed in a number of years. They said if I add agents on, I would have to get a quote from them as it depends on the level/number of sales additional agents would make - at least that's what they say but I swear when I first applied to them 11 or so years ago, they said I could have 5 agents on one policy. Perhaps their policy changed. I also have liability insurance at $455/yr. I "sub-let" office space that has at least two other independent brokers. My rent is quite cheap (PM me and I'll explain that to you). I do work mainly from home. 'Course, I pay for my own website, paid to have a logo created, pay for all the other administrative costs, etc., etc., etc. If you're happy where you are except for the commission limit, I'd see about re-negotiating that - give the broker a chance at least. I'm sure they'd rather see some money coming in rather than no money coming in. Shame other brokers don't think that way - particularly if you're seasoned (although I don't consider 3 years seasoned enough unless the vast majority of your successful contracts have been with actual sellers/buyers), and, yes, a lot of other places will not allow you to list your own property for sale. The liability is greater. In fact, one of the questions on the application is how many properties does applicant or agents own and have in sales for the past year.

Some places only charge $500 per transaction (so they advertise); but I am not sure how much 'broker contact' an agent has with those brokers. A newbie shouldn't start out in this type of place as they NEED broker contact for quite some time.

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#462257 - 08/30/18 09:41 AM Re: Should I make the jump to broker? [Re: jimmyk]
ALSTIEL Offline
Junior Member

Registered: 08/17/18
Posts: 2
Loc: Pa.
Getting Licensed in October and have two friends that are Brokers and an RE instructor (Associate Broker) that I have right now. All three told me that once licensed start working on your Brokers license. In PA. less than 10% of all RE agents have their Brokers.

There is no downside to getting it. Having your Brokers only increases your earning potential. This from three Brokers that have been in the RE business between twenty and thirty five years.

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#462261 - 08/30/18 12:26 PM Re: Should I make the jump to broker? [Re: jimmyk]
Vermont Offline
Major Contributor

Registered: 04/12/08
Posts: 7911
Loc: Vermont's North-East Kingdom
Having a Broker's License just gives you a few more degrees of freedom . . . . the ability to quit and do your own thing anytime you want, without having to ever be under the tutelage of someone else.

What price can you put on "freedom" and how do you measure it ?

Timing can be an issue for some. I've only traveled this route once; but 30 years ago (or thereabouts), a Friend of mine told me shortly after I got my SalesPerson's License, that:

"You'll never be better prepared to easily pass the Broker's Exam than you are right now; the sooner you do it, the easier it will be !"

And so it was.

PS: Here in Vermont, to become a Licensed Broker in addition to the Exams, it was still necessary to for me to have 8 or 10 completed and documented transactions under my belt and to have completed a full year of supervised Real Estate activity . . . . but when that year was up, I was good to go.

What I can say is that while there is a lot of learning experience that comes with completing transactions, there is even more that is learned from those transactions which falter and fail to be completed, and the reasons why they fall by the wayside.


Edited by Vermont (08/30/18 03:08 PM)
Edit Reason: Added PostScript
_________________________
Dale C. Hittle of GOLDEN RULE PROPERTIES in Glover, Vermont
Where We're Always Striving To Put Together "THE FAIR DEAL"

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