8-step Guide to Starting a Real Estate Brokerage

If you are a self-starter with an incredible work ethic and can bring out the best in other real estate agents, you may be the perfect candidate to start your own real estate brokerage. You will be required to have real estate experience and complete additional training, but also develop business plans, build a team, create your own brand, and organize finances. This will establish you as a broker-owner.

Before you read the eight steps of starting your own brokerage, make sure you’re up to the task by taking our quick quiz:

1. Determine if You’re Ready to Start a Brokerage & Understand Your Why

While opening a real estate office can be a rewarding experience in your career, real estate agents need to determine if they’re ready to embark on this journey and understand why they want to take on this next venture.

There are significant benefits to being your own brokerage owner, but also there can be a lot of downsides if you’re not prepared.

Before weighing the pros and cons of starting your own real estate agency, agents should uncover their own personal motivations. Below are some questions real estate agents must ask themselves before starting an independent real estate brokerage:

• Are you a leader or a boss? If you are a leader (a person who guides and communicates well with others), you have the first building block to being a successful broker. However, if you are the “bossy type” who likes to tell others what to do or believes that only your opinion counts, then being a broker is not for you.
• Do you need to be in control at all times? Agents must be given the freedom to be themselves. This does not preclude agents from straying from legalities or proper real estate protocols. But as a broker, you want your agents to think outside the box to exceed client expectations without constantly seeking your approval for every transaction or interaction.
• Are you well-organized? Since you’ll be operating the front- and back-end of your business, you must be well-organized and have systems in place to keep the business running smoothly. Although you want to leave room for flexibility, you should set expectations for yourself and your agents for how their business should run.
• Do you have strong communication skills? As the owner, you will communicate with agents, other brokers, staff, clients, and so forth, so your communication skills need to be top-notch. In addition, agents will look to you for guidance and mentorship, so you need to communicate strategy and dispense advice when requested.
• Are you passionate enough about real estate that you want to build a business around it? Building and running a successful brokerage requires a significant investment of time, effort, and resources. Being passionate about real estate can help fuel the commitment and dedication needed to handle the challenges and setbacks of owning a brokerage.
• Do you have a unique vision that will better serve your clients? Real estate is an extremely competitive landscape. Each brokerage must have a unique value to clients that differentiates them and their team from other brokerages to be successful in the long term.
• Could you achieve the same success by building a team at a different brokerage? There is a financial burden along with operational responsibilities that come with opening your own brokerage. Agents who want to just successfully practice real estate with additional team members should consider just building a team.

When asking yourself these questions to understand your personal motivation to start a business, the reason behind why you want to build a real estate brokerage will be a guiding motivator to taking the first step.

2. Meet Your State’s Requirements for Starting a Real Estate Brokerage

An essential step to starting a real estate brokerage is ensuring you meet your state’s eligibility requirements. Typically, real estate agents who want to learn how to start a real estate brokerage must take additional classes, practice for a specific number of real estate hours, and pass the broker licensing exam. Education requirements range from 24 to 336 hours, depending on your state.

For example, California and New York have substantially different requirements for agents to get their brokerage licenses. See the differentiating factors between the two below:

Once you obtain your broker’s license, you must also comply with all state regulations regarding brokerages. For example, some states like Nebraska and New Mexico will require brokers to have a specific type of insurance or a physical office location. These requirements can change constantly, so all brokers must stay updated with the changes in their state laws.

Another way to stay current with changing state regulations is through continuing education courses. Brokers can take continuing education courses through online providers like Kaplan. It offers traditional learning, online learning, and self-paced course formats. Continuing education courses can be purchased in bundled packages or as individual courses, depending on how many credit hours you need.

Visit Kaplan

3. Conduct Market Research

Once you’ve pinpointed your motivator for creating a brokerage and completed licensing requirements, research your location and competition to evaluate the success rate of opening a brokerage in your desired area. Understand whether the area you’re located in is saturated with too many real estate brokerages and if there is enough housing demand to supply you with business to sustain your team.

To begin your research, agents can look at the data for the area they are interested in opening a real estate brokerage. Use Google or the National Association of Realtors (NAR) directories to search for members or state and local associations.

It’s also necessary to evaluate if your brokerage will be able to cater to the chosen target market in your area. For example, you want to open a luxury real estate brokerage, but you discover the supply of luxury properties is limited in your area, which should cause you to reconsider your position. By understanding the target markets, you can build out your business and refine your marketing message.

Another consideration is the option of opening a franchise or an independent brokerage. Purchasing a franchise brokerage, like Keller Williams or Coldwell Banker, will give you pre-established features like branding, training, and marketing. However, buying a franchise can have starting costs of around $200,000.

The cheaper option is starting an independent brokerage. This will give you more control over your business, and you’ll be responsible for establishing your brand through advertising, marketing, and lead generation efforts. Although it will take longer for you to establish yourself in the community, and it will be tough starting out, you will be able to have complete autonomy over your business.

4. Develop a Real Estate Brokerage Business Plan

Developing a real estate business plan for your new brokerage is a crucial step to starting a real estate brokerage. This business plan will help you identify your goals, predict any challenges that may occur, and determine where the business opportunities are. This business plan will position your brokerage for long-term success and help you manage business growth. Here are a few important components to have in your brokerage business plan:

• A mission and vision statement: These statements outline your company’s purpose, values, and long-term goals.
• Develop a SWOT analysis: SWOT stands for strengths, weaknesses, opportunities, and threats. The strengths and weaknesses are an internal assessment of your brokerage, while opportunities and threats take into account external factors.
• Identify your competitive advantage: It’s important to clearly outline why and how your business differs from the rest of the competition in your market.
• Create a marketing and sales strategy: It outlines how you will attract clients and promote your business for financial growth.
• Identifying your niche: This will help you establish your expertise and help draw attention from clients who are looking for someone who specializes in that niche.

The biggest difference between a real estate agent’s business plan versus a brokerage business plan is the expected finances of running a real estate brokerage. Outlining these financials clearly will help you align with your financial goals. Here is a breakdown of the expenses that are essential to include in your plan:

5. Locate an Office Space for Your Team

When building a brokerage, brokers must decide whether they will have a brick-and-mortar office location or a virtual office. A physical office location makes it easier to develop a team culture and oversee your brokerage operations, whereas agents who choose a virtual office will save on overhead and office expenses. There are many pros and cons to each office type.

Ultimately, the decision to have a physical office or virtual office will depend on the type of brokerage you want to have and if you have the budget for it. You could consider a hybrid option with a smaller space or a space within a coworking building. Before finalizing your decision, make sure you’ve considered factors like location, size, costs, and amenities for each office option.

6. Determine Your Staffing Needs & Hire a Strong Team

As a brokerage owner, you must provide your team with careful planning, strategic recruiting, and ongoing support and training. Brokerage owners must give their team tools to support their individual agent’s business efforts, like access to lead generation software, customer relationship management (CRM) software, email, etc. With larger responsibilities, you must also build a team to delegate some of your responsibilities.

Hiring New vs Experienced Real Estate Agents

Recruiting and retaining great agents will be the key to building a successful brokerage. Since real estate brokerages make money based on their agent’s deals, you want to make sure you have the right agents in place that will continuously contribute to your business income.

During the hiring process, consider factors like experience, skills, and fit with your business culture. You want to hire real estate agents for your team who share the same vision and value as your company. Some brokerages offer incentives to help hire and retain top talents, like increased commission splits, a team structure, training, and support from a dedicated admin.

Brokerage owners should consider whether they want to hire new talent or experienced agents. Here are some pros and cons of hiring new versus experienced agents:

Hiring Full-time vs Part-time Employees

Unlike real estate agents who are independent contractors, full-time employees work for at least 40 hours per week and typically receive benefits, such as health insurance, paid time off, and retirement savings plans. Each state has regulations for what full-time employees must be offered to be in compliance. Part-time employees may not be eligible for all the same benefits as full-time employees.

When deciding whether you are hiring a full-time or part-time employee, consider your budget, needs, and growth plan. Full-time employees can offer more stability and may be more invested in your business. They are the better option if you need a certain level of commitment or expertise from them. However, part-time employees can be equally beneficial in your growth phase. They can provide you with flexible hours and overall cost savings.

Real estate CRM (Source: Top Producer)

One solution to manage a team’s productivity is by implementing a robust CRM like Top Producer. The platform helps agents connect with their leads through workflows and task reminders. The system also offers shared access to contacts, communication, and calendar so brokers and team leaders can view their team’s sales pipeline. Top Producer does have a real estate transaction management solution to help teams stay organized and store transactional information post-deal closure.

Visit Top Producer

7. Market Your Brokerage

Now that you have a brokerage name, an office, and team members, you want to market your brokerage, so everyone is aware of your new business. Successful brokerage owners with a strong brand identity and great reputation will be able to turn that into generating leads for their businesses. Agents should create a real estate marketing plan to help guide their marketing efforts and increase market awareness.

Below are some elements to effectively market your brokerage and increase your exposure:

• Develop a brand: To set your business apart from other brokerages in similar markets, brokerages should have their own brand identity. This includes having a creative brokerage name, defined logo, color scheme, and clear messaging that reflects your value and service offering.
• Build a website: Make sure you have a strong online presence. This includes a well-made website that showcases your brand, product, team, services, and anything else worthwhile to your target audience. Having a search engine-optimized website ensures prospective clients can find you. Agents who you’re looking to recruit will also scope out your website.
• Leverage social media: Social media platforms like Facebook, Twitter, and LinkedIn are great platforms for additional exposure. Your profiles on these sites should be completely built out with your brand messaging. Use these social media sites to share your content and engage with prospective clients.
• Network and collaborate: Attending local and industry-related events is a great way to develop your professional network. It’s a great opportunity for you to discuss your business with like-minded people to not only generate leads, but to give your brand some additional exposure. Make sure to bring business cards and reach out to everyone post-event.
• Invest in advertising: Advertising can generate sales leads for your office through online advertising, billboards, print mailers, etc. When choosing to advertise, make sure you have a budget allocated to the right effective channels. Try to track your lead sources so you understand where your leads are coming from and where you should spend more money.
• Provide excellent customer service: One of the best lead sources in real estate is through referral business. Make sure to always ask your clients for referrals. When you provide great customer service, your clients will want to share the same experience with their own personal networks.

Real estate postcards (Source: ProspectsPLUS!)

Marketing your new real estate business with a mix of branding, digital marketing, networking, and customer service will give your brand exposure and bring in new business. Use ProspectsPLUS! to execute timely mailers with their targeted mailing lists or by using your contacts. The platform has a campaign feature that allows you to set a series of mailers at set times, so you don’t have to remember to manually send them.

Visit ProspectsPLUS!

8. Generate New Business Leads

As a final step in learning how to start a real estate brokerage, you must provide sources of paid and organic leads to support your agents. This is especially important if you have new and inexperienced agents on your team who do not have an established sphere of influence.

Brokerages that provide leads or provide platforms that offer lead generation can have a larger commission split to the brokerage to help cover those costs. Having an established CRM that can route and identify leads according to lead source will help you determine which splits to include for each closed deal.

Each lead generation tool has different pricing options that can be personalized to fit your budget and the needs of your agents. Most brokerages will tend to have multiple platforms that provide agents with leads. These lead generation tools provide a valuable supplement to your existing marketing and networking efforts:

Best For	Implementing marketing automation	Generating leads via social media	Build lead generation websites
Key Features	CRM included Available paid-per-click ad campaigns Create custom websites Listing marketing solutions	IDX integration for website Can create custom landing pages CRM provided Mobile application included	Customizable website designs IDX integration available Code-free website builder Built-in SEO tools
Starting Price	Average price per lead is $25 to $35	$299 per month or $699 per month plus the cost of your ads	$80 per month for National Association of Realtors (NAR) members; $100 for non-NAR members
Learn More	Visit Market Leader or Read our Review	Visit Real Geeks or Read our Review	Visit Placester or Read our Review

Bottom Line

Owning a real estate company can be challenging and rewarding at the same time. By knowing what is entailed in starting your own brokerage and carefully planning and executing strategies, real estate brokers can feel confident they have the tools to create long-term success in the real estate industry.