Why did you become a broker?

In today’s market it seems that so many are going the way of expansion team or joining national brokerages like EXP.

My question is: Why did you become a broker? And would you do it again in today’s climate?

Great question. In many instances it makes more sense to form a team and let someone else manage the minutia of a brokerage. This allows you to focus on high paying duties versus fixing the copier.

Commission splits to brokerages have continued to decline thus making the business less attractive. One advantage to running a brokerage over a team is the ability to profit from agents that don’t want to be on your team.

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On average are those agents who don’t want to be on your team “profitable enough” to make the juice worth the squeeze?

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They can be if they don’t require too much time.

A team within a brokerage can work well too because if agents leave the team you can still keep them under your umbrella as they become independent or form their own team.

that is a great point on team members “graduating” out of a team. At least this way they hopefully still stay with your brokerage and don’t lose their numbers entirely if they are good. @Garyashton is this kind of your reasoning as well?

One of the biggest reasons people get into this business is to be independent. While not everyone can run a profitable team many ultimately want that. I don’t run a team (yet) but I imagine the big reason people leave a team is because they want to try to create something similar. Owning the brokerage allows them to stick around, try it and easily join the team again when they realize that it isn’t easy to pull off.

Up to a large extent, most Agents have a misconception of what ‘the company makes’ - spoiler alert, not much. With splits increasingly becoming more favorable to the Agent and more ‘benefits’ needed to successfully recruit agents (specially when the competition offers them much better splits), the profit margin for brokerages gets slimmer and slimmer. Often times, agents open brokerages because they (think) will make a lot more without realizing that the effort / time / money needed to run a successful brokerage will far exceeded any of their projections. My advice, form a team, devote your time to sales and leave the minutia to the brokerage.

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the only way I really see large profit centers is at massive scale combined with ancillary services such as mortgage, title etc.

My one thing though, is why are more brokerages not adopting the broker with team splits model. Where they drive more profitable business by running lead gen programs at team level splits like 50/50 or 25% off the top and 50/50. We know that team members happily pay this if all the lead gen and follow up is included, so why don’t more brokerages do that?

Morgan, you hit in the nail with ancillary services - whether property management, title/escrow, etc. Those can make the overall business more profitable AND less susceptible to downswings of the real estate market. BUT that’s assuming that a brokerage owner is savvy enough in business to successfully incorporate different businesses into one entity. What I see is that most brokerage owners are intelligent, hardworking individuals with a level of success in real estate, but that doesn’t necessarily translate into strong experience in business management.

Regarding lead gen, good point and that deserves a much longer response that I’m able to give now. To be continued.

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