For many prospective real estate agents, the state exam is the most challenging hurdle to clear. All there’s left to do now is pass your exam, apply for your license, and you’re ready to start finding listings! Well, not exactly—Before the state can approve your license application, you need to find a sponsoring broker.
To find a sponsoring broker, decide what’s important to you in a company (i.e., commission, training, culture). Begin researching companies online to learn about them as a whole. Schedule interviews with several local brokers, tour offices, meet agents, and learn about the agent-broker relationship.
As of 2017, there were 106,548 brokerage firms across America—not counting separate individually-run offices within franchise firms—meaning there’s no shortage of sponsoring brokers out there. Choosing the right sponsor can be essential to your real estate career trajectory for years or even decades. Now, we’re going to review three different ways to find a sponsor for your real estate license and brokerage!
Know What You’re Looking For in a Broker & Company
Though you need a sponsoring broker to work with buyers and sellers, not all companies provide the same opportunities and benefits to their agents. So the first thing you need to do is to shift your focus toward your future and away from the fine details.
Ask yourself: What do I need from my broker (or company) to succeed in my career and personal life? Before you begin researching companies and brokers, create a list of your deal-breakers and must-haves.
Here are some things you’ll want to think about:
Commission Structures & Splits
You may not be getting into real estate hoping for a windfall of cash right now, but you’ll need to earn a steady income to make staying in the industry “worth it” long-term. As a real estate agent, the only time you’ll see a direct deposit into your bank account is when you close a deal.
That means you need to choose a broker willing to offer a decent commission split unless you want to sell more houses to make up the difference (work smarter, not harder!).
Let’s look at some statistics first.
According to Zillow, the average home in America is worth around $260,000. Research shows that the average real estate agent will sell just four or five homes a year. Both of these factors will depend on the current market and your willingness to generate leads.
Now, if you negotiate a 3% commission with your clients, you’ll earn about $7,800 per deal on your side. However, you’ll need to split with your broker depending on your commission split.
Let’s see how that plays out in terms of commission splits, assuming you sold five average homes in a single year:
|The Split (What You Get)||Your Take-Home|
In the chart above, every 10% drop in commission was a difference of $3,900, and a 50/50 split brings you down to an astoundingly low annual income of just $19,500.
The point here is this: Every percentage point in your commission split matters, but your area’s average home value and market volume can make an even bigger difference.
If a broker is in a low-income area with a weak market and is only willing to offer 50/50, don’t anticipate making a livable wage.
Marketing Tools & Technology
There’s nothing new agents overlook more than the tools they need to rely on to perform a real estate agent’s daily tasks.
Long gone are the days where everything in the industry is printed, signed, faxed, and placed in a filing cabinet in the office. To get with the times, you need to have a firm grasp of marketing tools and technology—you also need access!
Now, if you don’t have any experience in sales, marketing, or technology, this needs to be one of your top priorities when choosing a sponsoring broker. Otherwise, you’ll be left to your own devices and forced to figure out how to build your brand on your own.
Key tools or resources to look for in a sponsoring broker include:
- Free or discounted marketing materials (business cards, flyers, online ads)
- Access to your very own MLS-integrated website
- An in-house marketing expert to provide feedback and aid
- Internet presence (if you Google the company name, does it rank high?)
- Access to a CRM tool to schedule drip campaigns and organize contacts
Being able to talk a good game and gain trust from your clients is crucial, but neither of those skills will matter if you can’t find clients or your ability to market their home is sub-par. It’s 2020—any real estate company or brokerage without a significant online presence and a box of online resources to rely on aren’t worth your time.
Training & Education Opportunities
Lead generation, client communication skills, and even the fundamentals of running a real estate business are things all agents need to know. Unfortunately, these aren’t topics you learn about in-depth while in pre-licensing training.
So you may feel like you’re on your own the moment you join a brokerage—something you can avoid by choosing a training-based company. Yet, you don’t want to settle for a company that offers a lousy “new agent training” that lasts four hours and is all about building “company pride.”
Instead, choose a company with a course catalog (in-person and virtual) and covers topics like:
- Lead generation skills (cold-calling, farming, door-knocking, social media ads)
- Working with different types of clients (expired, FSBO, seniors, rentals, short sales)
- The fundamentals (setting a list price, negotiating a deal, and fielding offers)
- Marketing (online, in-person, how to talk to people about real estate)
It’s also worth noting that training doesn’t end after getting your feet wet as an agent.
The real estate industry is always on the move (just look at how mortgage rates change and marketing tactics skyrocket in popularity). With that in mind, you also want to choose a company that offers agents of all skill levels training opportunities at no cost to you.
It’s a huge red flag if you can join a brokerage without any sort of guidance!
Perform In-Depth Research On Brokerages & Companies
Now that you know what you’re looking for in a real estate company, you need to start doing a little research into the brokerages in your area.
It’s a good idea to start with a basic Google search for “real estate brokerages near me” and focus on those within driving distance. Don’t even give a second thought to brokerages an hour away. After all, you don’t want to trek through rush-hour traffic or make a midnight run to the office just to make a few copies at the office.
Scout out about ten local brokerages that meet all of your must-haves, and then do a little more in-depth research about:
When you find a sponsoring broker, both your real estate career and your name are tied to the company for the foreseeable future. Surveys show that about 62% of buyers will choose an agent because of positive online reviews. So if a potential client were to Google you and wound up finding your brokerage, what would they discover?
Considering this is the most significant financial investment that many will make in their lives, you better hope that your potential clients get good vibes from your brokerage.
Now, when you’re looking at the online reviews for the brokerage, there are certain things you’ll want to look out for most. You have to remember that reviews could be coming from clients and agents who were either very happy with their experience or extremely unhappy.
Some important things to look out for when Googling a brokerage include:
- Recent lawsuits
- Major headlines (good or bad)
- Risk of bankruptcy
- Moral or ethical problems (racism, sexism, discrimination, etc.)
You might meet the nicest broker in the world, but you have to remember that the brand you align yourself with will follow you into each yard sign or business card you hand out.
Franchise Brokerages vs. Independent Brokerages
There are two main types of real estate brokerages: Franchise and independent.
A franchise brokerage is one with a presence across the state, country, or globe (like Keller Williams, Coldwell Banker, or Berkshire Hathaway). An independent brokerage is individually-run and is usually confined to a smaller community or hometown. The vital differences between the two are reach, funding, and name recognition.
Both franchise and independent brokerages have their own pros and cons, and there’s nothing that says one is definitely better than the other. Truthfully, it largely depends on what you’re looking for in a brokerage and company.
Here’s a glimpse at the key benefits of independent and franchise brokerages:
|Independent Brokerages||Franchise Brokerages|
|Community trust||Higher budgets and more resource access|
|Close-knit office atmosphere||Brand recognition on a larger scale|
|Less rigidity and more individual freedom||Lower fees|
|Local-based marketing efforts||Larger referral networks|
The reason we added the type of brokerage to this section is simple: Not all franchise (or independent) brokerages are the same.
In some areas, you may be able to get 15 listings a year thanks to incredible name recognition with a franchise brokerage (like in a big city). In a small hometown, you may get the same number of listings a year because you’re in a community that values “staying local.” Check out the reputation of the brokerage first and then weigh the importance of independent vs. franchise.
Here’s a video explaining some of the key differences between independent and franchise brokerages and perks of each.
Reach & Niche
In most U.S. states, your real estate license allows you to take listings and work with buyers within the state lines. But if you live in a state where it takes hours to get from one end to the other, you probably don’t want to be working with clients across the state if you can avoid it.
When you’re looking at local brokerages, one of the most important things you can do is check out the office’s website (not the franchise’s website). Look for information about “areas served” and see if you can locate where agents in the office currently have listings. This will give you a bit of insight into where the brokerage has the biggest pull in the community.
You can also get a better gauge on the types of listings and clients the brokerage prefers. For example, some brokerages build their business around beachfront rentals, others focus on mansions with sprawling front yards, and a few will prioritize rentals and apartments. Checking out the average price range of properties can give you a better idea of how much you’ll earn in commission with each brokerage (is it the average of $260,000 or upwards of $500,000?).
This is the point of your research where you have to identify what’s important to you.
Try to take note of the brokerages that center their efforts in areas or communities you know well (preferably the town you currently or have once lived in) and the types of properties you’re most passionate about. Otherwise, you risk turning clients off if it seems like you don’t know a thing about the local area or properties.
Schedule Interviews With Several Local Brokers
By now, you’ve done a lot of online research and have likely identified at least a handful of brokerages in the area that look fantastic on paper. But “on paper” isn’t good enough, and you need to jump in and find out if these brokerages are the real deal.
This is the point in the process where you’re narrowing down your choices from five (or more) to one. Make appointments with at least five local brokers. From there, this is what you need to do:
Ask the Right Questions
What’s interesting as a real estate agent is that, since you’re not an employee, you’re the one that will be interviewing each broker. That means you need to come in with a list of questions or topics you want to discuss with the broker to make the best choice for you.
Questions and topics you’ll want to prioritize are:
- The commission split, structure, and fees
- How much the company values training, education, and technology
- Your access to marketing materials and tools
- Which MLS systems will you have access to
- The in-office staff that can help you (marketing, administrators, assistants)
- Market volume and brand recognition locally
You should never leave a meeting with a broker empty-handed. Make sure that you ask each broker for reading materials to take home to dive in deep and learn about each brokerage. You may find out that a broker doesn’t mention something that can sway your decision (like mandatory monthly desk fees), or their words don’t match up with the official written materials.
The Things You Don’t Think to Ask
Many new agents go into the broker interview feeling 100% prepared. They’re going to ask about commission, training, and market presence and choose by the end of the night! Unfortunately, these concepts and topics are merely scraping the surface, and not asking about some more in-depth yet minor topics can hurt you in the long-run.
So you’ll also want to ask about things like:
- Desk fees (and are they dependent on making sales?)
- Mandatory floor time (do you need to man the phones once a week?)
- How you’ll have to pay error & omissions insurance
- Extra fees for using the company’s technology or online tools
- Profit share systems, referral systems, or ownership stakes
- Blood money (if you decide to leave the brokerage, do you owe anything?)
- Growth in commission split (time-based, progress-based)
These questions may not help you decide, “Yes, this is the brokerage or office for me!” More likely, you’ll find that the answers to these questions will turn you off of a brokerage. Regardless, you need eyes on both the positive and negatives of a brokerage before choosing one!
Take a Tour of the Office
Asking to tour the office is something particularly useful for franchise brokerages. After all, one Keller Williams Market Center, for example, can possess a very different atmosphere and culture than the one across town. Request that each broker give you a full-tour of the office space after your sit-down meeting—most will comply!
When you’re touring the office, you have to make sure you’re looking for the right things. So keep an eye out for office supplies, the technology available (workroom with computers), desk space and crowding, and agents’ attitude in the office.
Ask yourself: Can I picture myself working here?
If there’s any doubt in your mind that this is the best place for you, you may want to reconsider this particular brokerage—or at least this office.
Your choice in sponsoring brokerage isn’t a decision you should make lightly. This single decision can be the difference between $100,000s in commission, 1,000s of leads, 100s of clients, and—most importantly—your sanity.
A few things you should weigh carefully include:
- Notable differences between what a broker tells you and what the paperwork shows
- Lackadaisical, aggressive, or overly-competitive vibes while touring the office
- Loads of negative online reviews from past clients and agents
You’ll know it’s the right brokerage for you when you feel at home at the office and well-supported by your broker and colleagues alike.