When you initially joined your current company, you were happy with the commission split, the training opportunities available to you, and your broker’s office management tactics. Now, it’s been a few months or years, and you’re starting to realize your true calling might be with another nearby real estate company. You want to change companies, and you want to do it right, so how do you do it?
To change real estate companies, find out if leaving with pending sales will lower your split or cost extra fees. If you can’t slow your business before the switch, coordinate with an agent at your new office to take on clients for you. Then, file the appropriate paperwork and let your broker know.
As an independent contractor, changing your real estate company is something you can do whenever you please. However, impulsively making such a career-saving decision without prior planning can also cost you big at the bank (and take a toll on your reputation). To learn the right way to change real estate companies, read on.
Why Do Real Estate Agents Change Brokers?
The realization that you’re not at the right brokerage or office can hit you on day one, six months later, or even years after joining. The desire to change brokers can stem from a single deal-breaker incident, like finding out your broker isn’t a non-competing broker. It can also result from a feeling that develops slowly over time, such as catching on to the unfair office politics.
It’s safe to say that there’s no single reason that real estate agents want to change brokers. But, take a look at some of the more common reasons seen in this industry, specifically.
An Unfavorable Commission Split or Structure
New real estate agents gladly accept a 50/50 to 70/30 split during their first year, understanding that there’s still a lot of work to earn a greater portion of their commission. The additional money that goes into your broker’s pocket goes toward your mentoring and training, so your broker will justify skimming your commission checks by claiming you benefit from it.
As you become a top producer in your office, that’s typically when a broker would call their successful agents into their office and renegotiate a higher split for the agent. Many agents wish to leave a broker based on the concept of commission because:
- The broker never offers a higher commission, even when an agent makes the brokerage a ton of money.
- Higher commission rates can be earned throughout the year, but you’ll begin the next year at the same original commission, meaning you have to work your way back up.
- The company is a fee-based brokerage, and you’re paying a monthly $300+ fee, even if you’re not actively listing or selling homes.
A higher commission rate won’t make much of a difference on one or two listings sold. However, this can make a difference of tens (or even hundreds) of thousands of dollars in your bank account, which understandably aggravates many agents.
Lack of Training or Lead Generation
The real estate industry is one where you’ll see the most success as you build your network or your sphere of influence (SOI). Yet, if you’re a new agent or merely returning from years away from the industry, you may not have a network at all. Some brokers will gladly sign the paperwork to bring new agents on but will leave them to their own devices by day two.
Any broker that doesn’t train his or her agents in lead generation doesn’t fairly distribute leads that the office receives, or doesn’t spend time teaching the fundamentals to new agents is essentially setting up these agents for failure. Without mentorship or one-on-one training, it shouldn’t be surprising that the majority of brand new agents leave the industry in a few years.
Those willing to stick to the career path they’re passionate about may choose to switch brokerages instead.
Excessive Politics in the Office
Like any other office job or workplace, the real estate industry is full of “politics,” so to speak. Oftentimes, brokers will have “favorites” in the office—typically the biggest producers—and give them special privileges like their own office or desk space and the majority of leads that come through the office. The rich get richer, and the poor get poorer, essentially.
Many agents also come to dislike the protocols and standards in the office or company over time. Some brokers will require a specific number of monthly floor hours, something that’ll eat up hours that you could be using generating leads or working with clients, doing nothing more than fielding phone calls that go nowhere.
Other issues of unfairness within the office include tenured agents having their farming areas “protected” so that other agents cannot market there, a broker that seems disinterested in new agents, and a broker that outwardly competes for the same listings as their agents.
Sometimes, it’s a combination of issues that leads to loyal real estate agents to make the big switch. These additional reasons include:
- The desire to be in a large or smaller office (in terms of number of agents)
- Wanting a 100% commission rate (like Keller Williams)
- The additional fees (desk fees, broker fees, and funds) start to add up
- The need for near-unlimited amounts of training, education, and mentorship
- An office that’s closer to home or in an area you know far better
- The desire to be a part of a company with greater name recognition
- A higher commission split and more money in your pocket
Sometimes, there’s no definitive reason why you want to leave, but you just know that you belong elsewhere. That’s completely fine, and you don’t owe anyone a reason for leaving.
The video below will go into everything related to changing brokerages in real estate. You’ll learn about everything from why agents change brokerages and how they make the switch, to the paperwork you’ll have to complete:
Questions to Ask When Changing Real Estate Brokerages
Knowing you want to leave your current real estate company is the first step. Your second step is finding out what you’re looking for in a new real estate company. And step number three is figuring out which company is best for you.
So there are plenty of questions you’ll have to ask yourself before deciding on a brokerage. Run these questions through your head and, if possible, jot down your answers on paper. They’ll be useful when you interview other local real estate companies you might be interested in.
- What commission split am I willing to accept? Your history and success in the real estate industry will do wonders for your case with other brokers. So if you think you’re deserving of a 70/30 commission split on day one, use your sales volume over the past year (or five years) to back up your request.
- What type of training do I want access to? Some brokers will pair a new agent with a skilled agent in the office to teach them the company’s ropes and even real estate fundamentals for brand new agents. Other companies offer voluntary virtual and in-person training courses throughout the year to stay fresh.
- How far am I willing to drive to the office? The office doesn’t need to be around the corner, but it’ll be a pain to drive 45 minutes one-way just to pick up yard signs. So set a mileage distance and scout out the local brokers within the area. It’s also a good idea to choose an office in a place you know well, like your hometown.
- What is my ideal office atmosphere like? No two brokerage offices are the same, but you know the type of atmosphere that you thrive best in. Take note of what you prefer in an office and broker, such as equal lead distribution, no required floor hours, no monthly desk fees, and no cliques.
Interview Other Brokers & Choose the Right One
The great thing about being an independent contractor is that you’re interviewing the brokers, not the other way around. So unless there’s a glaring red flag in your file that makes a broker not want to bring you on board and into the office (or even something as simple as limited desk space), you have your choice of broker.
This is something you did once when you joined your first broker, but now you have a little experience under your belt—albeit, not the best experience—and you know what you’re looking for in the ideal broker or company. Now you can better steer this conversation so that you get the answers to the questions you want to ask.
Here are the things you’ll want to find out about:
- The commission split. Let them know the minimum you’re going to accept, and if you present them with your success in recent years, they’ll be more willing to negotiate.
- The office atmosphere. Allow the broker to give you a tour of the office to check out the technology and, most importantly, pick up a vibe from the other agents in the office.
- The training. Find out if the broker is willing to pair you with a mentor for six months or a year, pay for your training classes with NAR, or host informational office meetings.
- The expertise or niche. Ask the broker about the company’s reputation in the area—for example, do they specialize in apartment rentals, beach houses, or co-ops?
- The size of the office. Both small and large offices and brokerages have their perks, so find out how many agents work out of the office and how leads are distributed if they even are.
- Another note about interviewing brokers. You should be meeting with as many local brokers as possible to help you make the right decision for your career. If you think your current broker or the agents in your office are the problems specifically, you can interview at another branch of your current company.
Just be aware that the broker might be the one to let your broker know you’re leaving before you can. If your current broker didn’t know that you were on your way out, this could be awkward.
The Paperwork Needed to Change Companies
Now that you’ve decided on a new brokerage or real estate company, it’s time to get the legal jargon and paperwork out of the way. Each state does this differently, but many states will call the paperwork a “TREC” form, which stands for Transfer, Release or Change of Status, or a “broker change form.”
This paperwork can be typically found in PDF form on your state’s website via a simple Google search. You’ll have to specify your current firm, the firm you want to transfer to, and you’ll have to include your state’s mandatory fee for the transfer. To complete this form, you, your current broker, and your new broker must provide a signature.
The completed form will have to be sent to your state’s real estate commission.
How to Tell Your Real Estate Broker You’re Leaving
Breaking up with your real estate broker is never easy, and that holds whether you have a good or bad relationship with him or her. If it happens at all, this conversation is one that you’ll have to prepare and plan for tactfully for a clean break on both sides.
So here’s what you need to know about letting your broker know that you’ve found another real estate company and you’re leaving.
Things to Keep in Mind
Before you break the “bad” news to your broker, there are a few things worth considering.
First off, remember that you don’t owe your broker a darn thing, as you’re an agent and not an employee. So don’t let your broker try to talk you into staying an additional few months, bribe you with extra leads, or offer a brand new higher commission split. Accepting any of these offers will allow your broker to maintain control over your career and essentially hold you hostage.
Remind yourself that, to succeed in your career, there’s a certain level of support and training you need from your broker and your office. If your broker hasn’t been providing either of these adequately up until now, they simply didn’t want to or find it necessary.
Let Them Find Out When They Get the Paperwork
Though it’s often considered the “respectful” thing to do when switching real estate companies, there’s no fine print that says you have to tell your broker directly that you’re leaving. If your last interaction with your broker came with high emotions on either side, you might want to send your transfer paperwork to the state instead of handing it to your broker to fill out. The state will then send this to your broker instead of it coming from you.
Tell Your Broker Directly
Some brokers have great relationships with all of their agents, not realizing that some agents aren’t happy with being a company member. If your relationship with your broker is positive, schedule a face-to-face meeting with your broker, let them know that you’re switching companies, and have them complete the transfer paperwork.
During this meeting, your broker must give you your real estate license, something you’ll need to provide to your new broker.
What Not to Say to Your Broker
Unless you’re the only real estate agent in your office generating sales, don’t expect your current broker to get on their hands and knees to beg you to stay. But it’s not unusual for a broker to provide you with offers or incentives to convince you to stay, like:
- Offering a higher commission split, though this sort of offer may set the standard that other agents threatening to leave will yield them higher commissions
- Providing more leads, yet there’s no guarantee that these are qualified lead or serious buyers and sellers, and you might wonder why you didn’t receive these sooner
- Suggesting you take on a leadership role, though this will only eat up the time you could be spending with clients and won’t come with financial incentives
Also, keep in mind that you should be the one telling your broker that you’re leaving on your own accord. Letting the word slip to other agents in the office practically guarantees that your broker finds out from somebody else. And while they can’t “fire” you like other jobs, brokers who feel slighted may do whatever it takes to make your transfer as difficult as possible.
How to Tell Your Clients You’re Making a Switch
Your loyal clients may be surprised when they check your Facebook profile or website and see a different real estate company name associated with your account. This probably won’t be a deal-breaker with the majority of clients, but that doesn’t mean you shouldn’t tell your clients ahead of time, so they’re not caught off guard suddenly.
Given you likely have a CRM tool or a client database of some sort, you should take this pre-transition period to let your clients en masse that you’re making a big change. When you send out the email, be sure to include things like:
- The company you’re currently with and the company you’ll be with in the future
- Why you’re making the switch (make it client-based, like access to more sales tools)
- Links to your new website and social media profiles (good luck taking these with you!)
- The official date of the change along with your new company email address
Unless a client is completely loyal to your previous real estate company, this email likely won’t make a difference to the clients who genuinely enjoyed working with you. Just be sure to clarify that the change is client-centered and not because you thought you weren’t getting a high enough commission split—while this might be honest, it comes off as unprofessional.
Making a Smooth Transition to a New Brokerage
To be completely honest, the easiest part about transferring over to a new brokerage is the paperwork aspect. After all, some brokers seem to be hell-bent on making the lives of agents more difficult or taking as much money as they can for themselves as an agent tries to make a clean break to a new company.
With that in mind, take a look at a few tips for making this transition as simple as possible.
Knowing When to Cut Your Losses
A few old-school real estate companies out there charge real estate agents merely trying to make their escape something called “blood money.” Since your broker technically has ownership of all of your exclusive right to sell listings, the last thing they want is for you to take these pending sales to a new broker, who will profit.
You might be on an 85/15 split with a broker allowing you to make a smooth transition to a new brokerage. The only catch is that they might drop your commission on these pending sales down to a mere 50/50, which is well below what you spent years working up to. On top of that, you might owe an additional $500 or more in property transfer fees.
So if your broker isn’t exactly willing to let you take your pending sales and buyers to your new brokerage, you might have to cut your losses, take a cut on the commission, and start over fresh at your new real estate company. It can be a $10,000+ decision, but if you choose your next broker well, they can help you make up the difference in no time.
Coordinating Your Move
Now, since your current broker technically owns your listings and pending sales, you have a serious business choice to make:
- Do you want to stop taking on new clients entirely until you successfully cut ties with your current brokerage and settle in your new office?
- Are you willing to take a cut to your commissions and profits as you’re making the switch, as long as it means you’re taking your current clients with you?
- Will you be okay leaving your current listings and pending sales with your current broker and missing out on commissions entirely?
This isn’t always a decision you’re able to make as an agent, especially if your broker isn’t happy that you’re leaving. So you might have to put your business on hold for a few months, which means virtually no income for a little while.
Otherwise, you might have to leave your current listings and pending sales with your broker and other office agents. This can be a controversial decision for your real estate career, especially if you know the homeowner personally, and they chose you for a reason. There’s no guarantee that another agent or your broker will get them the price they want.
Partnering With New Agents at Your Office
If your broker or real estate company is being hard-headed about letting you make the switch to a new company without holding you to “blood money,” you do have another unconventional solution. However, the semantics will be something you have to navigate early on.
You can partner with another agent at your new brokerage and have them put new listings that you get into their name instead of yours—remember, at this point, you’re still with your old brokerage, so you’re saving these listings for when you make the big transfer.
Keep in mind that this agent you’re partnering with for the time being will want to get a 50/50 split on the commission for each listing you put in their name. And since they’re helping you to not miss out on a sale while also saving you from shelling over another dime to your old company in the form of blood money, it’s a risk you’ll have to take to keep your reputation positive.
Understand the Legal Aspect
Switching to a new brokerage or real estate company is extremely easy if you don’t have any pending sales or current listings. If you do, you’ll have to jump through additional hoops if your broker is willing to take pending sales and listings with you to your new company.
Some things you might have to do (or consider) to switch your current clients and listings over to your new company include:
- Inform your clients that you’re switching brokerages or companies
- Have your brokerage release your sellers, also removing the listing from the MLS, Zillow, and Trulia in the process—some sellers may not like this
- Complete a brand new listing agreement with that same client at your new company
- Convince your new broker to take on your current listings, even though your previous E&O insurance may not be in line with their standards
- Figure out how your original and new brokerage will split the commission fees on your pending sales or listings
It’s complicated, but you’re definitely in luck if your current brokerage is willing to allow you to take your current and pending listings to your new brokerage.
Changing real estate companies is never an easy task, and, if you have pending sales and listings, you might not be able to take these with you when you make the shift.
The best thing you can do is plan out your big real estate company move ahead of time, either by not accepting new clients for the time being or transferring these new clients to a partner agent at your soon-to-be office.
Once you’re sure, this switch puts your clients’ best interest at heart, shoot them an email letting them know about this upcoming change, share your new email address, and continue marketing under your new company’s name.