Answering that question was the most important step for me in the journey to opening a real estate company, which I explained in the first article in this series to help other real estate professionals who are contemplating forming a brokerage. Now it’s time to focus on the “what” in order to point your compass in the right direction.
“What Type of Brokerage Do I Want?”
There are several layers to this question, but on a fundamental level, you need to decide what type of brokerage model is right for you. It could be an independent brokerage or a franchised model, from a low agent count to multiple offices and markets. I was able to answer this once I established my vision and mission statement for my brokerage. From those assertions, I knew that the independent brokerage model was right for me. It was important that I could establish my own culture, training programs, policies, and procedures.
But there are benefits for going with the franchise model, including the level of trust and respect that comes with a well-recognized brand. Weighing the pros and cons of all models is important in this step, as is conducting a cost-benefit analysis of franchise fees and the services or support provided by the parent company.
“What Type of Broker Do I Want to Be?”
In my first article, I talked about personality types and how they played into my decision to open a brokerage. I’m a natural teacher, mentor, and coach, and that propelled me into a management and training position before I decided to become a broker-owner. Consider your own strengths when contemplating this question. Are you going to take on an active training role or hire a trainer? Continue to sell and hire a manager? Or give up selling and focus on management, recruitment, and business growth? The answers to these questions may also inform your decision on a brokerage model.
I know that I’m best suited for guiding my agents so they can be the best resource possible for their clients. Plus, to grow my brokerage into the type of company I want it to be, I need to focus primarily on managing, recruiting, retaining, and training. So, think about what role best suits your personality.
“What Separates My Brokerage from Other Brokerages?”
I put in a lot of careful thought and analysis when I answered this question. It’s important to point out that I looked at it from both the consumer and agent angle. What will make people want to hire my brokerage to perform real estate services for them? And what will attract agents to my brokerage?
First, I considered all of the aspects of my existing business, my company vision, and myself personally that do not separate me from other brokerages. Then I looked at potential weaknesses in my brokerage model and vision. From there, I analyzed how I could tweak those similarities and weaknesses to make my brokerage stand out.
My company is still less than a year old, and I have fewer than five years of experience in the real estate industry. I am still under 30 years old. On the surface, all of these realities may seem like weaknesses, but I saw them as points of separation. Being “young” and “inexperienced” has allowed me to look past the businesses that have been doing this for generations and focus on what the real estate industry will be doing tomorrow. Plus, having only a moderate level of experience, I believe, allows me to have more creativity when it comes to running my brokerage. If I had been doing the same thing for 20 years or more, it might be more difficult to adopt new business strategies.
Another differentiation is my intense effort to make sure my agents—I call them teammates—are the best in the industry. It’s not just something I say, but something I strive to prove. I included it as the first point in my mission statement. I’m determined to do this by providing the best training, marketing, technology, lead generation, compensation packages, and company culture I know I can create.
Now think about what separates you from your competition, how perceived weaknesses may actually be assets, and how you can improve upon your pre-existing skill set.
“What are the Opportunities and Threats Facing My Brokerage?”
Of all the questions I forced myself to answer, this one might have been the most encouraging and discouraging at the same time. I believe the opportunities to succeed within the real estate industry are great. But I also think there are several key threats facing the industry that could seriously hinder the growth potential of my brokerage.
On the opportunities side of the equation, I believe that the real estate market is and will be in good shape for a few more years. If you are considering a significant move like opening a brokerage, it is important that you thoroughly research and analyze the economic history of your area and follow the measures economists use to make market predictions.
For example, economists say the labor market will continue to shift toward an on-demand marketplace in the future. That means more self-employed entrepreneurs and independent contractors. That may or may not have implications for real estate. Another factor, which we’ll likely see in the not so distant future, is that consumers will be able to purchase real estate in much the same way as a car: within a few hours and possibly with only a few clicks of a mouse. If buying and selling a home becomes as simple as buying and selling a car, what then will be the role of a brokerage? These are industry trends that must be considered when planning for the future of your company.
Looking ahead to the last article in my three-part series, I’m going to cover the “how” questions. We’ll dig a little deeper into details for making sure everything comes together when starting a brokerage.