I have been in the real estate industry for 20 years. Like most, I have had some stellar years and, a few that I knew I could have done a lot better. For the first 12 years, I was part of four different large and well-established real estate companies in the Northern VA area. Since I generated a fair amount of business, the commission splits offered was generally competitive and acceptable. Since 2000, a number of new companies have come on line and done very well by offering higher splits or 100% after a monthly fee, no marketing compensation, some administrative support, but limited office space and almost no agent training or development. They typically require a year or more in the business or in order to be offered a position.
One of the faster growing segments of the real estate industry is the number of independent brokerages that are being established, typically by Realtors who have 8 to 10+ years in the industry. By far, the drive for going out on their own is not the money. For myself and others, it was the need to be independent of the endless bureaucracy, the corporate “we do it this way”, no check until all of the corporate case-related forms have been submitted, no check anyway for at least 7 to 10 days after received by the company, acceptable business attire only while at the office, referrals cost 25% unless it’s a relo; then it cost 35%; due to space costs - no more walled offices, corporate administrative fees for buyers and sellers have increased to $500 per side of each transaction and on and on and on.
When you’re in that kind of environment, there is this ever-present corporate babble and mind-clutter that, honestly, just gets in the way of keeping your focus and building your business. Having said that, if you are currently compensated for being a top producer with your current firm, chances are you have “golden handcuffs” that would make it very difficult to leave. I know of area firms who are paying the top agents a 90% to 95% splits, private office suite, private phones and generous advertising arrangements. It was and is worth it for these companies to have the “prestige” names of the mega producers on their list of top agents. They also want the transaction numbers and dollar volume these folks generate. Also, it makes good business sense for these top producers to stay put. They could never realize the same net profit on their own.
I produce my own fair share of business, but I am not one of the mega producers, so it was a much easier decision for me to leave and set up my own company. The mental leap is more difficult than the mechanical – the how you get it set up and underway. For me, the key was having been in real estate long enough to have a sufficient base of past clients to assist with referrals and their own buy/sell situations. There are a lot of nuts and bolts kinds of things to do like picking a name, incorporating, finding office space, setting up bank accounts, deciding on a logo, ordering signs and business cards, E&O Insurance and so on. But, all of that is truly secondary to being out on your own. For some it may boil down to freedom versus “security”.
I guess I was just fed up with the contradiction of being an “Independent Contractor” and being told I had to follow their rules, accept their split and pay their fees, if I wanted to be part of their company. That was eight years ago. I am still a small, profitable company with no corporate fees, high splits for my 10 agents and no rules on how they do their business other than to be professional, honest and fair in all their client transactions. We like being a small company, supporting each other’s efforts and continuing to learn new ways to be more effective in doing the business of real estate. One important thing I learned early on, I don’t think it would be as much fun or effective if I had continued by myself.
So, if you really don’t like being told what to do or how you must conduct your business; if you don’t like your commission structure and fee schedule, there is an option. Get your Associate Broker credentials and make a list of things you would do differently if you had your own company. See if the passion to be on your own rises to the surface and compels you to take action.
Those of you who have taken that step, what have I left out? What was the most difficult aspect of starting out on your own? What were some of the good things that happened to you along the way that you hadn’t expected?
Those of you who are thinking about going out on your own – what’s holding you back?
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Dave, I knew very quickly that I wanted to do my own thing. I have and always have had a rebel spirit and have a little issue with control:) I worked for another company for 3 years. My wife and I were the only Realtors in the office. It was owned by an Englishman that did shot term vacation rentals. There were only 5 of us. After 3 years my wife and I opened Tutas Towne Realty from our home. We have worked out of our house ever since, almost 10 years. She retired about 5 years ago and since then I have worked by myself. I have had a buyer's agent on and off but not for 3 years now.
The thing I love most about being on my own and working from my home is the freedom. Since I don't work with buyers I only have 3 or 4 listing appointments a week and try to do them all on the same day if possible.
I made the decision 10 years ago to stay small. I am a small time broker and only do 8-10 mil a year in business, by choice. I am sure if I was a little more motivated I could triple that but prefer to have lots of free time. I work maybe 20-30 hours a week. Because I have very little overhead, I am able to spend lots of marketing dollars that keep my phone ringing, so no cold calling for me.
Life is good!!!!!!!!