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How to Start A Real Estate Brokerage: 5 Steps to A Successful Launch

TIME TO READ: 14 minutes

Table of Contents:

It’s no secret that you can enjoy a profitable career as a real estate agent through hard work and relationship selling. If you’ve liked being an agent but dream of something bigger, perhaps you’ve thought about how to start a real estate brokerage. 

Be warned, however–launching your own brokerage is not for the faint of heart. It requires deep industry knowledge, being decisive about costs, strong people skills, and a taste for excellence. 

We pulled together the top five steps to focus on when starting a real estate brokerage. Dive into this blog post now for all the details. 

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Opening A Real Estate Brokerage Firm

Starting an independent real estate brokerage isn’t like Etsy or dropshipping where you can set up almost an entire business in a weekend (provided you have the cash). Independent brokerages have nuances that take time to grasp, like market positioning and brand development.

Throughout your brokerage launch journey, you’ll need to complete paperwork, make a real estate business plan, focus on the right kind of hires, and more. Setting a proper foundation for your brokerage leads to much higher chances of success in the future.

Here are each of the five must-haves when opening a real estate brokerage firm: 

  1. Get Your Broker’s License (If You Haven’t Already)

The crucial first step in opening a real estate brokerage firm is getting your broker’s license. This is similar to getting a business or eCommerce license when starting an online business. 

The steps required to get this license vary state by state, but the overall requirements are similar. Here’s what to prepare for: 

  • Be at least 18 years old by the date of your license application
  • Have a high school diploma or its equivalent
  • Have one to four years of experience as an active agent (varies by state)
  • Complete all broker education requirements
  • Take and pass your state’s broker licensing exam
  • Fill out a broker’s license application and submit payment

As you can see, this is a combination of paperwork and education. The paperwork is simple but if you haven’t finished the education, that can take between three to four months. 

Budget some time and money to ensure your paperwork is completed and approved before opening your office. You can’t legally practice as a broker without the license, and you want to protect your entire company from legal troubles. 

  1. Draft Your Business Plan

If you’ve been in business for more than a year or so, you’ve likely heard that “failing to plan is planning to fail.” There is no exception to that with brokerages. The next step in opening an independent brokerage is creating a written plan in order to stay on track and become profitable. 

Sadly, it’s a common misconception that your business plan needs to be lengthy to be effective. You only need a few pages of key information to get off the ground.

So, what does a good business plan contain? Let’s take a look: 

  • Business objective or executive summary. This is the comprehensive statement about why you’re in business. It should include the name and location of your business, when you’re opening, the kind of clients you serve, and who brings capital to the business. Also include what your overarching goal is for the first year and the actions necessary to get there. 
  • Mission and culture statement. Writing down your mission statement and workplace culture is just as important as your business goals. Think of the former as why you do what you do and the latter is how you support your staff. Employees are more productive and motivated when they’re part of a rewarding environment. 
  • Brokerage ownership, startup expenses, and startup assets. Starting a brokerage is a capital-heavy initiative, so you need all of your numbers in one place. First, list the ownership structure of the brokerage. This includes the principal, stockholders, and any partners. Second, list your startup assets and startup expenses. The former is the total capital available to you in starting the business. The latter is all the expenses your brokerage spends to operate from day one. 
  • Services–both from agents and for home sellers. Aside from branding, the services you offer are the key ways to differentiate yourself from competitors. Identify the services and benefits you’ll offer to your agents first. Your own teams should work efficiently before you make external offerings clear. Next, outline the services your agents will provide clients. Be as specific as possible; this is what will make clients choose your agents over others. 
  • Financial model. Your work should only begin after you’ve modeled at least 12 months of revenue, expenses, and profit. It’s wise to be conservative, as you don’t want to project profit that you haven’t reached yet. Research the average number of homes sold both in your designated market area (DMA) and the towns in your DMA. Also look at the average home sale price in your local market. Use this data to project the rate at which your brokerage will close deals over the course of a year.
  1. Figure Out What Makes You Different

As of 2022, there are about 107,000 real estate brokerages operating in the United States. In order to stand out in such a large crowd, your new brokerage needs to be on the cutting edge of marketing, social media, technology, and branding.

How do you accomplish this? It begins by asking yourself the right questions. Here are questions to begin with: 

  • What does your brokerage do better than any other? This is the golden branding question. What differentiates you from any other brokerage? Do you specialize in a type of home? Do all of your agents have hyperlocal knowledge? Do you serve only luxury clients in a particular area? Jot down all of your thoughts on these questions. Look at your notes and see if you find any patterns. Once you see what makes you different, put it into a single sentence. You can phrase it like “[Brokerage name] serves [type of client] struggling with [issue] by delivering [your unique solution.” Such specific branding makes you top-of-mind for the right clients!
  • What do people think of when they see your brokerage’s logo? This is a branding element that’s important on the subconscious level. Unless clients are watching a video, your logo is the first visual impression prospects get of your brand. Does it communicate that you’re a modern, savvy company? Does it look outdated or irrelevant? If you need to, send a survey to any previous clients, as well as your own staff. Address these questions with your graphic designer so they can come up with a few drafts of new logos if need be. Make sure your logo communicates the personality of your brand. 
  • What process do you leverage that few or no other companies do? Do you have a proprietary lead generation system that works like a charm? Are you known for agent trainings that lead to a high commission rate? Whatever you’re best at, make it known when recruiting. This is the kind of support that good agents need and excellent agents can maximize. 
  • What content marketing technique are you best at? Are you a natural behind the mic or camera? Can you churn out blog post after blog post without them sounding stale? Take stock of your strengths and make it a key part of launching your brokerage. Everyone wants content to consume and there’s no better time to get fresh content out there than when your business just opened up.
  1. Find An Office, Set It Up, and Furnish It

Unless you want to run a completely virtual brokerage, you’ll also need to set up your office. Opening your office successfully depends on getting a few tasks right. Take a look below: 

  • Choose your location wisely. A big part of why you have an office is making it accessible for clients and staff. Some clients will end up driving further than others, but you want it to be close to them to the best of your ability. Don’t choose an office just to have one; make sure it’s right for the long haul. 
  • Keep it within budget. Commercial office space ranges anywhere from $8 to $60 per square foot, depending on what part of the country you’re opening an office in. Don’t fall for the temptation to make everything about your office fancy just to impress clients. Pay for what you can afford starting out, and expand or embellish as you’re able. 
  • Furnish it comfortably. Conversations are always taking place in the real estate industry, which means your clients may be waiting for a while if you’re busy. Make it easy on them by including couches or chairs where appropriate. 

Remember, too, that your office isn’t just a place to do business–it’s part of your branding. Take the time to arrange it professional and make it inviting. You want both walk-ins and staff to feel excited about being there. 

  1. Hire Only The Best

When it comes time to hire for your brokerage, you want to focus on quality. As you know, there are more than 100,000 real estate brokerages in the United States and the industry is growing by 3.8% year-over-year (YoY). 

This means competition is getting stiff and there’s a smaller pool from which to pull qualified agents. Finding top performing hires for your brokerage will get more challenging as the years go by. 

Resist the temptation to hire someone just to have an agent at a desk. They may be a great person and close some deals, but they won’t give you the momentum you need early on. 

Paying attention to the right things is critical when hiring as a broker-owner. Here’s what to prioritize in your candidate search: 

  • Highly specific job descriptions. Make your job description for new agents as thorough and captivating as possible. You want to share what you expect of your next hire but also cast the company’s vision. Remarkable agents aren’t going to have interest simply because you’re a clear communicator. They want to see that you have a proven approach for building client relationships that drives growth for the entire company.
  • Excellent compensation. Building a great brokerage also includes paying people well. The commission split at most franchise brokerages is 70/30 or 60/40, where the larger percentage goes to the agent. In order to attract top performers, you’ll need to offer stronger compensation. Consider a 75/25 or 80/20 split, especially if you have the upfront capital to offer more. Higher compensation is one of the top three reasons people look for new work opportunities, so you don’t want to come up short on this front. 
  • Patience and intentionality. Smart business leaders and HR staff know that it’s worth waiting to find their next best hire. It’s smarter to be fastidious and hire a phenomenal producer than rush to get “staffed up” only to end up with an underperformer. Move at an intentional pace in interviews. Ask challenging questions and allow your candidates to speak freely. If it’s clear that someone won’t be a good fit, communicate that tactfully. 

Hiring the best agents you can find is one of the most difficult parts of starting an independent real estate brokerage. Take it slowly, but start the process early. It’s never too soon to be looking for great talent. 

Real Estate Brokerage Startup Costs

Another part of opening a real estate brokerage firm is real estate brokerage startup costs. This includes not just physical needs like computers and office space, but payroll, marketing, and taxes. 

Here are the basic real estate startup costs to budget for: 

  • Business registration fees: $500-750
  • Licensing and association fees: $235-400
  • Association fees: $150 per member, per year (x2)
  • Small office space: $1,100 per month
  • Office supplies and tools (i.e. transaction management software): $580 per month
  • Office furniture and amenities: $200-600 at the outset
  • Agent salaries: $10,718 per home sold, per agent, on average
  • Outbound marketing and sales: $1,500 per month
  • Fees and/or taxes: $150-500 per month minimum

As you can see, starting your own real estate brokerage isn’t a cheap endeavor. You’ll need several thousand dollars prepared just to open your doors, let alone become profitable. 

Bear in mind these are first month’s costs only. If you’re calculating costs for at least one year, you’re looking at closer to $45,000 to $55,000. 

Frequently Asked Questions About How to Start A Real Estate Brokerage

Are you ready to start your dream brokerage? Know that you’re among the small group of entrepreneurs daring and financially strong enough to undertake such an accomplishment.

Seriously–starting an independent real estate brokerage isn’t for the faint of heart. Chances are you have several questions about the process. 

We looked up the most commonly asked questions about starting your own kind of brokerage and answered them below: 

How Much Does It Cost to Start A Real Estate Brokerage Firm?

Though fees and expenses vary across states, it costs between $15,000 and $20,000 to get a real estate brokerage firm started. This includes, but isn’t limited to business registration costs, office supplies and furniture, and marketing and sales budgets.

While you can take out a loan to start your business, this isn’t advised. That’s because you’ll be making loan payments on top of paying interest, which creates a long-term financial obstacle to overcome. 

Instead, successful business owners recommend having enough savings. This way you have sufficient cash to cover upfront expenses before your agents’ deals generate cash flow. 

How Do I Start My Own Property Brokerage?

If you want to start your own property brokerage, know that it involves working behind the scenes for several months before you can open. You’ll also need a minimum of $15,000 to $20,000 to get started. 

Once you’re mentally and financially prepared, here’s what to do: 

  • Complete your licensing and business paperwork. Your brokerage can’t legally operate without the appropriate documents. These forms and their associated fees are typically found on your state’s commerce or Secretary of State website. If you can’t find them there, reach out to the county or village you plan to open offices in.
  • Get your branding down pat. As a new brokerage, you’re competing with over 100,000 brokerages and millions of agents. Determine what makes you stand out from day one and ensure all of your marketing materials convey your uniqueness. This is an often overlooked aspect of business that is directly related to your success as a company. 
  • Offer agents great reasons to work with you. Most brokerages want top producers but don’t incentivize them to join their team. Think about what would motivate an excellent agent to join your brokerage–then work that into your job description. Oftentimes, this is a higher commission split, prequalified leads, or access to industry-leading software, like Rechat.

Put clients first. It’s common knowledge that real estate agents can be pushy (at least historically). Instead of giving prospects reasons not to speak with you, approach clients through relationship selling. This is the process of first understanding what’s important to your client, then offering listings that match their needs. 

Aggressively build your network. Perhaps the largest obstacle new brokerages need to overcome is the lack of a strong network. Real estate is a relationships business. The more people you and your agents know, the more sales opportunities you’ll come across. Don’t be pushy, but do speak about your brokerage and share any listings you already have available.

Can I Start My Own Brokerage?

Yes, you can start your own brokerage as long as you fulfill state and industry requirements. Here are the basic tasks involved in starting your own brokerage: 

  • Complete brokerage licensing 
  • Create a business and marketing plan
  • Find an office and get it furnished 
  • Get printers and office equipment
  • Hire agents (if you’re ready to start with more than yourself)
  • Join an association (if desired)

Most states only require that you have a business license (possibly as a limited liability company), employer identification number (EIN), and a real estate broker’s license. Beyond that, the paperwork you fill out depends on the size of your brokerage and what you deem necessary for your brokerage to operate. 

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Creating Opportunities of Your Own

Starting a new real estate brokerage is an exciting chapter in your real estate career. It gives you the chance to offer opportunities to others while financially winning. 

It also requires lots of upfront work, learning from your mistakes, and making informed marketing decisions. Use the information in this blog post as your guide towards a successful brokerage launch.

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