Brokerages

Independent Brokerage Vs Franchise: A Comparison

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You’re faced with numerous career choices as a real estate agent. Whether you’ve been in the industry for over a decade or recently closed your first deal, knowing where to work is a choice you’ll likely make several times. 

Picking between a franchise or independent broker is not as easy as it looks. Both work environments have pros and cons that set the tone for your immediate future. Given the recent changes affecting real estate practices and the industry as a whole, it’s more important than ever to choose what works for you. 

Having an independent brokerage vs franchise comparison at your fingertips can ease any concerns about which path to take. Keep reading for pros and cons of both to help you settle on the right broker. 

Independent Real Estate Brokerage Vs Franchise

Before we analyze large, key differences, it helps to see the basic ways independent real estate brokerages differ from franchises. Here are the key points: 

Independent Brokerages:

  • Individual branding; aren’t affiliated with any other companies
  • Typically lower costs and/or higher value
  • Can offer customized services to their clients
  • Usually specialize in niche markets, like off-market listings or luxury property
  • Typically have a more personal feel with their clients
  • Real estate agents’ commissions tend to be higher

Franchise Brokerages:

  • Affiliated with parent real estate company (e.g. RE/MAX)
  • Larger networks means more listings to choose from
  • Latest tech tools may mean faster responses
  • Consistent client experience across the board
  • May be simpler solution for first time or lower budget home buyers
  • Real estate agents’ commissions tend to be lower

Of course, these points are true in most cases and don’t apply to every circumstance. Franchise brands usually have a more standardized approach that makes achieving results easy, whereas indie brokers offer a personal touch that some clients crave. 

Independent Brokerages Become Hyperlocal

One big strength of the independent brokerage model is its penchant for fostering hyperlocal knowledge in agents. Franchise agents are typically more focused on generating listings and booking appointments than understanding the nuances of a neighborhood.

Independent brands, on the other hand, have personal familiarity with an area. They’re able to glean this deep knowledge by spending more time researching and just enjoying the region.

It’s easy enough to find online pictures of a city and speak with clients based on such knowledge. Independent brokers take it one step further and offer customized insights based on their clients’ interests. 

If they’re working with a client who loves bars and sports events, they’ll lean into that part of their knowledge. If they’re speaking with a young married couple that loves the outdoors, they’ll (authentically) talk up the parks, riverside, or whatever is nearby. 

This hyperlocal knowledge advantage is a perk that you won’t find on a Google search and rarely on an agent’s website. Independent brokers make lasting impressions on new clients every month for this reason alone. 

Independent Brokerages Are Known for Certain Types of Homes

Another advantage of indie brokerages is they specialize in specific types of homes. When you’re working with a franchise brand, their property targeting isn’t as specific. One reason for this is because they’re more focused on the close, but also because being less specific means you can find more listings faster. 

If you have niche tastes in housing or are looking for your “forever home,” you’ll want to work with an indie brokerage. They commit the time and focus necessary to find these kinds of properties and have the market knowledge to go with it. 

While the average US homeownership duration was 13 to 15 years as recently as 2018, more buyers are staying in their homes even longer. The average duration is now closer to 15 to 18 years. This indicates that clients want homes they can see themselves living in for decades–possibly the rest of their lives. 

Such trends give an independent company the upper hand in this area. Instead of browsing several homes with generic qualities, buyers will turn to specialists who have decades of experience to leverage. 

Franchise Brokerages Offer Brand Recognition

Though indie brokerages have numerous strengths, one they don’t have is brand recognition. When clients are looking for companies they already know and trust, franchises tend to win out. 

Data reveals just how effective branding is, too. When looking for their next purchase, 82% of consumers click on a familiar brand first in the search engine results pages (SERPs). That’s the majority of buyers. If you’re looking to make money quickly as an agent, working for a franchise isn’t a bad idea. 

Though indie brokerages aren’t bad simply because they’re unaffiliated, they do need to work harder to create a good impression. Independent brokerages need to build their reputation over the course of years, while a franchise is trustworthy simply by opening a new office. 

Franchise Brokerages Generate Consistent Results

Another benefit of real estate franchising is these companies’ newer agents get the same kinds of training at the same intervals. When they hire staff, they introduce the agents to a proven process that’s helped the brand sell tens of thousands of homes. 

This consistency is reassuring for first time home buyers or those who haven’t home shopped in a while. Buyers don’t have to wonder if their agent can answer their questions. They simply look for homes they’re interested in and consult their agent on the rest. 

Frequently Asked Questions About Independent Brokerages Vs. Franchises

The competition between franchise and independent brokerages has existed for decades and will continue to. As the latest technology gives consumers even more leverage in the conversation, they will be making increasingly nuanced decisions about who to go with. 

If you have questions about indie and franchise brokerages that aren’t quite as advanced yet, have no fear. We researched some commonly asked questions about any independent brokerage vs franchise.

Check out our answers here:

​​What Is An Independent Brokerage In Real Estate?

An independent brokerage is a real estate office that sells real estate unaffiliated with any other brand. They are their own entity that competes with other real estate brands. Independent real estate brokerages have anywhere from two to 60 licensed agents in most cases. 

You can compare the indie brokerage model to indie restaurants. An independent restaurant handles all of their own operations, costs, and profits. This includes a physical location, utility expenses, marketing tools, menu creation, and staffing.

The same is true of those who have their own brokerages. They have to raise their own capital, train their own agents, market their own listings, and develop their own local footprint. 

What Is A Franchise Brokerage?

A franchise brokerage is a business that opens a specific office based on an existing real estate brand. Examples of real estate franchises include RE/MAX, Century 21, Keller Williams, and Coldwell Banker.

Franchise brokerages are opened by investors, previous agents, and business owners. Some real estate brands allow people to open a franchise for as little as $12,000 to $15,000. 

One main difference between franchises and indie brokerages is franchise fees. When a franchise is opened, the parent franchisor wants to gain some kind of financial benefit from it.

They do this by charging the new office a monthly or annual fee. Sometimes the fee is based on revenue; other times it’s a flat fee simply for conducting business. If you’re planning on opening a franchise, research different opportunities before you settle on one. 

Can Brokers Be Independent?

Yes, a real estate broker can be independent if they meet industry and state requirements. A broker is a professional who sells real estate without being associated with a brokerage or franchise.

Here are the minimum requirements to becoming an independent broker: 

  • Be at least 18 years old.
  • Hold a high school diploma or equivalent.
  • Complete 75 hours of prelicensing education (60 approved educational hours; 15 approved interactive study hours).
  • Pass an online exam with a minimum score of 75%.
  • Pass your state’s real estate broker exam.
  • Apply for your state real estate license.
  • Complete any additional state-specific requirements or paperwork for becoming a broker.

A Fork In The Road

Researching which brokerage to join can be a time-intensive process. You have to evaluate company culture, advantages, compensation, and online reviews. You may want to join an indie brokerage but discover that they simply don’t have the momentum that a franchise does. 

Remember that the next step in your career should be centered on what works for you. Always be prepared to deliver value to your employer, but make smart decisions about where you see yourself. Refer to the info in this blog post as a guide when thinking about independent brokerages vs franchises.

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