One of the most important decisions you can make upon passing your state licensing exam is which brokerage you want to work for. Your sponsoring brokerage is your home base and a safe place to ask questions. Your broker is your teacher, your supervisor, and your advocate. In this article, I will outline how to find a sponsoring broker that will help you reach your goals.
Table of Contents
- Overview
- Brokerage Model: Franchise or Boutique
- Commission Structure
- Interview the Broker
- Company Culture at Different Sponsoring Brokers
- Speak with Local Agents
- Training and Opportunities for Growth with your Sponsoring Broker
- Find the Best Fit
Overview
To find a sponsoring broker as a new real estate agent, you need to determine if you prefer a boutique or franchise-style brokerage, which brokerage has the commission structure that works best for you, and interview the brokers to find the one that you can see yourself working with.
1. Brokerage Model: Franchise or Boutique
You will find two main types of real estate brokerages in your search for a sponsoring broker — franchise brokerages and boutiques.
Franchise Brokerages
Joining a large franchise brand has its perks. These can include brand recognition (which is super helpful when starting out), relatively low cost of doing business, and frequent opportunities to learn from some of the best in the industry.
Franchise brokerages include Keller Williams, Century 21, Coldwell Banker, ReMax, ExP Realty, Exit Realty, etc.
These large franchises like to ensure all of their agents represent their brands well to the public, so they often cover a portion of extracurricular educational expenses to ensure they have the market’s sharpest agents. Rest assured that you will have no shortage of free seminars and classes. Many will even pay educators to come to the office and provide training courses over lunch breaks or happy hours.
Boutique Brokerages
Brokerages like these are typically owner-operated and consist of a few dozen agents. However, you may come across boutique brokerages with hundreds of agents in some larger cities.
Usually, the brokers at these firms wear many hats, acting as your broker and providing you with real estate business advice, answering contract questions, negotiating their own deals and working with clients, and even welcoming input from office agents for suggestions on how to make the brokerage more appealing for new agents to join, or what they can do to improve the experience for agents. It can be a more personal experience if that is what you want. The feeling in a boutique brokerage office can be much more intimate as you are more likely to know everybody that works there.
Things to Consider: Find a Sponsoring Broker Model That Works for You
At the end of the day, going with a franchise brokerage versus a boutique brokerage is a completely personal decision and won’t make or break your career either way. I started out at a boutique brokerage. If I was a new agent and had to find a sponsoring broker again, I would start at a large franchise. In my opinion, the structure and rigidity of large firms are great for new agents.
The agents that typically thrive at boutique brokerages already have prior experience in sales or have been in the real estate industry. They have built up a solid book of business and need help and advice from their brokers less frequently.
2. Commission Structure
The main question that most new agents have when trying to find a sponsoring broker is “how much will I get paid here?” when looking at potential brokerages. Although agents have no standard pay structure in Texas, many brokerages have similar pay structures.
Brand-new agents are very often on much more aggressive commission splits. Typically, 50% or more of their gross commission on each transaction is paid to the brokerage. This is to cover the high risk taken by the broker bringing them on. Additionally, it helps cover training costs until they are a producing agent.
The 50/50 Split
This pay structure is often referred to as a “50/50 split”. It is set up to change after a fixed period of time, or a certain volume of transactions is closed. An example of commission split increases after meeting these thresholds would be an 80/20 or 75/25 split. Thresholds can be as simple as time, number of deals, or even volume of transactions: say $1 million, $5 million, and $10 million or more to go up the ladder to better-split ratios.
Most brokerages with commission splits will offer better splits to more experienced agents because they know that they will incur fewer costs on behalf of the agent and that the agent will assuredly produce revenue for the brokerage. More experienced agents will often do what is called “capping out.” Capping out is when you sell enough to pay a year’s worth of brokerage fees, and moving forward, you receive 100% of gross commissions on deals you close.
Fixed Fee Structure
On the other side of the same coin, many brokerages operate on a fixed fee structure. What does this look like? Typically, there is a minimum monthly fee that you have to pay the brokerage each month; let’s use $300 per month as an example. Sometimes there will be additional desk fees or technology fees.
This fixed fee can make a lot of sense for an experienced agent with a steady pipeline of deals, who knows their average take home on their commissions will be greater when accounting for the fixed fee as opposed to taking 20%, 30%, or even 50% of the gross commission from each deal.
Commission Split or Fixed Fee?
Usually, my recommendation to new agents is to go somewhere that provides them with lots of training and experience upfront without paying cash out of their pockets before they close any deals. The knowledge and experience these brokerages offer is paid out of commissions instead of upfront. This is incredibly powerful when starting out as a new agent.
Things to Consider: Non-monetary Brokerage Benefits
Brokerages with 50/50 splits for new agents often provide more than their dollar’s worth in training, mentorship, one-on-one coaching, property photography, and personal branding (headshots, business cards, ads, open house flyers, yard signs, etc.).
This can be huge if you are new and don’t know quite yet if you plan on staying in business long-term, as most other brokerages with more favorable starting splits will require you to pay all of these other costs out of pocket upfront.
3. Interview the Broker
Interviewing multiple brokers is a step overlooked by most new agents. The average agent calls 2 or 3 brokerages and asks the first to answer if they would be willing to sponsor them. You don’t want to be an average agent, though.
Choosing which broker you want to sponsor you is not a light decision, so you should treat it like a job interview and give serious thought to who you want to work with! Even within the same franchise, the brokers running each location across the country will be different, and because of this, the culture at that location could be different. Prioritize this as part of your search for a broker before making any firm decisions.
Setting Up Interviews with Sponsoring Brokers
Take a day out of your busy schedule to narrow down your list of brokerages that you are interested in working with. Call each office to set up a time for an interview with the office’s broker.
Most brokerages will be incredibly accommodating and want to make you feel as welcome as possible. Regardless of how much they try to dazzle you with appearances and showing off their great office, be sure that you take time to ask important questions about commission splits, training and growth opportunities for your business, and what the brokerage offers its agents that sets it apart from other brokerages.
4. Company Culture at Different Sponsoring Brokers
Good company culture is something that you take for granted until you don’t have it at your brokerage, and then you feel like there is something very wrong with your situation. It can be hard to pinpoint when the company culture is your issue, so I recommend finding somewhere with strong cultural practices you are comfortable with from the beginning.
Things to Consider: Find a Sponsoring Broker That Has a Culture you Are Comfortable With
I thrive in my local Keller Williams office. I came from a small boutique brokerage where it was dog-eat-dog, with everyone out to get each other to succeed. Although there are some who thrive in that world, I found that my overall level of happiness (and production numbers) dramatically increased when I switched to an office that had a culture I felt comfortable being part of.
I did not know anything was wrong (for me) where I was before because I knew no other way. Seeing what it feels like to work somewhere where you fit in with the company culture has pushed this to become one of my top priorities and something that I will focus heavily on if I start my own brokerage someday. If you are a round peg, don’t try to force yourself into a square hole and blame yourself for not fitting. There is a brokerage out there with a perfect culture for you.
Rather than spend years somewhere that makes you feel less than your best and stifles your personal and professional growth, take a little extra time and find the place that feels like home to you. Both your sanity and bank account will thank you in the long run!
5. Speak with Local Agents
Who are the agents in your market that you look up to, or would you like to model your new career after? Most agents don’t bite, so shoot them a message on Facebook or text them to introduce themselves. 99% of agents will be willing to hop on a 10-minute call to give you new agent advice if you take the first step and ask.
Things to Consider: Where Would They Go?
What should you ask them about? Find out what they would tell themselves if they were starting again as a new agent with no client database, experience, or market brand established yet. This is a great way to start the conversation, but feel free to ask any other questions you have.
When making these calls or meeting up with these local agents, always be mindful and respectful of the time they are taking to help you out. Think of something you can do for them, whether that is sending them a referral for a client, buying them lunch, or sending them a thank you note with a gift card to their favorite local coffee shop (a quick search on their Facebook is a great way to come up with ideas).
This is also a great opportunity to begin building your network within the industry and begin plugging yourself in with leaders in the market. Surround yourself with those you aspire to become similar to, and your path to success in real estate will be more clearly laid out in front of you.
6. Training and Opportunities for Growth with your Sponsoring Broker
One of the most important aspects when deciding which brokerage to hang your license at is what opportunities to learn and grow your business are offered. Training and business growth opportunities can mean just about anything, but let’s discuss a few things that you should look for — especially as a brand-new agent.
Contracts class with your broker explaining the different details and nuances of the residential purchase and sale agreement and other associated documents in the state of Texas. As a new agent, sitting in on these sessions and hearing real-world problems that other agents in your office are running into and getting real-time feedback from the broker is invaluable and will exponentially shorten your learning curve as you are able to learn from others’ mistakes in situations that you have not encountered yet.
Business Planning and Coaching
In addition to the contracts class, find out if the brokerages help with business planning and coaching. Having a mentor to help you formulate a game plan to reach your desired annual income is one of the best ways to make it a reality. Know where you want to be in your business five years from now. This will help you figure out what you need to be doing today.
Find a sponsoring broker that provides you with a wealth of free resources. Things like cold calling scripts, role-playing opportunities, and guides of every question you need to ask when working with new buyer clients.
Find the Best Fit
Be sure that you use the information contained in this guide to figure out if you want to be part of a franchise or boutique brokerage, what the payment structure looks like, how well you get along (and can see yourself working with) the broker, what the company culture is like and if you can envision yourself there, what agents in the area think of the brokerage and where they would start at if they began their career over again, and finally – what opportunities they provide new agents for learning and growing their businesses.
Don’t Sweat the Small Stuff
Regardless of what brokerage you end up at when you first get your license, don’t get too bogged down if your decision doesn’t click immediately. Sometimes it can take some time to fully get into the groove of things when you join a new company (not to mention a new industry), which can take months.
I recommend giving yourself either a full year at the brokerage or ten deals before deciding to go elsewhere. If things don’t feel right after your “test drive” at your first brokerage, repeat the process again and find somewhere that you LOVE working at. This is a normal situation in the real estate industry; everyone has a “home” somewhere in the community.
Let us know in the comments below where you are thinking about starting out and why! If you are an industry vet and have advice for new agents, we would also love to see that in the comments below! Are you still at the brokerage you started at, and if not, how many brokerages have you worked at?
