John Austin suffered a heart attack in October 2017—on Friday the 13th, to be exact.
“It was after that I decided to make life changes, including starting my own brokerage,” he says. “It was time to build a business that I could be proud of.”
After months of careful thought and planning, America's Best Real Estate in Salt Lake City opened on August 2, 2018. He became principal broker along with his wife, Michelle, a real estate agent. Working out of their home office has helped Austin become more efficient and able to spend time with his family. “What I’m doing now is not that much different from what I did my entire career,” he says. “I’m just doing it for myself, in my house, and building my own name instead of some other company’s name.”
When real estate professionals open their own brokerage, they have a lot to think about: whether to become a franchisee or go independent, whether to go virtual or have a brick-and-mortar location, how much money is needed to begin, how the company should be branded and marketed, and so on. Approximately 287,391 members of the National Association of REALTORS® hold a broker’s license, and 147,700 of those identify as broker-owners, according to the 2019 NAR Member Profile.
Those who start their own brokerage do it for many reasons—independence, wealth potential, or the ability to build their own philosophy and brand, Austin explains. The plus for him was building a business he could potentially sell one day. Austin went independent to avoid franchise costs and to shape his own brand. He also sought a greater sense of pride in his work, the ability to grow his income potential, and the freedom to run his business from home.
Ramonica Caldwell, broker-owner of Ramonica Caldwell Real Estate Group LLC in Houston, opened her brokerage mainly for the freedom. She, too, decided to go independent to control her own brand and business identity. Today, she operates with two agents. “I always knew I wanted to have my own company no matter what job I was going to do. I always wanted to be an entrepreneur. I’m normally a go-getter in everything I do,” she says. In May 2017, she opened her doors after working the previous five years as an agent with different types of real estate brokerages.
The Biggest Obstacles
The most complicated challenge for Caldwell was understanding how to set up an office. “I didn’t know where I should have a space or even if I should have a space,” she says. Setting up her website was a pain, too. Similarly, Austin struggled with getting the right graphic designer. He ended up doing it all himself since he did have some background in website and logo design.
Austin says he gave himself three months to get everything prepared—but it took more like six months to get started. He spent about $3,000 initially, with the bulk of that going to website domain names and signage. He picked out his name by narrowing it down to 10, then he sent an email to his past clients asking them to help select the one that best represents him and his work.
Caldwell says she spent at least $7,000 initially, including a two-month deposit on her office. She also moved closer to her new office so she could reside in the area where she wanted to focus her business.
Starting a brokerage from scratch isn’t easy. Both Caldwell and Austin saw their share of ups and downs. To help others avoid some of the pitfalls, here are six pieces of advice from these two very different independent broker-owners.
- Decide whether you really want to leave your current brokerage. Carefully consider the pros and cons involved with starting your own brokerage versus continuing to work for another broker, says Austin. The cons might include the time and money commitment necessary to get the business running, as well as increased costs if you decide to have a brick-and-mortar location. Office rentals in his Salt Lake City area range from $1,500 to $6,000 a month. Buying a space can run up to $700,000. “There is much to consider, and although the advantages of starting my own brokerage far outweighed the disadvantages for me, that does not mean it will be the same for you.”
- Get a quality logo professionally designed. A new broker-owner will need to make his or her online marketing, signage, letterhead, and business cards stand out, yet look professional. “Those are the things that get the most attention from potential clients. You get the opportunity to sell yourself with a good website,” Caldwell says. Austin agrees that the right business name and logo design should be top priorities when starting a new business.
- Weigh the pros and cons of virtual. Austin encourages brokers to seriously consider starting as a cloud-based, virtual brokerage. A home-based business lowers costs and offers advantages such as the ability to work at your own pace, the elimination of commuting to and from an office, and fewer office fees. You can always transition to a brick-and-mortar location later after the company’s income justifies the expense. “There are some who will say, ‘But I don’t want to bring clients to my home,’” Austin says. That’s never been a necessity for him. He and his wife (it’s still just the two of them) always meet clients at a mutually chosen location, or in the home they're planning to list. But a virtual office might not be for you if you want to grow your company by adding several agents, or if you operate in a market where you want to attract foot traffic, such as a resort community.
- Establish your company goals. Write down your company values and goals in addition to your business plan. You need to understand where you want that company to go, says Caldwell. “Figure out how much production you want to do for yourself, and if you want to recruit other agents,” she says. Caldwell started out on her own before adding her two agents when she felt it was time to grow. Her receptionist was included in the rent, which helped her financial situation.
- If you are opening a brokerage with agents, have a plan for them, too. You need to have systems and tools in place from day one for agents to use, such as a CRM, a transaction management tool, a website or systems to manage online leads, onboarding and training manuals or classes, file sharing platforms that keep clients’ personal data safe, and more. Caldwell’s most important investment was her CRM, which can run as low as $35 a month up to $300. She believes having three to six months of savings for office space, printing, signage, and miscellaneous dues is important. Austin’s greatest tool is his all-in-one website, which offers everything built-in, including a CRM, lead management, transaction management, and a drip email system for $60 a month.
- Enjoy the ride. Austin credits starting his own brokerage with improving his self-esteem and pride. “I wish that I had known how it was going to make me feel when I opened up my own business and how different things would be,” he says. Austin also says that owning his own brokerage has helped him overcome some of the stigma attached to real estate agents. “Some think agents are shady and only do it for easy money.” He used to carry that weight on his shoulders, but through his business he’s been able to change people’s perception about real estate professionals. Now, he believes that if someone asked one of his past clients about him, “They would stand up and fight for me.”