How Important is Your Real Estate Brokerage to your Business?
The idea for this post popped into my head on the eve of our quarterly new agent training class that we affectionately call Bosley U. For a little background, it was developed many years ago as a way to quickly ramp up new agents so that they could hit the ground running. Not only do they learn the art of negotiation, but we include panel discussions with top agents in the firm who talk about marketing and best business practices. To round out the program there is a property visit and an actual CMA has to be prepared and then there are three big sessions where we roll play a buyer meeting and a listing appointment and then a multiple offer session. It can be intense at times but also a lot of fun. In my opinion, agents come out of the 5 week program with more experience than someone who has been practicing for two years. As I like to say, OREA teaches the moves but Bosley U teaches you how to dance.
The forgoing leads me into a discussion about the value of the brokerage to the overall success of the agent on the street. Certainly how you start your career is critical to your success but after that, does the company remain as important? There are many schools of thought on this. Some would argue that the brokerage is just a necessity to selling real estate. While the law requires an agent to belong to a brokerage in order to buy and sell, the brokerage also provides some much-needed back-end support. At he very least there is a manager or broker/owner to oversee the running of the trust accounts, make sure the phones get answered and appointments get booked and provide some experience to answer questions or provide that next level support if required. With basic services agents run their own business, pay minimally to the “house”.
The flip side to the simplest licence holder model is the full service brokerage who takes a bigger slice of the commission but also provides more services. These services include, but aren’t limited to, things like broker loading, typing offers, education and office meetings, marketing services, printing, and maybe even access to significant technology, social media or a worldwide referral network.
Then there is everything in between with different brokerages offering different baskets of goods or services with a hundred different commission splits. Any new agent will find that wading through the choices is one of the hardest decisions to make. Then there are the myriad of other things to think about….Does a company’s perceived values line up with you as an agent? What about culture? Are you one who prefers a boutique brand over a national or international brand? Do the colours and style of the brokerage logo appeal to you? What about location? Parking? desk space? How professional are the business cards, buyer and seller packages and all other associated collateral material? The list is endless. In fact, there are even a number of single agent brokerages out there who just don’t want any association with a branded brokerage at all.
And what about the public? Our clients? do they care about the brand? Maybe? I used to work for a brand with luxury roots so people would call me because they thought their home met those requirements…they often did not, but having a prestige sign on their front lawn meant much more. Others chose a recognized brand because they had the lion’s share of listings in a particular neighbourhood. Still others wanted the brand that they imagined to be the most tech savvy. At the end of the day however, experienced agents would argue that clients rarely hire them because of the brand they work for, rather a combination of sales and marketing experience, reputation and market share.
So, is there a definitive answer to how important a brokerage is to your business? I asked many experienced agents this question and got a rather consistent response. Look and feel was important. lead generation was a big deal. Freedom to try new ideas. Smart and supportive management team. Culture played in to a lesser degree.
There is another factor to consider…The sub brokerage. While other industries allow independent contractors to incorporate, real estate brokers are currently excluded in Ontario. In response to this some brokerages are allowing for the creation of sub-brokerage models. The paperwork is excruciating and complicated but for experienced and successful agents it is an imperfect work-around. Unfortunately only a handful of brokerages have either the skill or impetus to incorporate this business model into their operations.
Of course in the small amount of research I conducted, the topic of splits was not even brought up…and here is why. Agents who see no value in a brokerage and prefer to run their own business as they see fit will gravitate to the company with the best splits while those who see the value in a more collaborative and supportive environment will be happy to pay for it.
Mark McLean is the Broker/Manager at the Bosley Real Estate Queen St W office, the Immediate Past President the Toronto Real Estate Board and a director at the Ontario Real estate Association .The opinions expressed here do not reflect the opinions of TREB, OREA or Bosley RE.