From agent to broker: 5 strategies for success in your first year
This story was published as a guest column in REM, Canada’s Real Estate Magazine on February 28, 2023.
https://realestatemagazine.ca/broker-shares-5-keys-to-success-in-the-1st-year-of-business/
In mid-2021, I was halfway through my best year as an agent, representing a great brokerage. They had a strong market share and were home to some of the brand’s top agents and teams.
Like many, our market was having one of its best years in recent memory. However, also similar to other markets coming out of the pandemic, brokerages across the city saw agents on the move, switching offices and looking for a different environment.
I was fascinated by why these agents were moving. At the same time, I had been studying leadership, management and corporate culture, obtaining professional and master’s certificates through the University of Regina and Royal Roads University.
It was easy to see that there was something missing in our market. There were gaps in the value offered by brokerages, and agents were looking for other options.
It was time for me to take my own leap and start a new brokerage. Was I unhappy? Disgruntled? Not at all. Leaving was more about wanting to create something I believed in and prove to myself it could be done.
It’s been just over a year, and we’ve experienced some moderate growth, with 28 agents joining me at the brokerage. It’s far from a big city super brokerage, but here in Regina, where we have just over 400 realtors, we’ve carved our spot and are holding our share of the market.
Reflecting back on the year, we’ve made our mistakes and realized some unexpected successes. It’s hard just to pick a few, but I’ve outlined five themes that I felt were important to our brokerage in my first year as a broker/owner.
If you’re considering a move or already have, your situation is likely quite different, but I hope you find some value here.
Find the gap
If you’re in a market where one brokerage enjoys a large market share, you can have a lot of success being the alternative option (think Uber vs Lyft).
However, in a market with dozens (or hundreds) of brokerages, you have to find the gap. What are agents looking for that isn’t offered elsewhere? Fees, culture, support, training, leadership, office space, team opportunities, etc. Maybe it’s not just one thing but the sum of many little things.
We found success reintroducing pieces that established brokerages had moved away from, rewinding the clock a bit.
We established regular office meetings (something many brokerages got away from even before the pandemic), making our branding consistent with all agents (limiting how agents and teams can brand themselves alongside the brand), offering various support programs and focusing on collaboration over competition between agents.
The model matters more than the price
My wife and I travel quite a bit. She loves to scuba dive. I like to drink beer on the beach. We have often stayed at all-inclusive resorts.
Recently, we stayed at a resort where this wasn’t an option, paying for each meal and drink separately. I was surprised by the difference. When you’re paying for each drink, the quality and selection increase (no more cheap draft in plastic cups); the restaurant menu options are better, and there’s much less food (and guests) wasted around the resort.
Instead of trying to control costs, the resort finds additional ways to provide value and earn your pesos. It was a much more enjoyable experience, and overall, we spent around the same amount.
Is one model more profitable than the other? I have no idea. I do know that each model attracts a different type of traveller and has a major impact on the type of atmosphere the resort offers.
In our market, many of the big brokerages offer a variation of a flat rate fee model where an agent’s expenses remain relatively the same, no matter how many homes they sell. While this can be an attractive option for some agents, over time, it can put negative pressure on the value a brokerage provides, as the only way to grow profits is to recruit more agents or cut expenses.
By nature, brokerages with variable fees (splits and deal fees or pay-per-service) can more easily establish a culture based on each other’s success. The more the brokerage invests in the agent (training, leads, marketing, support), the more successful the agent can be. The more successful the agent, the more revenue they generate.
In the end, it might all come down to the same pesos, but the model will affect who you attract and the culture you create.
Keep it cheap, cloud-based and flexible
We all know agents are funny. They all claim to want a private office. They want us to have magazine-worthy spaces, but then they never use them.
Keep your overhead low by having limited square feet, open concept flex spaces with private meeting rooms and reserve private offices for those who really need them or share them (and/or are willing to pay additional fees).
For staffing, we’ve encouraged flex time and have been lucky to find great staff on contract that will grow their time as we grow. All of our staff work from home for at least part of the week.
We’ve restricted office hours for public “walk-in” access and encourage scheduling appointments. We provide secure mail and drop-off boxes for agents/clients picking up keys or dropping off deposits.
We continue to leverage technology as much as possible.
We can review transaction paperwork remotely; our agents can join all our meetings virtually, and even our office phone lines are forwarded to our cell phones. We pay commissions by direct deposit and collect deposits electronically when possible.
Why do we do all this? The more efficient we can be with our resources, the more we can invest our money (and time) in our agents and the value we provide.
Transparency matters
This was important to me, and it appears to be valued by our agents as well. There is very little that our agents (and our competition) don’t know about our brokerage.
Everyone pays the same fees, including me (I still work with clients). There’s no special treatment or discounts. If an agent wants to negotiate a special rate (maybe they have a team or work in a specific segment), we work with them to develop a new model and then offer it as an option to all agents.
We’ve even held an Annual General Meeting to show our agents where we’ve spent our money and how much we have collected in revenue.
We get their input on where we should focus our budgets in the coming year. We openly discuss our profit targets. Agents know the brokerage needs to be profitable to exist.
This keeps me on track and accountable to my agents. They have a better understanding of the investments we make and the reasons for our decisions.
Invest in your people
Our goal is not only to help our people become great agents but great business owners as well.
In addition to regular coaching, we teach our agents to proactively manage their finances and encourage them to invest for the future.
We have health and benefits coverage and have introduced a voluntary pension plan, which we contribute to from time to time (when they hit milestones, etc.).
We provide grants/office bill credits to those who attend conferences, volunteer in the community, register for additional training courses or get involved with our local association.
We match a percentage of the expense when they support local sports groups and community programs. If they invest in their business, so will we.
We also offer a profit share program. We want them to treat this brokerage like their own, helping to recruit great agents, keeping costs under control and finding different ways to grow revenue.
Next up, we are launching a real estate investment trust, providing agents with a venue to invest in real estate at whatever level they feel comfortable with.
Why do we do all this? We want them to be successful and stay in the industry longer. It’s easier to retain than recruit.
Momentum matters
This is likely the hardest to explain, but one of the most important. Momentum can make your job a lot easier…or harder.
For example, recruiting agents is incredibly hard when others have just left your brokerage. But if five agents have just joined you, you would be surprised how much your phone rings.
Being the shiny new brokerage in our market has helped to grab some attention, but we were lucky to have some great agents trust us early on. So far, we’ve been able to keep that momentum going.
Building momentum in a large, existing brokerage could be more challenging but not impossible. Big, established brokerages might need to introduce change in pieces.
Communication and stubbornness are key. Keep your foot on the pedal. Introduce new concepts, remove old services that aren’t working and keep delivering more.
If something doesn’t catch on right away, don’t quit. It may take several changes over time for agents to notice things are improving. Also, try to keep everything moving forward. One bad move backwards ruins ten good moves forward.
In the end, you’re allowed to make mistakes. The more we fail, the more we learn. We’re all just trying to figure this out as we go.
Do you have advice for new broker/owners? Let me know in the comments below.