Before opening up a Real Estate Brokerage Firm, you definitely want to research who are your competitors. Do your competitors have brick-and-mortar offices or are most brokerages in your area have virtual offices? What services do your competitors offer? What is their commission splits? Researching these details will provide you with an idea on which route you should take and of course what kind of budget is required to open and maintain a real estate brokerage firm.
If you are planning on opening a brick-and-mortar office, you definitely want to research your competitors to see what they charge to buyers and sellers. As a new real estate company, you want your fees to be as competitive as possible but at the same time, you want to be able to make enough money to cover all the business expenses. Also, competitive rates will definitely put you on the map to attract new clientele. Once you have built your business reputation as a recognized and reputable real estate brokerage firm in your area. Later, you can always reevaluate your service fees or commission splits after of course, you have built a successful real estate business.
Beside services offered to clients, you definitely want to research your competitors to see what commission splits they offer their agents and what benefits are included. As a new company, you want to make sure you have competitive commission splits. The questions you need to ask yourself are; What is the commission splits in your market? Are most agents on a 50/50 split, or are brokerages in your area offering 60/40, 70/30, 80/20, or even 90/10 splits or even 100% commission splits? Researching the commission splits will allow you to forecast into the future to see how much your brokerage will make per year so that you can establish a budget for your business plan.
If you are planning on opening a virtual real estate company, your commission split would need to be very competitive. For example, will you offer a 90/10 split with no monthly fees? Or will you offer 100% commission with a small monthly membership fee? When establishing your commission plans, you’ll need to ask yourself the following question; Why would an agent want to sign up with a virtual company that has the same commission structure as a traditional company? The agent might have the option of signing with a company that charges the same commission splits but might offer office space, office equipment, printing, face to face support, training, and might even offer company leads.
Lastly, as you can tell a lot of research is required before opening a brokerage firm. To recap the main questions you would need to ask yourself is, are you planning on opening a brick-and-mortar office or a virtual office? Do you have the capital available? Will you be a competing broker v.s. non-competing broker? What services are you planning on offering customers? How much will you charge for services rendered? Will your commission splits be competitive? If your commission splits are competitive, will you make enough money to support the business expenses? What will set your real estate office apart from other brokerages in your market area?
At RealtyBackOffice we believe that researching your competitors and market is a crucial element to starting off on the right foot when opening up your Real Estate Brokerage, and will ultimately contribute towards the success of your new business venture.