For many real estate agents, a logical step on their path of professional development is becoming a real estate broker, then working as either a managing broker or a broker-owner.
However, unlike other industries where promotion to the management level is generally tied to additional income, some brokers find themselves struggling to perform at the same financial level as their most successful agents.
For brokers who are franchise owners in a big-box brokerage model, upstream costs can make it difficult to maintain profitability. For brokers who are indie broker-owners, overhead and operating costs can make it practically impossible, especially during the start-up years.
It’s no fun being the broke broker, and it can keep you from offering your agents the support they need to grow their businesses and, by extension, your business. Here are seven ways to ensure you avoid being the brokest person in your business:
1. Determine whether you’ll be a competing or non-competing broker
You may find that you can’t secure your own income without being in production, at least initially. Make sure that you have a plan in place to feed leads to your agents as needed or that the agents you’re recruiting are experienced enough that they won’t feel like you’re working against their interests.
2. Develop a profitable commission structure
Make sure that you crunch the numbers on your commission structure to ensure you can operate profitably and in a way that allows you to earn an income that’s fair, competitive and aligned with market standards for your area.
3. Focus on volume or premium listings (or both)
Make sure that your marketing and branding allows your agents to secure higher volume or premium listings so that they (and you) can generate larger commissions. Provide the support and resources needed to help your agents work in these markets.
4. Leverage your expertise
Perhaps you have a wide network that allows you to develop relationships with other brokers and pursue high-net-worth clients. Perhaps you’ve developed specialized expertise that would allow your brokerage to dominate a specific niche or market segment. Position yourself as an industry leader and subject matter expert, and develop your unique value proposition to enhance the reputation of both your and your firm.
5. Optimize your management
Make sure that you’re doing what’s best for your agents so that they can produce at the highest possible level — and so that you spend less time on recruitment, onboarding and retention activities. Expand your team in a smart way so they’re happy to support each other instead of competing with each other for crumbs.
6. Diversify streams of income
Add additional services to your brokerage’s offerings, from property management to consultation and investment services. Pursue strategic partnerships with lenders or title companies. Start a real estate school or use your professional expertise to develop your own real estate investment portfolio. The more ways you make money, the higher your income and the better protected you are in the face of market adjustments.
7. Draw on the expertise of others
Work with a tax strategist and employ a fractional CFO to ensure that you’re making smart decisions with every dime that goes in or out of your brokerage. Make sure that you’re doubling down on the activities that generate revenue and delegating the support tasks to others so that you can use your talents in the best way possible.
Your financial success depends on your agents — and vice versa. Make sure that you’re creating a business where everyone can succeed, including (and especially) you.
Troy Palmquist is director of growth for eXp California.
