If you are a new or even experienced real estate agent who is looking for the right brokerage to join, how do you even know where to start? Medium-sized cities like Raleigh, NC and Austin, TX each have over 1,500 separate firms. Even if you narrow that down to firms with more than five agents, there are still over 150 individual brokerages in each city to choose from. What if there was a way to narrow that down to a 10th of that number, to just the firms that might be the best fit for you?
Not in the mood to read? That is fine! Check out the video version below:
Quick disclosure up front: one of the types of brokerages I will be discussing in this article is those focused strongly on systems and process improvement, an example of which is Relevate Real Estate. Our approach is perfect for some agents and not perfect for other agents. I promise to be as objective as possible in comparing the ten different types of brokerages in this article because my only goal is to help you find the right fit for your needs.
At Relevate Real Estate, we love organizing everything to make life easier, so we came up with the crazy idea of dividing all those firms out there into categories to help you focus on what you are looking for. It turns out most brokerages fit into one of ten unique categories.
I will briefly describe each of those ten different types of real estate brokerages and what each of them claims to provide to real estate agents to help them be successful. As you learn about each type, you can compare their approach to the kind of support and situation you are looking for. That should help you narrow your choice down to two or three, or one of the ten different types of brokerages. Then you can contact some of the specific firms representing that type of approach and grill them on their details.
The Ten Different Types of Real Estate Brokerages
I have put this list in order from roughly how long that type of brokerage has existed on planet earth, from oldest to newest. I am not aware of the timeline of brokerages on other planets. The first few have been around on our planet for over 70 years, and the last of the list has only been around for about 15 years. I am not going to recommend any one over another. It all comes down to what type of brokerage is the best fit for you.
With that in mind, after hearing about each type of brokerage, stop for a moment to reflect on what you want from a brokerage verses what this type of brokerage claims to offer, and ask yourself if that type of firm might be the best fit for you.
So, here we go…
1. Local Boutique Firms: The primary benefit they claim to provide agents is that they are “small and local, and you will have a nice group of quality people to get to know and work with”. Other than that, these types of firms do not have any typical characteristics. Every boutique firm is different. Some are very high-end, while others are similar to low-cost firms. They often incorporate elements from the other types of firms listed below. High-quality, local examples of this type of firm are The Rich Realty Group, Urban Durham Realty, and Inhabit Real Estate.
2. National and Regional Brand: These firms came along next when a number of local boutique firms expanded to other cities and states. These firms have spent a ton of money on brand recognition and their main claim is that “our highly-recognized brand name will help you get more clients”. These firms typically have excellent brokers-in-charge, solid training for new agents, big offices, and medium cost to the agent. High-quality examples of this type of firm include C21, Coldwell Banker, Berkshire Hathaway, Long & Foster, Weichert, Howard Hannah, and many other firms with high regional or local brand recognition. This type of firm would be good for any agent who feels that national brand recognition would be a significant help to their business.
3. New Construction Sales: These firms sell agents on the idea that you will “work out of a beautiful model home, and customers come to you”. This could be a role within a brokerage or working directly with the builder. The compensation can be great and steady in a good neighborhood in a strong market. You will need to be prepared to work almost every weekend because that is when new customers stop by most often. Local examples of this type of firm are Toll Brothers, Ashton Woods, and the Jim Allen Group.
4. Low-Cost Firms: These firms compete on being low cost for agents, not necessarily for buyers and sellers… that is up to each individual agent. Their claim is simply “we charge you very little to hang your license with us”. These firms claim to be, and usually are, very inexpensive to work with, but of course, they offer limited broker-in-charge or any other type of support. Fathom Realty and Realty One are two great examples of this type of firms. If you are convinced there is nothing that a brokerage can do to add value to your business, this type of brokerage would be your best choice.
5. Team and Brand Building: Gary Keller made this type of brokerage famous with the book, The Millionaire Real Estate Agent. This type of firm specializes in giving agents guidance to build their own teams and brands. If you want to hire, train, and manage your own team and have your own logo and brand name, this type of firm is perfect for you. Keller Williams is the biggest of these brokerages while newcomers Side and Fusion offer even more advanced versions of the same approach. If you are convinced that building and leading a team is the best strategy for your future, this type of brokerage will be perfect for you. You can check out this video for an unbiased analysis of the different ways to have the support team you will need to grow your business beyond 20 or so transactions per year, and MAYBE even have a life outside of real estate.
6. Lead Providers: These firms advertise for or purchase cold leads and teach mostly new agents how to convert these leads into clients and then into commission checks. They typically provide great training because they have to. It is hard to convert those types of leads and they generally keep at least half the commission because the leads are expensive. These are very professionally managed organizations such as DASH Carolinas or Paracle locally. If you are a new agent who needs experience, this type of firm may be a good choice.
However, you will keep a low percentage of your commission revenue, and you willl be learning how to handle cold leads, which frankly is not a whole lot of fun for most agents. Too many agents get addicted to cold leads, and that is a formula for a very exhausting career. The key will be to learn to cultivate relationships with past clients so you will start getting tons of referral business, which is much better business. This type of lead provider brokerage may not have the software tools, coaching, or support to help you make that change.
7. Multi-level Marketing: This has been used to sell all kinds of products and this type of firm focuses almost exclusively on using multi-level reward systems to recruit agents. They promise that “you will be able to earn unlimited passive income by recruiting other agents, and the agent who recruited you will be financially motivated to help you”. The biggest and best example is eXp Realty, but Exit Realty paved the way years before them. If your primary interest is recruiting and not selling homes, this type of firm could be perfect for you.
8. Your Own Brokerage: There are only three reasons to start your own brokerage. The most common is you want to develop your own unique brand that means something different in the market. That is tough to do as part of a bigger brokerage because legally you are required to show their name and logo in your advertising, and that can be confusing to consumers. The second reason is to save money by not having to pay anything to a firm. Very few agents start their own firm for this reason, because there are so many truly low-cost brokerages now, where you can hang your license for next to nothing.
The third reason is you feel you have a better way to do real estate and you want to do it your way. If you do it for this third reason, be prepared that if you want agents to join your firm, you will need to give them value worth more than what they are paying you. Tall order. I do not have any examples of firms started by you. You will have to create your own!
9. Base Salary and Benefits: Are you a new agent and wish you could help people buy and sell homes while also having a base salary and benefits? Well, with this next type of brokerage, you can do that. Redfin is the most well-known brokerage that offers this to agents. If you work hard at this type of firm, you can not only have some security, but you will also take home more than the average agent. If you take the risk in a commission-only situation, you can take home much more income, even in your first few years. It just comes down to how smart and how hard you are willing to work.
10. Focus on Systems and Process Improvement: This type of firm is the most recent and promises that “our systems will help you work smarter, give better client service, make more money, and better work-life balance”. The proven processes and support at this type of firm will deliver the promised results if you use them correctly. Theoretically, the results more than pay for the cost of the productivity-enhancing structure and support staff.
This type of brokerage is best for agents who naturally seek to do everything in life in the smartest and most efficient way, who do not like to waste time re-inventing systems and processes for themselves, and who value structure and consistency as an essential part of running a successful business.
So there you have it, the ten different types of real estate brokerages. Now comes the hard part…. which is best for you? Think through that list again. Which are the two or three, or even one type of brokerage that resonates most with you as an agent? What do you value most in your career as a real estate agent? Which from the list above aligns closest with these values?
So, What Type of Real Estate Brokerage is Right for You?
We gave you just a few examples of brokerages within each category, but we will be happy to recommend additional high-quality organizations in your city within the type of brokerage in which you are interested.
Pro tip: Most agents, whether they are looking for their first brokerage or leaving their current firm, are in a hurry to interview brokerages and are looking for the right questions to ask them. But, you will help yourself in a big way by taking a few minutes to ask yourself the right questions to understand what you want from a brokerage, so when you meet with them, you make sure they have what you want. Check out this video for a list of 10 smart questions most agents never think to ask themselves before jumping on board with a brokerage firm. It might save you a lot of trouble and help you get where you want to go a lot faster.
If you are an experienced agent, which type of brokerage did you start with? Was it clear to you which of the ten types of brokerages it was when you joined them? Which type do you think is right for you now?
Keeping in mind that my only interest is in helping you find the best brokerage for you. If you are an agent in the Triangle Area of North Carolina area and you’d like to visit with us to learn more about Relevate Real Estate, click HERE to set up a time to talk with us.