Becoming A New Real Estate Agent - 3 Things To Do FIRST!

You’ll probably hear someone ask, “where are you hanging your license?” 

When you first hear this you may be confused and ask what are you talking about?...On the wall of my house… 

What “hanging your license” really means is “what brokerage are you going to be working with?” This is more of an older term as in today’s industry you do not necessarily have to choose an office and hang your license in that brokerage’s office. 

Becoming the new real estate agent there’s a couple things you're going to want to look out for when picking your new brokerage.

A lot of people go with what they recognize first. Something that is top of mind or local familiarity. That may be a local Re/Max franchise office, a Century 21 or even a local boutique brokerage. Whatever is frequently seen around town the most. Oftentimes it just becomes what you're familiar with and you tend to assume because you see it all of the time they must be doing a lot of business. 

A boutique brokerages means independently owned and operated smaller brokerages. They are usually more local they're not a larger nationwide brokerage. But those are probably going to be some of the ones that you entertain first.  

Another factor that may come into play when choosing your brokerage is word of mouth. 

Maybe your cousin, your sibling or even some of your friends already work there and they told you that you should definitely call this person who's an agent and she's fabulous and you should go talk to her about joining her brokerage. That's one of the reasons a lot of times agents pick these brokerages. Just because of the influence from somebody else's word of mouth.

Agents often make this MISTAKE instead of doing their own due diligence to really dig deeper into what each brokerage has to offer. 

As a new real estate agent be sure to dig deeper into their business model and ask these questions.

1. What kind of support do they provide?
2. What are their fees?
3. What are their commission splits?
4. What kind of technology tools do they provide?
5. What will my daily activities be as an agent at this brokerage?
6. Will I be provided a mentor?
7. How are other agents at this brokerage generating business and does that align with how I want to do business?
8. Will they be teaching me how to build a massive, long term sustainable business?
9. Will I be competing with my brokers for clients?
10. Is their business model setup for me to continue to grow my company or will I outgrow the brokers here?

These very important questions will help you get a really good understanding of how that brokerage operates, what they’re doing to support their agents, and how they can help you build for the future and not just the here and now. 

Understand Fees & Commission Splits

Fees vary from brokerage to brokerage. Whether it's a nationwide brokerage or the smaller boutique brokerages that we were just talking about. Understanding your fees that you will be paying into the brokerage and what you get in return for those fees. 

This also depends and will be different if you join a team. 

If you join a team then there's going to be heavier splits versus being a solo agent.

When joining a team it’s important to understand how much work you're gonna be putting in and how much you're going to be compensated for with that time and that work that you're going to be putting in. 

In general, brokerages will have monthly fees and some (depending on if it’s a local franchise, boutique, or in the cloud) will have royalty fees, franchise fees, desk fees, and a few others. 

I (Ryan Strong, writing this blog) personally am a licensed agent with eXp Realty and our fees are $85/month that includes insane amounts of technology and support. There are other fees such as a broker review fee of $25 but that’s only when you get to the closing table of your transaction. We’ll do a deeper dive into eXp Realty’s fees and splits in another article. 

What Are The Commission Splits?

The typical splits you will see in the real estate industry between brokerage and agent is either 80/20 or 70/30. 

Let's say that you closed a transaction, you helped someone buy or sell a house, and the commission split between you and your broker is 80/20 as a solo agent. 

Taking a step back, when a listing agent signs an agreement with a home seller, they determine the commission split between their brokerage and the buyer’s agent’s brokerage. This is commonly 6% with 3% going to the seller’s agent broker and 3% to the buyer’s agent broker. 

Now, of that 3% (assuming you’re the buyer’s agent), it is split 80/20 between you and your brokerage. That’s 80% of that (3%) amount going to you (the agent) and 20% going to the brokerage. 

Here’s a typical example of what that may look like:

Seller’s agent agreed to 6% and listed the home at $500,000. 

3% to the seller’s agent and 3% to the buyer’s agent. 

$500,000 (sold price) x 3% (brokerage split) = $15,0000

$15,000 x 80% (buyer’s agent) = $12,000 (agent take home with the exception of any other fees due) & $3,000 (20%) for the brokerage

This is really important to understand for each brokerage you interview. 

And if you’re considering joining a team then the splits will be even less for your take home.