New markets require new approaches and tactics. Experts and industry leaders speak at Inman Connect New York in January to help navigate market change – and prepare for the next one. Meet the moment and join us. register here.
It’s that time of year again. Brokerages are actively recruiting new agents, and agents are reconsidering their level of happiness at their current brokerage. If you’re considering making a change or being heavily recruited, it pays to go to interviews with questions in hand. The right questions, or even more so how the interviewer answers them, can help you determine if it’s right for you.
Here are 10 red flags to watch out for when interviewing your next realtor. Be sure to educate yourself on these critical aspects of your business before committing.
1. Stingy Commission Sharing
The commission breakdown is one of the considerations when deciding if the broker is right for you.
The percentage that a real estate agent makes from a sale is relatively small. For example, 6% of the sale is split between the buyer and the selling agent. This 3% is then shared with the brokerage.
Most brokerages will ask for a 60/40 split, but some will give the agent more. Obviously, the less the brokerage takes, the more the agent gets. In fact, if the brokerage is asking for more than 40%, it could be a red flag unless the value they provide through training and leads is justified.
Keep in mind that some brokerages will have a cap on commission splits. For example, a cap of $100,000 means that if the agent earns $100,000 from sales, he no longer has to pay the brokerage fraction for the year. Having a low cap in place is another sign of a good opportunity.
That being said, you can’t judge opportunities on splits alone, as the other points mentioned here might be even more important.
2. A lack of growth support
Most brokerages offer their agents some support. This takes the form of training, marketingmaterials and more.
It’s best to find a brokerage that offers the support you need, especially if you’re a new agent. Otherwise, you may find yourself very lost.
3. Too many fees
It is common for brokerages to charge fees to their agents.
- Franchise fees
- Office expenses
- MLS fees
- Training costs
- Marketing material costs
- Errors and omissions insurance (E&O)
- Start-up costs
These fees can take a huge chunk out of your revenue, especially if you’re a new agent and aren’t making a lot of sales. If the brokerage charges excessive fees, you may want to look for another company.
4. Lack of internet presence or poor marketing
The company you work for needs to be good at helping you sell yourself, so if it can’t even sell itself, you should have second thoughts about working for the company.
The brokerage you are considering should have an attractive website and social media. It should come up prominently when searching online. It can also provide separate web pages to agents.
Keep in mind that working for the biggest, the most well-known companies is not always the way to go. Working with family businesses has many advantages, including individualized training and a more intimate atmosphere.
While these companies might not be able to compete with the big fish, they should still be able to carve out a niche with some nice marketing materials.
5. No administrative support
Some brokerages offer agents administrative support to do paperwork and manage MLS listings. Support often comes at an additional cost, but if you’re dreading dealing with the paperwork, it might be worth it.
6. Bad reputation
Today, you can go online to learn about almost any company. When it comes to brokerages, you can check out review sites to learn more about the experiences agents have had with the company. If the brokerage has bad reviews, that could be a red flag.
In addition to finding out about agents’ experiences with the company, it’s important to find out what customers think about working with them. If you join a brokerage that does not provide good customer service, it could damage your reputation in the industry.
7. Bad Culture
Culture is a huge factor in any workplace. This shows in the way the office looks, how co-workers are treated by management, and how co-workers treat each other.
Some brokerages are very practical and foster a family spirit. Others prefer agents to be independent and do their job.
There is no right and wrong when it comes to corporate culture. It is simply important to find the culture that suits you best.
8. They don’t allow your specialty
Many agents aspire to evolve into a specialty. For example, they may want to specialize in luxury properties, multi-family properties, investment properties, etc.
Some brokerages encourage specialty agents while others have strict guidelines against them. You need to make sure that the brokerage you partner with will allow you to pursue your specialty if you want to steer things in a specific direction.
9. No mentor support
Most brokerages offer some sort of training, but some go the extra mile by offering mentor support.
A mentor will be an experienced agent who will provide you with personalized support. However, they often come with additional charges. Generally, the support of a mentor is a good thing if you can afford it.
ten. No referrals or leads
It’s up to the agents to generate their own leads. However, some brokerages will help by providing lead generation tools or by referring calls and appointments to specific agents.
Find out how the brokerage you’re interested in handles leads. Do they provide lead sheets to agents? If clients come in, are they referred to new or veteran agents? Do leads have a cost?
How leads are handled will give you an idea of the suitability of the brokerage for you.
Finding the right broker is an essential step in growing your real estate business. Now that you know the red flags to watch out for, you have the tools you need to find the best brokerage for your needs.
Chris Heller is a bestselling author and currently serves as Director of Real Estate at Ojo Labs. He is also an advisor and head of the editorial board of AgentAdvice.com. Connect with him on Facebook and LinkedIn.