Friday, January 24, 2014

Which Brokerage Should I Join?

If you are thinking about getting a real estate license, you will have to consider which brokerage to join. The Washington State Department of Licensing requires new licensees to hang their license with a brokerage firm, who then assumes much of the liability for supervising that new licensee.

Supervising means training that new person, answering questions about what they can and cannot do, reviewing their paperwork, and general mentoring and coaching. If they violate NWMLS rules, it is the Managing Broker who will be assessed any penalties and have to defend those actions.

And yes, having a professional license to help people with one of the biggest financial transactions of their lives, carries a big responsibility. And costs.

But why is it so expensive for a new licensee to join a firm?

Having your own brokerage means renting your own office space, hiring your own bookkeeper, generating your own leads, processing your own transactions, providing your own insurance and legal guidance, developing your own marketing materials, buying and troubleshooting your own office equipment, answering your own phones, finding your own training for credit hours, paying higher brokerage fees to NWMLS/CBA, getting your own CRM and website, and identifying and negotiating your own coverage when you want a night or weekend off....

If you are willing to do all of these things, then down the line, having your own brokerage may be a good thing. In the mean time, a new licensee is  paying for this expertise, training and support.

In analyzing which firm to join, a new licensee should consider what benefits come with the costs, how much training they will receive, the reputation of the brokerage, their ability to generate leads and help the new licensee succeed.

Focusing solely on cost means that a new licensee may not get the training, support, and income-producing lead-generation they need to jump start a new career in real estate. While I believe that training and support for newcomers in the real estate industry generally is abysmally poor, I will admit my own short-sightedness in selecting my first brokerage on the basis of out-of-pocket costs. As a result, I was poorly trained in the skills I needed to generate business. I believe this decision resulted in a longer learning curve than necessary.

So my advice to new licensees, or those considering a real estate license, would be to interview a number of brokerages and get referrals from experienced and successful brokers. If I had to do it over again, I would have gone with a reputable, experienced firm with good training, coaching and mentorship opportunities, rather than the lowest-cost desk-fee operation that offered only limited training and support.That may be appropriate later in one's real estate career, but not for someone new to the industry.

In a future blog, we will talk about whether it is better to have a real estate license as an investor...or not....

Happy Investing!

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