How To Choose a California Real Estate Brokerage

How Do You Choose the Right California Real Estate Brokerage?

Business Structure: Franchise, Boutique or Virtual

A real estate brokerage is a business. Like other industries, they can be national franchises, small boutiques or even virtual businesses. Each one has its pros and cons for the agents that join.

National franchises tend to be a good starting point for new agents. The commission splits aren’t typically the highest, but they offer a lot of education, support, and name recognition.

Small boutiques are an option for agents that prefer a more personal, team-oriented work environment. It can also be the best type of brokerage if you work within a specific niche that the brokerage has cornered.

Virtual brokerages are for the truly independent agents that already have a physical space to meet with clients. They’re appealing to veteran agents who have built a healthy network and don’t need as much support because the commission split tends to be very favorable.

Commission Split

Let’s get real. The commission split is important. It determines how much you take home every time you close a sale.

There’s no set commission split between brokers and agents in California. It’s a negotiable point that you work out before signing a contract. The commission split typically ranges from 40/60 to 90/10 (agent/broker).

The broker takes a number of things into consideration before determining the commission split:

Experience of the agent.
How likely it is the agent will bring in business on their own.
Whether additional fees are being charged.
Cost to support agents.

Brokers may also offer 100% commission to the agent in exchange for a flat fee that’s paid monthly. Keep in mind you’ll have to pay the fee whether or not you close any deals during the month.

Sliding scale commission splits are also offered in California. At the start of the year, you’ll have a lower split of 50/50 or 60/40. As you close transactions the split will get better. Just make sure you know what triggers a change and have a good idea of how quickly you can reach those goals.

Support and Services

So what do you get for that commission split? California brokerages offer an array of support and services to their agents, which should be spelled out in the contract.

What the broker has to offer will help you determine if the commission split offered is fair. In some cases, the support and services may be even more valuable than getting an extra 10%. This is often the case for new agents when a brokerage offers mentoring, training and lead generation.

Leads and prospects are a big one. When you’re interviewing brokerages ask whether the broker provides leads and how many you can expect in a given month. Also, inquire about the opportunity to work the main phone lines and holding open houses for other agents.

Reputation

In real estate, there’s nothing more important than your reputation. The bulk of agent leads come from referrals and past clients, some of which are passed down by the broker. Many buyers and sellers may not have a specific agent in mind, but they do prefer to work with a brokerage they’re familiar with and trust. And just like any other consumer, many do their research online before choosing who they want to work with.

It’s in your best interest to do the same. Research brokerages in your area online to get a feel for their reputation. Steer clear of brokerages that have a number of poor reviews or complaints filed with the California Department of Real Estate (DRE).

Experience

The experience of the broker is another important factor all California that real estate agents should consider. In California, brokers must have two years of experience before they can get their license. However, that’s the minimum.

You’ll want to consider how long the brokerage has been in business as well as what type of transactions the company is known for handling. If you plan to focus on a certain niche it’s in your best interest to find a broker with experience you can leverage.

For example, if you want to get into luxury sales (which is super high-end in California compared to other states) you’ll need to work within a brokerage that’s known for working with luxury buyers and sellers. Pricing luxury homes is a real art, which an experienced broker can help you learn.

Choosing a California brokerage is a big decision. Take your time and aim to interview at least three brokerages to get a better idea of what’s out there. Once you find the perfect fit you’ll know it!