Changing Brokerages?
|15 Key Points of a R.E. Employment Contract!
Want to Switch Brokerages?
Ask Yourself These 7 Questions First!Independent vs. Franchise
Which Brokerage Model is Best for You?
By Troy Palmquist
Many agents are slow, so if you are considering a broker change, now is the time, while your pipeline is closing out!
‘It’s no secret that I (the author) am a proponent of the nimbleness of the indie brokerage model, but everyone has their own preference.
Whether you are just starting in real estate or considering a mid-career shift to a new brokerage, one of your most significant decisions will be whether to align yourself with a nationally known franchise brokerage or a local or regional independent.
There are many considerations to review before you decide. According to the NAR’s most recent report, 54% of Realtors are affiliated with an independent, non-franchise brokerage. The report identifies this as part of a more significant trend in the industry away from the franchise model.
In many markets, we see a trend of buying sprees in which big-box franchise companies purchase independent brokerages to expand into desirable markets.
This suppresses competition and often forces agents into the position of working for a large franchise, something they were trying to avoid by hanging their license with indie in the first place.
What are the pros and cons of franchises and indies, and how do you know which will better fit you professionally? Let’s break it down.
History of the Franchise Brokerage
From the more traditional names like RE/MAX and Coldwell Banker to newer iterations the value of a franchise brokerage, is often considered to lie in its name recognition and its history.
Most of the current franchise brokerages emerged from the ’60s and ’70s, when easy travel and national communication enabled large brands to proliferate and grow.
In addition, the post-World War II residential boom and the rise of the
college-educated baby boomer cohort created a perfect opportunity for
brokerage expansion and the crafting of a national message.
The downside of a franchise brokerage is that they take advertising and franchising fees (off the top of an agent’s commission), which can substantially eat up an agent’s commission check.
Franchise Pros
Support: The corporate structure can offer a sense of safety to agents looking for more guidance as they start out. Mentoring programs and training opportunities are often readily available.
Built-in branding: Franchise companies spend millions each year promoting their message and the latest iteration of their brand through print and television ads.
Established systems and processes: Because they are focused on bringing uniformity to their brokerage operations, the big box brands will have systems, processes, and procedures already in place, ready for you to plug and play.
This can be a significant asset when you first start, especially if you don’t have preferred systems in mind.
Support: The corporate structure can offer a sense of safety to agents looking for more guidance as they start out.
Franchise Cons
Distance: Because they are grounded in their corporate culture, working for a franchise can mean that the decisions that need to be made locally can take a long time to arrive.
In addition, branding elements, policies, and processes are based on a reading of the total service area rather than on the particulars of your local market. This can result in a disconnect between what works for you and for “most” agents nationwide.
Expense: Exorbitant franchise fees can put your brokers in the position of passing along costs to the agents rather than investing in their success.
Then you’re spending so much on fees and commission splits, there’s little left to invest in your own marketing.
Lack of Ownership: Remember that built-in branding? Those built-in systems and processes can inhibit your ability to create and promote your brand and define your style.
If you break ties with the franchise mothership, you’ll return to square one, trying to create an identity-independent brokerage.
Indie Pros
With unique operational models and brands focused on the local market, independent brokerages offer the opportunity to do real estate in a responsive and grounded in community where agents serve.
· Nimbleness: Because they are free from a centralized decision-making apparatus, indie brokerages can respond as needed to everything from local micro-market shifts to press inquiries.
When you can adjust branding, marketing, and processes without approval from corporate, you add vitality and timeliness to everything you do.
Unique culture: Culture can vary from location to location, branch to branch, depending on the manager, office and support staff, and agents and brokers. In addition, they can effectively communicate their unique culture with greater clarity in marketing initiatives and messaging.
Market share: Indie brokerages own some geo markets and niches, making them the dominant force in the area. This gives you an automatic leg-up with local buyers and sellers.
· That can be a significant advantage, providing you with an automatic leg-up with local buyers and sellers.
Indie Cons
Risk: With no “higher power” in charge, independent brokerages have to believe wholeheartedly in their own vision and understanding of their market and professional best practices — and so do you.
If your broker-owner’s vision is wrong, you could find yourself floundering.
DIY: From tech to branding to office space, the indie broker has to define, revise, and maintain every physical and operational environment element.
While that can be advantageous for those with a clear vision, it can be chaotic if your broker lacks that sure and steady insight.
Growth: How can growth be a con? If your indie brokerage doesn’t manage growth well, you could be frustrated by the same problems plaguing the big franchises.
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Daniel Dobbs (.org)
Mutual Home Mortgage
500 S. Kraemer #165
Brea, Ca. 92821
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Dandobbs6@gmail.com
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