There are a number of important factors that you should take into account as you decide where you'll best fit in and where you'll be the most successful. These are the most critical:
- Local Market Share and Agent Income. Most brokers maintain a detailed accounting of how they are doing in relationship to their competition. They also know how much each sales agent in their organization is earning now, and how much each earned in past years. Don't expect to be given company secrets or to be told exactly what each person in the office is making, but it is not unreasonable to anticipate being told how the company stacks up in the marketplace and the general range of agent incomes.
- Composition and Quality of Sales Staff. If practical, most brokers try to maintain a mix of ages, races, sexes, and experience levels among their staff. Diversity is an advantage, for you want exposure to as many ideas and perspectives as possible. If the company is large and successful, it is likely that some of the more experienced agents specialize in areas like investments, exchanging, or rural and farm property. This is an ideal environment. Nothing is more stimulating and educational than being exposed to a variety of transactions actually being consummated in the marketplace. Another definite plus is that the first time you encounter an area that's new to you, you're likely to have someone in the office who will be able to offer guidance and support.
- Recruiting and Retention Philosophy. Afew brokers subscribe to the "cannon fodder" method of recruiting. They enlist more salespeople than they can reasonably expect to accommodate, train them intensely in the art of pressure selling, send them into battle, and keep the occasional survivor. One of my survey participants called these firms "body shops." Unless you are fully combat ready, you are well advised to avoid them.
- Office Esprit de Corps. This could be tough for you to judge when you're doing your company research, but here's a quick personal observation that illustrates my point. Having taught real estate licensing at a nearby community college for several years, I have active agents in just about every real estate brokerage in the local area and nearby communities. I visit the different offices on occasion for various purposes. Recently I was in the local Kellar- Williams office talking to their Director of Training, Trish Reinert. All of a sudden I heard cheering that sounded like a high school football crowd. Trish jumped up and excused herself. When she returned I asked her what was going on. "Oh, when any of our agents gets a listing or makes a sale we all gather and celebrate", she replied. I was impressed.
- Agent Status (Independent Contractor or Employee?). Well over 90 percent of all Realtor salespersons are classified as independent contractors, and that's probably typical of the entire industry. There are considerable advantages to both the company and to you in such an arrangement. For the company it means a simpler accounting and tax procedure, and it is much less costly because they don't have to contribute to things such as Social Security. For you, it means that you basically operate your own business within the framework of the company, and under the supervision of the broker. The advice I give my licensing students is this: As you are getting started in the busi- ness take all the assistance the brokerage provides. Get to the office early, attend all training sessions, volunteer for open houses, floor duty, and other activities that will put you in contact with potential customers. In other words, act like an employee until you attain the skill levels to operate as an independent contractor.
- Training Programs. These vary markedly among companies. In some agencies, training consists of giving you work space, a telephone, and a pat on the back (pat optional). In others, you must attend company seminars on listing, selling, and related matters before you can face a prospect alone. There could even be a fee associated with the training. If you join a national franchise or a very large independent, you can count on attending a structured, standardized orientation program, probably at some type of training center. Some time ago, I reviewed a product developed by one of the nation's largest franchise companies for training their new agents. They put their entire training program on one dinky little CD-ROM! Even with such a convenient format, there's still need for personal interaction, but you are likely to encounter more and more of these high-tech training products that puts the primary responsibility on you-the newcomer. If the company has some type of formal training course, consider it an asset. You might not wish to use all of the material you encounter, but it is good to have as many choices as possible. There is also a possibility that there may be a charge for the initial training program, depending on how complex and extensive it is. A student of mine, who interviewed with a national franchise brokerage that ostensibly charged for their training, was informed that in her case it would be "waived" if she decided to come to work with them.
- Support Facilities. There will likely be written office procedures that describe what the broker provides and what you provide. Typically, you will get a work space, a telephone, and some secretarial support, although polices vary widely. For the most part, you will be required to pay for all expenses that relate to your specific activities, such as long distance telephone calls, postage, business cards, and other personal promotional material.
- Multiple Listing Service (MLS) Membership. MLS is a cooperative arrangement in which member agencies make their listings available to all subscriber companies in their area. It is a well-developed, tightly controlled marketing system. As a member agent, you have use of the lockbox system most MLSs employ, thereby assuring you of convenient entry to most listed properties. I don't know of any MLS that is not now computerized. That means you have convenient access to all listing information. Generally, updates are provided on a daily basis. It is hard to conceive of any circumstance in which you would be better off working in an office that was not a subscriber to MLS, or a comparable service. You will need all the help you can get, and having ready-made access to hundreds of listings is about as helpful as anything you could devise. It also gets your own listings immediate, maximum exposure.
- Realtor Affiliation. As I pointed out in the preface, slightly less than half of all real estate licensees in the United States are Realtors. They are, however, the dominant organizational force in the real estate profession. Some segments of the public erroneously think that "Realtor" is synonymous with "real estate agent," much to the understandable dismay of Realtors. An office may not use the logo or the term in advertising unless all those in the organization have some form of Realtor membership. The association has a comprehensive code of ethics that all members agree to follow, and a procedure for arbitrating disputes between members. It also conducts extensive educational programs, which I cover in more detail in the next chapter, and a well-funded national advertising program. Its official publication, Realtor Magazine (www·realtormagµcom) is provided to all members, and is clearly one of the best periodicals of its kind in the nation. For more information visit www·realtor· com. When you become a member there will be an incredible amount of additional information available to you on www·realtor·org. I've also attended several national Realtor conventions over the years and have always been impressed by the incredible amount of outstanding educational seminars and the very impressive and enjoyable social events.
- Office Ethics. The office should have an internal set of rules and courtesies that govern business conduct among its sales agents. It is important that everyone understands and follows standards of conduct necessary to foster a feeling of cooperation and mutual respect. If a group of physicians were in business together in the same office, each would establish a practice composed of specific clientele. One physician would not think of attempting to entice a patient away from an associate. Attorneys observe similar ethical standards, as do accountants and all other professions of standing. In the best-run real estate offices, agents adhere to the same strict courtesies. In others, it is "catch as catch can," and whoever gets the name on the dotted line wins. The broker's philosophy will prevail, so find out what it is. If it's a survival-of-the-pushiest office, or the broker can't understand why you are concerned about such a subject, I would strongly suggest you keep looking- unless you feel comfortable swimming with sharks.
- Commission Splits. Each broker has written instructions on how commissions are divided within the firm. There will be differences among companies, but the broker who takes a larger share of the commission dollar might provide more support in terms of advertising and facilities, so consider the whole picture. The general rule is that new agents earn a smaller percentage than experienced agents because they require a greater investment of supervisory time and effort. While this is valid, remember that as you become more successful, you can legitimately expect to retain more of each dollar you bring to the company. Even though the office might have a standard, published structure detailing percentages, bonuses, and incentives, you can negotiate directly and individually for yourself. It's to your broker's distinct advantage to keep high-volume producers and reward them appropriately. Early in your career, you will not be in a strong bargaining position, but keep these thoughts tucked away in the back of your mind for future use.
- Errors and Omissions (E&O) Insurance. This form of liability insurance protects you from claims made against you as a result of your activities as a real estate professional. An increasing number of states make E&O insurance mandatory. Many observers feel that is the trend for the future. However, at the present time, there are offices in the United States that self-insure, which is a fancy way of saying they have no E&O coverage.
- Your Obligations to the Firm. No matter how the office is organized, you will be expected to contribute in various ways to the operation. For example, there will be "floor" days when you will be the agent on call in the office to handle real estate inquiries. As an independent contractor, you technically must volunteer, but floor duty is one you should enthusiastically perform. It can be an excellent source of income. Not all duties, however, are so eagerly anticipated. In your discussions with the broker, make certain you are clear as to what will be expected of you. You will want to do your fair share, but the mark of a well-managed company is that licensed agents perform duties that only they can perform by virtue of holding that license. If it is clear that you will be expected to do a lot of routine clerical chores that anyone, licensed or not, can do, then you are probably dealing with a poorly run firm. You will be expected to do the basic clerical tasks in matters related to your own real estate transactions; in fact, you will probably have to do most of them.
- Special Functions. Some real estate brokers are also builders and market their homes through their own company. This will offer an interesting dimension to your activities-the opportunity to sell new houses. However, you may be expected to give these homes preferential treatment in your sales efforts. Be certain you are clear on the ground rules.
Some brokers who run small offices make up for a lack of numbers by in- jecting their own personality, background, and expertise through a hands-on managerial style, particularly with new agents in need of guidance, direction, and encouragement.
Pay attention, too, to the ability of the office secretary or office manager. If you are treated with courtesy, good cheer, and efficiency when arranging for your interview, your clients will most likely receive the same kind of welcome. On the other hand ...
One sign of how well an office is managed is the length of employment of the sales staff. Large office or small, if there has been an extremely high turnover rate, be cautious. There may be a logical explanation, but it pays to investigate.
A veteran broker explained his personal recruiting and retention philosophy to me this way: "Some real estate companies will bring aboard ten new agents, throw them all hard against the wall, and keep the one who sticks. We screen carefully, select one, and keep throwing her against the wall until she sticks."
Wherever you work, and whatever your status, you will sign a contract (ordinarily a standard form) that specifies your legal classification and your obligations, as well as those of your broker. Ask for a copy to read over and study in advance.
Several philosophies prevail relative to office planning. One is that agents' desks should be grouped together in large open spaces. The rationale is that this arrangement enhances the communicative process. Another view is that private offices are the most desirable. A third holds that having individual desks in a common area, with private rooms available for special occasional use, is the best. Don't be disappointed if you are given less than an executive suite when you start. You may even be required to share a desk with another agent. In my own case, I was given a small desk near the rear exit, next to the Coke machine. That didn't do much to boost my ego, but then again, there was nowhere to go but up (or out the back door). Be patient. If there is a particular office or desk you have your eye on, you may inherit it- if you stay around long enough and prove your mettle. Yes, I eventually got a much nicer office (as a matter of fact, the nicest one).
I have been a member of NAR for many years, and I've participated extensively in their educational programs and other activities. I have found the quality of the entire organization to be exceptional.
For all these reasons, plus the fact that it will provide you with an ideal way to develop your critically important personal business network, I strongly recommend that, if at all possible, you join an office with a Realtor affiliation, and that you become an active and contributing member.
If E&O insurance is mandated in your state, the procedure for obtaining it will be well developed. If not, you have a number of options. One approach is for the company to contract for it and pay for the coverage on an annual basis, with the premiums being determined by the number of sales agents and the sales volume. Each salesperson typically contributes a monthly amount toward the premium. Some brokers buy insurance on an individual transaction basis. Another option may be for individual agents to purchase his or her own coverage. It is not cheap.
Regardless of how conscientious and sincere you might be, you can be a prime target for a lawsuit. Quite often, after all the dust has settled in a controversy, the real estate agent is the only individual left in the locality where the problem occurred. The agent may also be the one with "deep pockets"- the only person really capable of paying a judgment.
Many agents happily go through their entire career with not even a hint of litigation, but the fact is that the frequency of lawsuits has been increasing at an alarming rate over the past few years. In today's (and tomorrow's) environment, I simply would not sell real estate without E&O insurance. Not one transaction. None. Ever.
It is also not unusual for real estate companies to have a property management department. This is an advantage, since renters often turn into buyers and the more buyers the better. One of the most enjoyable transactions I had was working with a young fellow who was renting an apartment through our company's property management operation. Almost all renters wish to become home owners, so if you have access to that type of a pool, there's great potential. There are also some companies with affiliated insurance, title and escrow, mortgage lending, and appraisal activities. Although having all these functions available within a single organization can be convenient for consumers (and profitable for the company), care must be exercised to ensure that a genuine freedom of choice exists, and that full disclosure is made. There are those who would say that all these functions would be best left in completely independent hands.