Business Overview

A real estate brokerage employs real estate agents and associate brokers and conducts real estate transactions. Most real estate transactions take place with the usage of a brokerage. Essentially, a brokerage facilitates the process of buying and selling real property. In order to open a real estate brokerage, you will need to become licensed as a real estate broker or hire one to oversee operations for you. This requires you or the broker to have been licensed as a real estate agent for a certain amount of time (as determined by your state), along with some other state-specific requirements.

Who is this business right for?

If you find yourself driving through the neighborhoods, looking at the various properties, and thinking about how much they might sell for, then real estate might be the perfect business for you. You will spend a lot of time canvassing certain areas of town to get familiar with what is offered for sale and then more time in your car driving potential buyers around to take a look at these properties.

Local ordinances require you to be a real estate agent for a certain amount of time before you can get your broker's license and start your own brokerage, complete a certain number of deals per year, complete a certain number of hours of continuing education, and pass the real estate broker's exam. If you've worked as an agent and enjoy the experience, you might enjoy opening a real estate brokerage.

What happens during a typical day at a real estate brokerage?

While daily duties differ greatly for real estate brokerages, the general duties of the supervising broker (and/or owner of the brokerage) can be summed up as follows. Supervising brokers advertise the brokerage and oversee the operations of agents. This includes helping with paperwork, giving advice, and stepping in where necessary to help with transactions.

Brokers also frequently perform many of the same duties as agents. A broker may choose to represent a client as a listing agent or a buyer's agent. As a listing agent, your duties include marketing properties, holding open houses, and vetting buyers. A buyer's agent, on the other hand, helps clients by finding suitable properties, creating and presenting offer agreements, among other things.

What is the target market?

One of the best things about the real estate market is almost everyone is a potential customer. The evolving nature of the industry requires extended interaction with clients in order to secure listings and buyers. An ideal seller will be motivated to sell quickly, though the process to secure the listing will likely involve constant interaction for several months.

An ideal buyer, on the other hand, will be one who is either ready to purchase in cash or has received financing from a financial institution. Ideal buyers will also have an idea of what type of property they'd like to buy while also being flexible.

An oft-overlooked quality in sellers and buyers is agreeableness. Most real estate agents and brokers will tell you that a lucrative opportunity with an ornery client is not worth the time. A brokerage may find itself working for 6 months without ever completing a transaction because of a picky client.

How does a real estate brokerage make money?

Real estate agencies make money by earning a commission (or a part of a commission) from participating in the conclusion of the sale of a property. In the sale of a property, they may represent the buyer, the seller, both (with consent from both parties), or by acting as a transaction coordinator—who helps with the paperwork without representing either party. Typically, a broker will receive a percentage of the agent's commission, as agreed upon in the agent's contract. This may take the form of a 50/50 split, 60/40 split, 90/10 split, or whatever else the broker and agent agree to.

What is the growth potential for a real estate brokerage?

Expansion of this business is based on serving additional geographical areas. A common practice is to set up a brokerage in one community and then expand to serve other areas based on the initial successful operation.

An example is Century 21 that started in 1971 with a single location and then expanded globally to now have over 6,800 independently-owned franchise operations in about 78 countries, with over 100,000 sales professionals.