In this article, I will lay the foundation of the “new brokerage model,” which takes away many of the fears, enumerated later, that traditionally go along with starting your own brokerage thanks to technology, outsourcing and shared space.
I would like to disclose outright that even though you can outsource most details of operating a brokerage, all of the final responsibility belongs to the “Broker of Record.”
Top performing real estate brokers have been dreaming of having the business benefits of both worlds. On one hand, they want to “own” their own business and on the other hand they do not want to “own” the operational headache of a real estate brokerage. Now it’s possible to have your cake and eat it, too.
The “new brokerage model” makes it possible for top producers to transform from a “salesperson” to a “business person.” This opportunity is made possible by the latest advancements in technology and behavioral changes both in consumers and real estate professionals.
We are all marching toward conserving what we have by sharing our resources. The trend is that the business owner doesn’t have to do everything himself or herself. One can outsource different aspects of a business. A real estate brokerage is no exception to this trend.
This new business model will give the owner of the brokerage a greater opportunity to focus on the sales side of the business. As an example some businesses outsource their marketing efforts while others outsource their administrative responsibilities.
In the real estate industry the administration side of the brokerage is the most time-consuming and tedious work that every broker/owner prefers to hand over to someone else. Administrative tasks prevent the brokerage owner from generating revenue. Instead of focusing on sales, recruiting and training, the broker is caught up with administrative hassles.
As per the Real Estate and Business Brokers Act (REBBA 2002), the Broker of Record is the signing authority and responsible for all aspects of conducting the business of the real estate brokerage in Ontario. Having said that, the Broker of Record should always read and review before adding their signature to brokerage paperwork even if the services are completed in-house by brokerage staff.
The responsibility doesn’t go away when done in-house by someone other than the Broker of Record. The final authority is one and the same. It goes without saying that whoever takes the responsibility of handling your administrative paperwork should be qualified for the task.
A wide range of brokerage services can be outsourced, but the ones that occupy most of the resources and are the most tedious tasks are:
1. Deal with administration
In order to bring a deal to the closing table, there is a lot of coordination and paperwork that goes on behind the scene. A ton of details and paperwork are exchanged between the brokerage and interested parties such as lawyers, lenders, insurance brokers, etc. Your time, as a top performing real estate professional, is worth way more than handling these tedious tasks. And if you hire someone to do it for you, you will still need to supervise that individual.
But more importantly, it might not be financially feasible to hire an individual to coordinate and close your deals in a boutique brokerage. The ideal option for you might be to outsource this service and let someone else take care of this headache for you.
2. Accounts management
In order to protect the interest of all parties involved in a real estate transaction, REBBA 2002, for very right reasons, is the legislation that has strict parameters for brokerages to conduct their business and is overseen by The Real Estate Council of Ontario (RECO).
The main mandate of RECO is the protection of the consumer through a fair, safe and informed marketplace, and all brokerages are obligated to adhere to the requirements legislated by REBBA 2002. Naturally, these rules and regulations generate a vast amount of checks and balances which leads to a copious amount of detailed record keeping.
There are compliance regulations about how funds are disbursed and how documents are filed and managed. Each and every detail has to be adhered to as per RECO regulations.
These details can be extremely time-consuming, require a lot of attention and plenty of patience to fulfill the requirements. For example, every brokerage is required to reconcile all accounts (trust, commission, general) each and every month. This duty is a tedious process. Even if you utilize some of the latest software available, it still needs an individual to reconcile each item of the transaction. There are many other operating tasks that are going to fully occupy your precious time. You are better off to hand-over this responsibility to someone else who is capable.
3. Receptionist services
It is part of the real estate brokerage business norm to be open for long hours during the weekdays and weekends. One of the tasks that is required to be taken care of is handling calls and arranging showings.
Like any other task in a real estate brokerage, there are many details behind the scene such as showing instructions, appointment confirmations, broker paging and handling all sorts of client and broker inquiries coming to the brokerage. In addition, any communication such as fax, email, mail, etc., needs to be handled accordingly and promptly.
Technology has made it possible to be mobile, and you might be able to handle your reception services from anywhere, but not having a receptionist in a reception area might reflect poorly on your image. Not having a receptionist in place could negatively impact your brokerage reputation. Although hiring a receptionist should be a must for a brokerage, it might not be a financially feasible option for everyone.
This is where the new brokerage model comes in, and you can have access to the services of a receptionist. It is much more cost-effective and headache free. More importantly let someone else be responsible for hiring, firing and monitoring the staff.
4. Shared office space
One of the main obstacles of opening a real estate brokerage is the cost of office space and interior furnishings required for a real estate business. The initial setup cost could easily get into the tens of thousands of dollars which is a sizeable risk even for top producers.
More importantly, the commitment of paying office rent each month is an obligation in which most top producers prefer not to partake. Therefore, some brokers choose to work out of their home, which can tarnish their image and others do not dare to establish their own real estate brokerage for this very reason.
The new brokerage model proposes to open your brokerage in a shared office environment where it is a move-in ready space. All furniture, interior design, printing equipment, internet, phone systems, etc., is in place for you. All a broker has to do is just move-in.
The risk on the brokerage owner is much lower as there is no significant upfront cost, and further because it is a shared resource, the cost of monthly rent is very low compared to independent office space with a long-term leasing commitment.
Predictability and stability for you
All the above four points of the new brokerage model create stability for your business. The biggest challenge for a business owner is unpredictability. On one hand, the expenses such as phone bills, internet bill, utility bills, office supplies, etc., can fluctuate greatly and unexpectedly. On the other hand, handling staff schedules can be unpredictable and aggravating. Sometimes there is no staff showing up while other times they might quit without notice. As the owner of the business, you have to fill in the position which could be very daunting and costly for you. It can take you away from prior important commitments.
The unpredictability of business is one of the other main reasons that brokers do not dare to step out, take action and open their own brokerage. By opening your brokerage with a shared resource model, not only does it fix your monthly operating expenses at a very low amount but also gives you confidence that someone else is taking care of making sure that everything is functioning properly.
Develop your business?
By taking charge of administrative hassles, you are getting yourself dirty with day-to-day operations of the business. You are not opening your own brokerage to take you away from your business. The least is that you don’t want your business to decrease. By getting involved with the daily operation of brokerage administration it is more than likely that your revenue will suffer badly.
Even if a portion of your focus is shifted toward administration, the details of paperwork takes you down with it. Once your focus is shifted, even if there is time left in your day, you cannot bring your focus back on business development. You are worth way more than handling administrative hassles when compared to income potential.
Once you decide to hand the administrative hassles to someone else, you now have to choose one of the two paths you want to follow: either to focus on your sales or develop your own team and focus on managing your team. Of course, you can do both at the same time, but it might not produce optimal outcomes for you. Just imagine a world where you don’t have to worry about the paperwork, and you can simply walk into your office and either prospect for new deals or work with your team members to expand your business.
Step forward and be an owner
Top producing real estate professionals have always preferred to establish something of their own for many different reasons. Some might want to leave a legacy behind while for others it makes perfect business sense.
In the past, there were obstacles for an individual to open their own brokerage ranging from initial hefty setup cost to high monthly payment commitments. The broker is responsible for monthly payments whether their brokerage makes money or not. It is a risk that a lot of people are not willing to take, especially if they feel comfortable in their current employment.
The new brokerage model takes away all these worries. There is minimal initial upfront cost as there is no office leasing involved. More importantly, there is no significant monthly operating expenses as almost all aspects of running a brokerage business is shared.
Further, even staffing is handled by a third-party, which leaves a lot of room for the brokerage owner to focus on the developing their business. The beauty of operating out of a shared resource brokerage centre is that a brokerage can expand at any time it wants.
Therefore, this new brokerage model offers the best of both worlds; making you an “owner” with no hassles and commitments and providing exceptional room for business growth and expansion.
So go ahead, leverage your resources and take advantage of this new brokerage model.
James Hussaini is the founder and president of Realty Point.
