Tips on Choosing Your Broker
What fees do I pay my Broker?
Usually there is a “franchise” fee and it is also referred to as an “Admin Fee” off the top of every commission earned. This is passed onto the national brand franchise (for example Prudential, Coldwell Banker, Century 21, Keller-Williams, RE/MAX, and etc. This is true for most all of the nationally recognized real estate service companies. At Coldwell Banker it is 3.75% of commission amount. Some franchises have fees as high as 6%!
Most Brokerage companies have a mandatory program for risk management. At Coldwell Banker this program is referred to as the “Legal Assistance Program.” At many companies it is referred to as “E & O” coverage, which represents “Errors & Omissions” insurance or occupational insurance in the event the agent is named in a lawsuit, or incurs other legal expense in connection with a real estate transaction, either current, recent or past.
E&O is underwritten by an insurance company. Coldwell Banker is self-insured and has a in-house legal staff to offer agents legal guidance. E & O works like medical health coverage, and for most companies there is an annual premium (cost to agent) for coverage and there is a co-pay schedule or deductible payment for an agent to participate in payment toward legal expenses. The Coldwell Banker Legal Assistance Program has no deductibles providing agents complete their file documentation to office and company standards.
Agents may not be a “dual agent” in any personal transaction because of the conflict of interest. They must ask another Coldwell Banker associate to represent their seller in the purchase or to represent their own buyer on their behalf. This is an “arms-length” rule that most banks and lenders follow as well as being company policy for most real estate brokerages. This makes sense as it would be difficult to prove or ascertain if an owner were committing fraud or non-disclosure, etc. In any event, we ask the owner/agent to have another Coldwell Banker agent in the company act as the agent on behalf of their own client if the event of a personal transaction. The agent can determine a fair compensation arrangement between themselves.
Most companies charge agents a similar annual fee and offer an installment plan with payment due upon close of agent’s first several closed transactions. Some offices and companies charge agents desk fees, fees for use of copiers, fax machines and other office equipment. Some offices and companies charge agents for use of any company stationery, letterhead, envelopes, office supplies, folders, paper clips and paper. Agents can also be expected to pay for their own city sign permits that must appear on real estate signs. Coldwell Banker does not have desk fees nor do they charge agents for incidental use of office supplies and stationery used in conducting daily business. Coldwell Banker office also can provide agents with generic company property signs, flags and sign permits (where required) at no cost to agent.
Some offices charge agents a technology fee and charge agents who utilize the staff marketing coordinator, listing coordinator, and transaction coordinator. Coldwell Banker offices do not charge a technology fee. Coldwell Banker only charges agents when they voluntarily elect to employ the services of the office Transaction Coordinator. The offices have on-site “IT” and Tech support, as well as HELP DESK numbers for almost every company department and program. Coldwell Banker offices also offer agents free access to computers, printers, copiers, scanners, and phones!
At some companies agents pay ALL of their advertising and marketing costs, including the rental fee for post signs, brochures, magazine and online advertising, etc. At Coldwell Banker we provide all of our agents and all of our listings with a full-service marketing menu. Additional agent advertising is optional.
Why is a non-competing sales manager a good thing?
If the branch office sales manager is also a selling agent, working with clients to list, lease, buy and sell, then they must take time, focus and resources away from their task to recruit, manage and administer the office. They will not be as accessible and may have a conflict of interest with their own agents!
How do I evaluate agent commission schedules?
Don’t get too attached to the percentage number offered! For a new licensee, skills development programs, company support, company resources, and name-brand recognition are far more important than the agent’s commission split. In any sales business, if you are successful and can repeat a successful performance, your value increases proportionately as well! You can always ask to re-negotiate your commission with management. And, remember that it is less expensive for a company to retain a valued associate than hire a new, inexperienced agent who requires development and oversight.
Most companies offer an incremental commission plan- the more you earn qualifies you for a higher commission split. Coldwell Banker offers commissions ranging from 50%- 80%. Some commission plans are based on the number of units sold by an agent versus the dollar volume amount sold by the agent. In our market where our average sales price point is higher than most of the country, the preferred plan is a commission scale based on sales dollar volume.
Some companies offer higher commission splits because that is all they have to offer…as a recruiting and retention tool! They do not provide their agents or their clients with full service. Some companies are limited-service companies or discount companies, and that is why they must offer higher commission incentives. At Coldwell Banker South Office we begin newly licensed agents at 60% commission to agent and 40% of the commission to Broker.
Why should I look for in Agent Skills Development?
Look to your company first, then plan on attending additional events sponsored by the MLS (Multiple Listing Service), as well as the local association of Realtors® – our Beverly Hills Greater Los Angeles Association of Realtors. Also special events sponsored by CAR (California Association of Agents) as well as take advantage of attending workshops presented by various national real estate coaches and gurus (Brian Buffini, Tom Ferry, Tommy Hopkins, and others) , when they come town. Many of these events are sponsored by various real estate related service companies such as Title companies, etc. Coldwell Banker’s new agent development program is called “Success Builder”. It includes a company orientation class and a total of 10 sessions on specific topics, including technology, self-marketing, contracts and disclosures, working with buyers and working with sellers, risk management, affiliate company real estate services (i.e. mortgage, title, escrow, home warranty), and much more! Agents attend classes weekly until they have completed all sessions. They can also access live webinars, posted monthly on Coldwell Banker’s DEVELOPMENT CALENDAR as well as access “tutorials” 24/7 online about virtually all Coldwell Banker services and divisions-including Relocation, Architectural Division, Previews International© Estates Program, marketing, and etc. In addition, all offices have experienced agents who tutor and coach as Mentors and Development Directors. New agents are typically assigned to an office Mentor until they have completed two (2) sale transaction sides. These mentors are similar to a Personal Trainer, in that the will assist new agents in all tasks as requested. Since they also participate financially when the agent succeeds, they are incentivized as they are attached to a successful outcome!
What are my start-up costs? [Please refer to separate info sheet for estimated expenditures –“Start Up Costs” “
Mandatory costs include membership in the NAR (National Association of Realtors®), CAR (California Association of Realtors®), and the local association of Realtors® (BHGLAAR).
Agents must join in order to access all of the disclosure and contractual forms published by CAR and available online (Zipforms®). Without membership, an agent is denied access.
Also, agents must join the local MLS (Multiple Listing Service) in order to access listing information, and list property. The MLS rules also regulate and protect the agent’s commission entitlement.
New agents will want to order personalized business cards, name riders for signs, personalized OPEN HOUSE signs and property flags as well as some personalized “FOR SALE or LEASE” signs.
Agents must purchase a SUPRA lock box from the MLS if they want to access properties where a lock box is placed. There is an annual subscription fee.
How does a company help me develop client contacts and build my business?
Floor time is one of the ways a new agent will develop new contacts. Some companies don’t have “floor time” because all calls and property inquires to directly to the listing agent or their voice mail ! Many offices do not have a full-time receptionist 7 days a week to direct calls during office business hours! In offices with floor time, the “Floor Agent” is assigned to take incoming calls and inquiries from agents and the public about office inventory and real estate services.
If the caller is not working with an agent then the Floor Agent has an opportunity to offer information and help and hopefully develop a future client relationship with the caller. All Coldwell Banker offices have Floor Time.
Open House is another way to meet potential clients.
Real estate companies offer different “lead-generation” systems where they capture the phone number, e-mail and contact information of potential buyers and sellers. Coldwell Banker offers a proprietary system called “Lead –Router™.
Part- time vs. Full-time Agents
Residential real estate sales on the Westside (LA), and Southern California in general, is extremely competitive! Beverly Hills is referred as the “Golden Triangle” or the epi-center for the world’s luxury real estate. So, you can understand and appreciate that the market here is extremely competitive because our price point is so much higher and the potential to earn large commissions is greatly enhanced.
However, the reality is that 80-90% of all the sales is accomplished by 15-20% of the agent population! Real estate is 27/7, and clients want their real estate professional at their service on demand! New agents should always work on Sundays at Open Houses, previewing inventory, or showing property! It is very difficult to juggle and multi-task two jobs and be good at both!
Experience has proven that part-time real estate agents don’t enjoy the measure of success of a new agent who is focused, with a business plan, and shows up at the office, attends sales meetings, and development events.
Also, find out about the company development program and if resources are available online – such as a secure intranet or website accessible with a login and password. Ask if you will receive one-on-one help from a Mentor or Development Director.
Is it possible to become an assistant to a Top Producing Agent as a path for getting a real estate career?
Yes, but tenured, experienced agents tend to advertise, interview and select their own team. Many agents have “teams” and in exchange for the new agents procuring new listings and contacts, they receive mentoring and learn from the Team Leader. Usually there is some financial arrangement whereby the agents splits all their business with the Top Producer and may receive some salary plus commission from the Top Producer. Usually they hire newer agents who have been referred to them by past clients, family, or friends. Sometimes when they are looking to add staff to their “teams” they will mention their intent to the branch office sales manager. So, it is best to inquire of the office sales manager. Timing is everything!
A downside of this arrangement is that the new agent never really gets to build their own brand. They are promoting the name and brand of the Top Producer who is their employer or sponsor. Also, since the new agent is paid by the Top Producer, they don’t get credit and recognition for their sales production from the Broker/ Company.
What are some things to consider when choosing an office and location?
For a new agent, a busy office offers more opportunities to network with co-workers and associate agents; it affords more chances to sit or host other agent’s listings on Open Houses because busy offices have more listings and inventory! Offices with more inventory receive more calls and inquiries from prospective buyers! Bigger offices tend to have more desks, more staff, more office equipment and resources!
Since new agents are inexperienced, it is important to affiliate with a brand name that you don’t have to sell or explain! The company brand will help sell YOU, and give you credibility. Also, consider that you are making a career choice with long-range goals! You want to avoid a smaller company that may go out of business, or be sold, because they may not have the fiscal strength to compete when the market experiences downturns. Moving can be costly as your clients may not be able to easily find you! Did you know that it takes about 10,000 hours or 4 years of practice in order to become a pro at your sport, business, or craft?
A company with multiple office locations is also an asset for many reasons. It enables an agent to conduct business in a wide geographical area with local resources and expertise available!
A good idea when selecting your first office is to ask if you can attend a weekly sales meeting as a guest! This will give you an opportunity to see the office assembled and you can determine if you feel it is a welcoming and comfortable professional environment.
Also, it is a good practice to schedule several interviews with different offices and sales managers or office development staff. The interview process is both good practice and a learning opportunity about how companies and offices differ, etc. This is a good way to learn about your future competition!
Finally, it is a good idea to go on Open Houses and speak and interview the residential real estate agents about their office and company!
What are some “tips” for newly licensed agents seeking a real estate career?
- Prepare by saving and setting some money aside to allow for a period when living expenditures will offset any income- perhaps six months!
- Show up at your office every day. Treat your new career like a business and keep business hours!
- Attend all office sales meetings and company events! Be seen and noticed by your peers and associates who can help you and support your efforts!
- See lots of “inventory” or product. Go to Broker Preview (weekly caravans) and weekend Open Houses to get better acquainted with properties being offered. This practice will help the new agent develop a better sense of market trends, pricing, as well as knowledge of available inventory.
- Read books on the book list in order to learn about sales strategies and techniques.
Another piece of good advice when you are interviewing is to pay attention to your IMAGE. Body language as well as attire and grooming will make a first impression! Sales persons are always judged by their appearance as well as their manner, speech and body language. When you speak, be enthusiastic. But also try to LISTEN more than you TALK.
What you drive, where you live or come from, and who you know are all important criteria to recruiters and employers.
To begin, can I work part-time?
Selling residential real estate is a full-time occupation in an ever increasingly competitive marketplace! In fact, real estate agents are expected to be accessible and available almost 24/7- and often after hours and on weekend, when clients are not working! In order to be knowledgeable and informed about “product” or properties for sale, agents must preview property during the weekdays, as well as participate in office activities such as weekly sales meetings, classes, and seminars to network and exchange information. And then there is time spent preparing marketing materials, setting up showings, taking floor time at the office, or hosting an open house or Broker Preview! At Coldwell Banker, a new agent must attend and complete the development classes, which are now offered in 8 sessions, or 4 days for 2 weeks from 9:30AM-3:30PM every month.
Can you describe how important is an International affiliation to a company?
Having an “International” connection is perceived as a marketing advantage to offer clients. However, with worldwide Internet exposure and access to most broker listings, is not a point of great differentiation between companies. The “perception” is more powerful that the “reality” because real estate is local! The leading international venues for marketing properties include: Previews ® International (exclusively Coldwell Banker), Sotheby’s International, Christie’s Great Estates, and Leading Estates of the World. All utilize various foreign and international publications including magazines and newspapers to reach a worldwide audience. These “international” designation is a marketing device. Most of these organizations try to also generate referral and relocation business among the participating offices.
REV. 10/22/2012
Category: Affiliate with Coldwell Banker
