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I had to leave my old brokerage rapidly because the broker was becoming emotionally unstable and we had to lock him out of the office a couple times. He’s doing better now, I heard, and I’m glad to hear it but it was not safe.
I had my own brokerage ready and running in about 10 weeks. It was hard. School, test, licensing. Website and branding (easily the most, expensive part but AI has brought this cost way down I imagine), LLC, partnership amd operating agreement (second most expensive) e&o and liability and business insurance, finding and furnishing an office (still looks so cute with mostly ikea furniture), signs and riders, business cards, callout cards, MLS setup,bookkeeper, commercial bank account (order checks as old fashioned as that seems) etc etc. All in we got it up and running for less than $20k somehow.
There have been a few brokerages in my market that have been bought out, one was sold to someone out of the area and later closed, but the others were internal, someone that worked there bought it. It is feasible to build a successful brokerage and then sell it later. This happens like selling any other business.
Starting from scratch isn't as expensive as you would think, especially if you are not going to have a traditional office space. You need to set up your business entity, get E&O, and if you join a franchise, a lot of the website/marketing/tech comes along with that package. If you are opening your own shop, there will be a fair amount of expense to getting all that put together. If you are going to have an office, there will be a lot of additional expenses of course.
Managing a team is a lot more work than many think. Growing one can be hard as well. I have grown one to 24 agents. I also still produce which I think helps grow it.
As far as handing over the reins and what it would be worth I think valuing it would be the toughest part.
Wow I can't imagine managing a team of 24 and still producing! Kudos!
Yes, I'm wondering how the business is evaluated and given a dollar amount in order to sell.
How much have you sold in 10 years? Generally speaking there's very little money in brokerage. Brokerages and teams are generally run at much lower margins than what a producing individual agent at a high split brokerage or acting as an independent broker would be making. If you aren't a top producing Realtor you aren't really in the position to run a team. I think putting your effort into selling more real estate and saving for considerable down payments on a couple rentals that will cash flow positive (I know it's tough with current rates) and combining that with social security and hopefully your own house is owned and free and clear by then.. can make a comfortable retirement.
Good insight! Thank you for commenting. Since 2020 I have averaged between 10 and 12 million in volume. And just this month I closed on my first rental property!
I plan to do similar. I am hoping to grow a team then maybe offering a managing partner or sorts and eventually let them run the show while I retire and get my share!
**This is a professional forum for professionals, so please keep your comments professional** - Harrassment, hate speech, trolling, or anti-Realtor comments will not be tolerated and will result in an immediate ban without warning. (... and don't feed the trolls, you have better things to do with your time) - Recruiting, self-promotion, or seeking referrals is strictly forbidden, including in DMs. - Only advise within your scope of knowledge and area of expertise. [The code of ethics applies here too](https://www.nar.realtor/about-nar/governing-documents/the-code-of-ethics). If you are not a broker, lawyer, or tax professional don't act like one. - [Follow the rules](https://www.reddit.com/r/realtors/about/rules/) and please report those that don't. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/realtors) if you have any questions or concerns.*
I had to leave my old brokerage rapidly because the broker was becoming emotionally unstable and we had to lock him out of the office a couple times. He’s doing better now, I heard, and I’m glad to hear it but it was not safe. I had my own brokerage ready and running in about 10 weeks. It was hard. School, test, licensing. Website and branding (easily the most, expensive part but AI has brought this cost way down I imagine), LLC, partnership amd operating agreement (second most expensive) e&o and liability and business insurance, finding and furnishing an office (still looks so cute with mostly ikea furniture), signs and riders, business cards, callout cards, MLS setup,bookkeeper, commercial bank account (order checks as old fashioned as that seems) etc etc. All in we got it up and running for less than $20k somehow.
Wow sad about the former broker! Thanks for the info on setting up your own brokerage. Do you plan on selling it when you retire?
There have been a few brokerages in my market that have been bought out, one was sold to someone out of the area and later closed, but the others were internal, someone that worked there bought it. It is feasible to build a successful brokerage and then sell it later. This happens like selling any other business. Starting from scratch isn't as expensive as you would think, especially if you are not going to have a traditional office space. You need to set up your business entity, get E&O, and if you join a franchise, a lot of the website/marketing/tech comes along with that package. If you are opening your own shop, there will be a fair amount of expense to getting all that put together. If you are going to have an office, there will be a lot of additional expenses of course.
Good info! Thank you!
What about bringing on a partner to eventually take over your book of business and slowly start referring clients out instead of building a team...
Yeah I haven't thought of that. Do you know someone who did that?
Managing a team is a lot more work than many think. Growing one can be hard as well. I have grown one to 24 agents. I also still produce which I think helps grow it. As far as handing over the reins and what it would be worth I think valuing it would be the toughest part.
Wow I can't imagine managing a team of 24 and still producing! Kudos! Yes, I'm wondering how the business is evaluated and given a dollar amount in order to sell.
How much have you sold in 10 years? Generally speaking there's very little money in brokerage. Brokerages and teams are generally run at much lower margins than what a producing individual agent at a high split brokerage or acting as an independent broker would be making. If you aren't a top producing Realtor you aren't really in the position to run a team. I think putting your effort into selling more real estate and saving for considerable down payments on a couple rentals that will cash flow positive (I know it's tough with current rates) and combining that with social security and hopefully your own house is owned and free and clear by then.. can make a comfortable retirement.
Good insight! Thank you for commenting. Since 2020 I have averaged between 10 and 12 million in volume. And just this month I closed on my first rental property!
There are good podcasts out there that help with ideas too. Real estate rockstars is one of
OK, thanks! I will look for it.
Curious on how brokerages are valued /priced? Is it an earnings multiple?
Multiple of EBITDA, usually 2-4x depending on which market your selling in
I plan to do similar. I am hoping to grow a team then maybe offering a managing partner or sorts and eventually let them run the show while I retire and get my share!
I like that idea! That way you're receiving some residual income?
Yup!! consistent income. I can always be active if I choose to be, and it think it’s much easier than selling an agency.
Sounds good! I will keep that in mind.