There’s always something to howl about.

10 reasons big box brokers suck

Did I really just say that? Sorry but it’s high time to call a spade a spade.

I recently decided to cut the apron strings so-to-speak with my old broker and go “indie”. After paying in about $200K in exchange for about $12K worth of business over a five year period, I had to evaluate whether the relationship with my broker was anything other than terribly one-sided. Since about Year 1.5 when I began working full-time from home, I’d managed to become pretty independent in terms of how I operated and procured business. I finally saw I wasn’t getting much of anything in return for those hefty commission splits and transactions (not counting the occasional pep talk, although at times it was much appreciated.) So I left at the start of the New Year. Since making the split official, I’ve had a chance to evaluate the cost of every aspect of my business compared to what it used to be. Not surprisingly, I’ve found that my overall costs are much lower. More surprisingly, however, I also discovered:

1. business cards were a profit center for the broker
2. sign installations were a profit center
3. color copies were a profit center
4. template sites (complete with crappy framed in MLS data) were a profit center that did not even generate leads
5. advertising was a profit center
6. leasing back office space to agents was a profit center
7. accounting services were a profit center (in the form of huge transaction fees)
8. sending closings through the broker’s joint venture with a local title company was a profit center
9. home warranty applications were a profit center (by skimming off the top of agents’ referral checks)
10. 100% tax deductible sales meetings were a profit center – vendors paid the broker to have their mediocre template sites etc shamelessly endorsed & pushed on agents

But wait, you may be thinking. Surely there were other ways your broker was adding value? Sadly, not really. Training beyond the basics was almost non-existent. Occasionally something would be offered gratis, eg a bank talking about changing lending standards, thus hoping to get some loan business. Or “training” that mostly served the company’s own purposes (e.g. how clients should use their website). Real estate applications were outdated and kludgy. The company’s website was buggy and badly coded. MLS search tools were so poorly designed and implemented that they resulted in virtually no leads for agents. I even subsidized my broker’s advertising and marketing budgets by purchasing business cards with the broker’s website address printed on the reverse side (this was the company’s template so we had no choice).

Let’s face it. The future of real estate is in advanced search technology, web-savvy agents, and superior relationship building skills, not brick & mortar offices, big overhead, and big billboards. Although I don’t rule out the possibility that there may be exceptions, for the most part big box brokers artificially jack up agents’ costs and don’t add a lot of value. Worse yet, many agents seem to be in the dark about what they’re paying their brokers. As independent contractors it’s important to understand your operating costs and loss/return on investment. Realtors do not make salaries, nor do we get benefits or retirement plans. We are completely dependent upon ourselves to make investment decisions that will generate profits that will enable us to pay the mortgage, feed and clothe our families, buy life insurance, buy health insurance, invest in our retirement, fund future business activities, etc. Small business owners – even Realtors – have to carefully evaluate the return on investment associated with being affiliated with a big box broker. And if all the money is going in one direction, it may be time to re-organize your business structure.

If your investment is greater than the return on it and you a.) have a little imagination (to develop a corporate identity and branding strategy), b.) have an interest or background in technology (or a willingness to learn), and c.) have a little self-discipline and drive (or at least an ability to seek out help when your motivation falters), you may want to seriously evaluate whether going solo is right for you. It’s the quickest way to lower your monthly operating costs while boosting every commission check instantaneously. And it’s virtually risk-free – if being an independent broker isn’t for you, just walk into any real estate broker’s office and, provided you don’t have horns, you’ll get hired on the spot. We all know that.

If you’d like to know whether you’ve got the stuff to make it as an independent broker, contact me. I’ll help you assess whether you’re a good candidate for freeing yourself from the chains of your big box broker. And if you’re an Indie broker looking to collaborate and support other like-minded Indie brokers, please get in touch. I’d love to hear from you!