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Turning LiquidBlue into steady green: Is it possible to found a new real estate brokerage without going broke?

Cleveland real estate broker John Kalinowski and I have been batting around some ideas of his on how to structure his new brokerage to make it work well for everyone — clients, agents and ownership. Surely I’m not the best person to ask about this, since we are doing everything we can to avoid adding agents. So John decided to throw it out to the Bloodhounds — contributors, commenters and readers — to see if y’all can come up with better ideas.

Here’s John’s epistle to the dawgs:

Hi Greg!

I’m reaching out to you and the Bloodhound community for a little advice as I prepare to take the next step in the fascinating world of real estate brokerage. I left RE/MAX in early December to start Liquid Blue Realty with a secret weapon of sorts, a custom sign sign idea built around your original concept. So far the response has been beyond incredible. It takes a ton of work to create each sign, and they’re not cheap, but the attraction is unlike anything I’ve seen in our area.

Our market is in a state of transition, just like everywhere else, with agents concerned about whether or not their brokers will survive, and struggling with monthly desk fees and transaction charges. Right now I have one other truly excellent agent working with me, along with two part-time admin assistants who have the ability to work full time. I’m ready to start talking to other agents, and I plan on being very selective in who I choose to join our company. Our approach to listing homes is an important part of our business, and providing a reliable, repeatable listing experience to the public is one of my main goals.  No matter who a seller works with at our company, I want to make sure they receive the same attention to listing detail and transaction management as I bring to my clients.

Where I’m stuck is how to best create a compensation plan that makes sense, particularly with all the extra services we intend to provide to our agents.  We will partner with them on their listings, taking care of many of the details that help create a focused, effective marketing strategy. To keep it short, you can see what we offer on our Careers page.

My thought is that we’ll offer two simple commission splits. One for listing transactions and one for buyer sales, with no additional transaction, E&O, or monthly fees. Agents will not have to worry about writing a check or receiving a monthly statement, and much of the overhead and stress that holds the majority of agents back will be handled by the company. Ideally, I imagine creating something like a mini Russell Shaw Team within a brokerage, possibly with listing and buyer agents handling certain territories and receiving all company-generated leads for their area.

I also intend to have one program, with no secret back-office deals to lure agents. Everyone will be under the same structure, and we intend to attract, not recruit agents.  We’re completely virtual at the moment, and I don’t expect to sign a lease for any sort of expensive office space in the near future. Small, satellite offices, possibly part of an office conglomerate where you basically pay for a small space and share a conference room is probably where we’ll land.

How can the Bloodhounds help?

I’m looking for input from fellow agents and brokers as to what they consider to be a fair split, with no additional fees, based on all the things we’re offering. With one split for listings and another for buyers, what do Bloodhound readers think is the best plan that allows both the agents and brokerage to prosper, particularly when working together in a true team arrangement.

Thank you so much for your help!

John Kalinowski
Broker – Realtor
Liquid Blue Realty

It happens that Cathleen and I were treated to dinner last night by Greg Tracy of BlueRoof360.com, and he had some interesting thoughts on the general idea of how to manage a modern brokerage. Perhaps he’ll have time to jump in with thoughts of his own. I may shed a notion or two, too, but I don’t think my ideas will scale well. That leaves you. What do you think John should do?

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