Post by Matt Jones
Imagine starting your very own real estate brokerage. I know what you’re thinking:
“But I don’t have the $20,000 for a franchise fee, or the $10,000 for a lease deposit and and first month’s lease payment. For that matter, I don’t have the $50,000 it will cost me to buy the desks, tables, chairs, fax machine, copy machine, and all the endless stuff that I need to get things started. And even if I had the $80,000 in hard start-up costs, and another $100,000 available for operating capital, I can’t begin to afford the advertising campaign that will be required to recruit agents and to let the public know I exist.”
So instead, you resign yourself to continue to schlep houses until you drop. Riding in cars with buyers. One frustrating transaction after another. Not that you mind making new friends, but enduring the daily grind of chasing from deal to deal gets old. Let’s be honest. You have ambitions to get out of the trenches and you have vision for how things might be. There has to be more than this. Right?
Well I have some great news! There is more! So much more! I’m going to show you how you can own your own Virtual Office brokerage, and how you can do it inexpensively. I’ll show you how you can recruit agents, train them, and manage them better than in a traditional model company. Most importantly, I’m going to show you how you can make more money in the process — a lot more money.
What’s more, in this model you can be up and running in days, not weeks or even months. You don’t have to be able to ride out a long start-up period with yet another big slice of your hard-earned savings. And what’s even better is that this model is thriving during the current depressed housing market. Sounds too good to be true, right? It’s not.
You could open your own Virtual Office brokerage with us and never miss a transaction. I want you to imagine being the person in the plan I’m about to lay out for you. It could very well be you, and the entire transition could take place in a few days. You’ll see. I know you have your doubts, so we’ll just call you Thomas (as in doubting Thomas). Okay, Tom. Here is your plan:
Day 1. Getting everything in place. A building, a managing broker, and your Virtual Office technology platform.
- First, your building. Some states require you to have a physical brick-and-mortar location for your company (at least for another few years). Legally, that can be your house, but I’m not suggesting for an instant that you use your house to meet clients. Here is our model. I’m assuming you are a working agent, so you have been using both a lender and a closing attorney. Start there.Go and ask either of them — no ask both of them — if they’ll allow you and your agents to use a conference room to meet clients, if you continue to send them your business. If they won’t, then find another who will. Believe me, this will be the simplest negotiation of your life. I’ve never heard of an agent being turned down when they asked for the ongoing use of a conference room. Remember, they want your business, and what better way to get it than to let you and your agents use a conference room that sits empty most of the day.
- OK, now your Broker. If you are not legally qualified to manage yourself or other agents, don’t panic. The beauty of our industry is that we have lots of agents who are qualified and yet leaving the business. Find a qualifying broker and make him or her a deal to pay them so much per deal to be the “legal oversight”, and to review your work. It shouldn’t take more than a few phone calls to set that up. Remember, this arrangement can always be changed as you expand your business.
- Finally, Get your Virtual Office technology in place. That one’s simple. Call FavoriteAgent.com and we handle the rest. In a typical office of 30 agents, we cover the the cost of roughly $35,000 per month for the agent’s technology. How easy was that?! No big checks. No first and last month’s rent. No deposits. If you qualify to open an office, we pay the technology bills.
Now it’s been a pretty busy morning, so go ahead and treat yourself to a nice relaxing lunch. While you’re having lunch, let’s think about your company name. Have you decided on a name yet? Well, with our Virtual Office license, you get to use the FavoriteAgent.com nationally recognized trade name, and immediately associate with nearly 20,000 other real estate professionals across the globe. We have agents in all 50 states, in every province of Canada, as well as Mexico, the United Kingdom, Australia, and New Zealand. Let’s see: “FavoriteAgent.com Premier Properties” has a nice ring to it. Perfect!
OK. Lunch is over. It’s time to think about a few logistics. You need to order some business cards and yard signs. No big deal. Our corporate office has all the art work ready to send to the printer and sign company. Oh, and don’t forget to make sure your voice mail has your new company name on the recording. Now log into your MLS and download the email addresses for all the area agents and start focusing on a list of possible recruits. Don’t worry, recruiting will be easy.
Here’s what I mean: Recruiting always comes down to your value proposition to the agent. And what you have to offer them is so much better than everything else out there, hiring agents will be a snap. Here is your value proposition in a nutshell. You give them freedom, better tools, and more money. What more could they possibly want?
Freedom because your agents don’t have to waste half their productive time pulling floor duty, sitting in sales meetings, driving to caravan houses, or any of the other traditional agent busy-work. With FavoriteAgent.com they have none of that. Freedom is huge to a productive agent.
Like any of the national franchises, your agents will each pay 10% of gross commission to FavoriteAgent.com corporate. But unlike those other national companies, with FavoriteAgent.com they actually get something tangible for their money. Instead of paying a franchise royalty to use a national name, they are paying a technology license fee. That technology license fee buys them everything they need to operate a Virtual Office real estate practice. Here’s what I mean.
Each agent gets his very own LCM web gateway, his own LCM phone gateway (both are state-of-the-art lead capture technologies), his own personal website, his own integrated contact management software, his own virtual assistant and mobile applications. They also get the most powerful Virtual Office real estate platform available today, complete with hundreds of training articles, videos, calculators, business planning modules and much, much more. Our technology bundle would cost each agent over $1,100 per month if they were to license it directly.
Now remember, as the broker-owner, running a typical 30-agent office, FavoriteAgent.com will be providing your company with nearly $35,000 per month in Virtual Office technology. You’ll also be happy to know that all of your agent accounting is included in that licensing fee, so you won’t have to spend your money to hire a bookkeeper to run your brokerage, or shut down the entire office for the month of January to get all the agent 1099’s sent out.
But besides all the freedom and all the tools, you’re going to attract your agents the old fashioned way — you’re going to pay them well! The FavoriteAgent.com Agent Compensation Plan is probably the simplest and most generous you’ve ever seen. Here it is: Every single agent pays a 50% split on their first transaction with the company. That’s to offset all the administrative costs in adding a new agent to the company. But after that, all active agents keep a minimum of 80%. To remain active with the company, an agent only has to complete one transaction a quarter, or, they can work full-time in real estate. Now, there are two ways an agent can make 90%! First, by being a top producer. If an agent completes four or more transactions in a thirty-day period, he is paid 90%. Or they can make 90% by recruiting. If an agent recruits five other agents to join your company, his commission is increased to 90%.
And that’s 90% commission with with no office rent, no transaction fees, no administrative fees, no nickel and dime fees, period. So, how easy do you think it is to attract agents when you can give them freedom, you can give them a state-of-the-art technology platform and the ability to forever solve their lead problems, and you can pay them 90%?
Believe me, it can’t get any easier. OK, enough about recruiting. It’s been a tough day but well worth the time invested. Go ahead and take the evening off and get some sleep. You’re going to need it. Tomorrow’s going to be really busy!
Day 2. Today you have your initial coaching session with FavoriteAgent.com. It will take about an hour, and during that hour you’re going to learn how to set up and manage your online advertising. By the end of the day, you’ll have a steady supply of new leads coming into your own Virtual Office contact manager. Don’t worry, if you forget something, the coaching staff is always there to answer any questions you may have. Now it’s time to do your homework.
The coaching staff is going to suggest that you take an hour to make sure that everything is set up just like you want it, and to learn your way around the Virtual Office software. They’ll also tell you to import all your contacts into your software. While you’re at it, why don’t you go ahead and email the customer service department your list of local real estate agents, complete with the phone numbers, fax numbers, and email addresses. You know, the ones that you downloaded yesterday. Within an hour or so, they’ll have them all in your contact manager and ready to use. Was that easy or what?!
Day 3. Now it’s time to actually start recruiting agents. Better check your Pipeline. Oh my! You have seven new leads waiting to be called. Sure, you continue to practice real estate while you build your team, but now you get to keep 90% of your commissions instead of giving over a third to your old broker. Now you can spend less time drumming up business too, because it is coming to you faster than you can handle it. Now you can actually think about building your business by recruiting. Maybe you already are a broker and have agents working for you, or maybe you are just starting from scratch. Either way, using techniques we’ll show you, you should be able to recruit 30 agents in less than 90 days.
Now let’s look at a realistic scenario comparing this model to the traditional model. Let’s say you recruit 30 agents over the next few months, and those agents average one single transaction per month. Here is how your income looks:
- Traditional Model. With 30 agents and 30 transactions per month, using a typical traditional model broker split of 38% (or in other words, you pay your agents an average of 62%), and using an average GCI or gross commission income of $6,000 per transaction, you would have a franchise fee of $14,400. That plus any note payments you might have, and any mandatory signs and supplies you had to purchase. If you run your brokerage like the typical traditional brokerage, then you will bring about 2% to the bottom line or about $3,600! Don’t forget, you might not have that much business coming in, and your expenses will still march on, but for purposes of this illustration let’s say your agents come through and business is good.
- Virtual Model. With the same 30 agents and 30 transactions, using the national average company dollar of 15%, and the same 30 agents and 30 transactions per month, you’ll make $17,901. In other words, your Virtual Office company makes about five times as much money and has virtually no risk. No rent. No utility bills. No accounting. No company advertising bills. No additional staff. The very picture of simplicity. And you have lots of time available to actually do some production, if you decide you want to.
Remember, in the traditional model, your cash outlay is nearly $200,000 and your risk is very high. At that level, your return on investment is minimal and you have basically bought a job. Unless you can live on a $43,200 income, you are going to have no choice but to sell houses every day and compete with your agents.
In the virtual model, you’d make $214,812 on the revenue produced by one virtual office of 30 agents. Let’s say you continued to grow that office, adding 30 agents a year for the next five years. You’d be making $1,388,016, and it would all be profit! Your company will be a virtual real estate money-making machine and you’ll have very little, if any, stress. Your agents will make more money, and your customers will be better served. You’ll have the benefit of a national brand and state-of-the-art technology, and you’ll own a business valued at roughly seven times EBITDA, Earnings Before Interest, Taxes, Depreciation, and Amortization, or nearly $10 million.
Contrast that to the traditional alternative where you would likely still be leveraged to the hilt in your one brokerage of 30 agents, taking on a huge risk of capital, and working with diminishing margins as agents continue to demand more and more money and brokerage commissions continue to erode. Suppose you wanted to expand. You’d have to reinvest more capital to get and equip a larger facility. And you’d have to add staff. Your risk would continue to escalate with every expansion, and unless you’re a rare agent, you’d still be selling houses and own a business nobody would buy.
Day 4. Now comes the fun part… all you do from your fourth day on is make money. Now how cool is that!
Well I hope that helps you understand exactly how I’d recommend you open your own virtual office. It’s simple, and our company pays all the Virtual Office expenses for those qualifying agents who have big dreams but small balances. We’ll hold your hand every step of the way, and help you become successful.
The only thing standing between you and a very enjoyable and rewarding life is your own fear to act. So, contact us at "Become a Favorite Agent", and we’ll help you get started doing real estate this new way!