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Recruiting season is afoot. 10 brokerage red flags to watch

Finding the right brokerage is essential to growing your real estate business. Watch for these warning signs that indicate it's a bad fit for you.

It’s about that time of year again. Brokerages are hard-core in recruiting new agents, and agents are reconsidering their happiness level at their current brokerage. If you’re thinking about making a switch or being heavily recruited, it pays to go into interviews with questions in hand. The right questions, or more so the way the interviewing broker answers them, can help you figure out if it’s a fit for you.

Here are 10 red flags to watch for when interviewing your next real estate brokerage. Be sure to inquire about these critical aspects of your business before you commit.

1. A stingy commission split

The commission split is one of the considerations in deciding if the broker is right for you.

The percentage a Realtor takes home from a sale is relatively low. For example, 6 percent of the sale is split between the buying and selling agents. That 3 percent is further split with the brokerage.

Most brokerages will ask for a 60/40 split, but some will give more to the agent. The less the brokerage takes the more the agent gets. If the brokerage asks for more than 40 percent, that could be a red flag unless the value they provide through training and leads is warranted.

Keep in mind that some brokerages will have a cap on commission splits. For example, a $100,000 cap means that if the agent earns $100,000 in sales, they will no longer have to pay the brokerage split for the year. Having a low cap in place is another sign of a good opportunity.

All that being said, you can’t judge opportunity on splits alone as the other points mentioned here could be even more important.

2. A lack of growth support

Most brokerages will offer their agents some amount of support. This comes in the form of training, marketing, materials, and more.

It’s best to find a brokerage that offers the support you need, especially if you are a new agent. Otherwise, you may find yourself very lost.

3. Too many fees

It’s typical for brokerages to charge fees to their agents.

These include:

  • Franchise fees

  • Office fees

  • MLS fees

  • Training fees

  • Marketing material fees

  • Errors and omissions insurance (E&O)

  • Startup fees

These fees can take a considerable amount of your income, especially if you are a new agent and aren’t making a lot of sales. If the brokerage is charging excessive fees, you may want to look for another company.

4. No internet presence or poor marketing

The company you work for should be effective in helping you market yourself, so if they can’t even market themselves, you should have doubts about working for the company.

The brokerage you are considering should have a nice-looking website and social media to match. It should come up prominently when searched online. It may also provide separate web pages to agents.

Keep in mind that working for the biggest, most well-known companies isn’t always the way to go. There are plenty of benefits to working with mom-and-pop ventures, including individualized training and a more intimate atmosphere.

While these companies may not be able to compete with the big fish, they should still be able to carve out a niche for themselves with good-looking marketing materials.

5. No administrative support

Some brokerages offer agents administrative support to do paperwork and handle MLS listings. The support often comes with added fees, but if you dread handling paperwork, it may be worth it.

6. Bad reputation

Today, you can go online to find out about nearly any business. When it comes to brokerages, you can look at review sites to find out about the experiences agents have had working at the company. If the brokerage has bad reviews, that could be a red flag.

In addition to finding out about agents’ experiences with the company, it’s important to find out how clients feel about working with them. If you join a brokerage that doesn’t offer good customer service, it could damage your reputation in the industry.

7. The wrong culture

Culture is a huge factor in any workplace. It comes through in the look of the office, the way the co-workers are treated by management, and the way co-workers treat each other.

Some brokerages are very hands-on and promote a sense of family. Others prefer agents to be independent and do their thing.

There is no right and wrong when it comes to company culture. It’s just important to find the culture that works best for you.

8. They don’t allow for your specialty

Many agents aspire to work up to a specialty. For example, they may want to specialize in luxury properties, multi-family properties, investment properties, etc.

Some brokerages encourage specialty agents while others have strict guidelines against it. You must make sure the brokerage you partner with will allow you to pursue your specialty if you want to take things in a specific direction.

9. No mentor support

Most brokerages will offer some sort of training, but some go the extra mile by providing mentor support.

A mentor will be an experienced agent who provides you with personalized one-on-one support. However, they often come with additional fees. Generally, mentor support is a good thing to have if you can afford it.

10. No referrals or leads

It’s up to agents to generate their leads. However, some brokerages will help by providing lead-generation tools or by referring call-ins and walk-ins to specific agents.

Find out how the brokerage you’re interested in handles leads. Do they provide lead sheets to agents? If clients walk in, are they referred to newer agents or veterans? Do the leads come at a cost?

The way leads are handled will give you some insight as to whether the brokerage is right for you.

Finding the right broker is an essential step in growing your real estate business. Now that you know the red flags to look out for, you have the tools to find the brokerage that’s best suited to your needs.

By Chris Heller

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