“The incentive today [to start a brokerage] is less than when I started out,” says Norman Schneiderman, who started City Street Realty in Halifax in 1991. “It was a 50/50 split commission in my day, so it was a big incentive.”
Indeed, the dollars-and-cents factor is still the greatest pull to start a new brokerage. Blair Anderson, owner and broker of Promise First Realty in Ontario’s Durham Region, says he decided to separate from his former brokerage to address the community’s need for an alternative agency structure.
“The biggest thing is, obviously, the cost,” he says. “Real estate expenses are going through the roof. Fuel goes up, car insurance goes up, it’s a big expense for advertising. And most brokerages are raising their fees as well, because their expenses are going up, too.”
For his part, Anderson says he’s able to offer agents low overhead costs without sacrificing the support that brokerages should offer their clients.
Still, not many agents see how that’s possible – making recruitment the greatest challenge for independents.
“You just need to make your place as attractive to your clients [agents] and you go from there,” says Larry Sage, who opened Sage Real Estate in 2010. “You have to be comfortable in your point of difference in what you can offer. You have to delineate why coming with you might be better for them.”
Even after you’re able to convince other agents to join your brokerage, it’s hardly smooth sailing from there. Only the most business-focused agents will make it on their own.
“You need a solid business plan,” Sage says, “a well-researched and thought-out business plan – then you go to the bank.”
Anderson, too, says it’s crucial to research all aspects of starting a brokerage – from the financial and tax implications, to the community and the legislative requirements – before running to the bank for financing.
“Make sure you’re a business person, not just a real good agent,” he says. “There are lots of pitfalls. I wouldn’t say don’t do it, but do your research and make sure you’re well-funded.
“If you can make it work, it is incredibly rewarding.”
Think twice before opening a brokerage with your name on the door, say agents arguing the path to owning an independent brokerage isn’t as smooth as it once was.