Episode 004: "The $10 Brokerage"

As I set out to figure out a way to run my own brokerage, I had a couple of questions to answer first. Do I buy a franchise or go independent? What will the costs be? What other training or licenses do I need? After it’s built will I be able to sell it?

While gathering answers to these questions I made some interesting discoveries. Typically the goal is to get your name on the sign out front, so everyone knows who you are. At that point you will truly have made it… or will you.

The things I would discover over the next few months as I continued to dig for more information would surprise me. I hadn’t gotten any closer to whether I would buy into a franchise or go independent, but with my personality I was leaning toward independent. I had been with an independent broker for the last several years and not 1 client of mine cared at all what brokerage I was with So brand recognition didn’t really mean anything to me, because it didn’t mean anything to them.

As far as the costs and additional training went, it wasn’t really a big surprise to find out that I would have to have a certain amount in reserves as well as obtain a new license for each state that I wanted to grow my business in.

Now, thinking about how I wanted to scale my business, I could see the costs and time “racking up”. This was going to be expensive and cost me a ton of time. This was my first roadblock. I was really having a tough time wrapping my head around accomplishing this goal. How was I going to build what I really wanted to build? The money was one thing, but the time? That was a completely other challenge. There is only one of me.

But, the costs and the time associated with what I wanted to accomplish wasn’t even the biggest surprise.

I was talking to one of my best friends, who owns his independent brokerage. He said to me, “guess what? I just expanded into another city about an hour away”. I said, “that is awesome, congrats! What did that cost you?”. He told me that he had purchased it for $10.

Wait… what?!?!

“Yeah, she wanted to give it to me but my lawyer said I need to pay something, so we settled on $10”.

I asked why the hell would she ever sell her brokerage for $10. He then explained to me that brokerages typically don’t sell for much because you are essentially selling the agents that you have on your team and their production can fluctuate. Another factor is that an agent can leave at any point. If they average 100 transactions a year with you, the new buy can’t count on them staying. They would be at risk of dropping those transactions should that agent decide to leave.

This was the final blow for me. After learning that she owned her brokerage for 30 years and sold it for $10 I no longer had an interest in building my own brokerage. The $10 deal was great for my friend, but for the broker that sold her brokerage after owning it for 35 years… not so much. As I stated in chapter 1, I want to leave a legacy. This isn’t how I was going to do it.