Lee Kiser, A multifamily expert, active broker and co-founder of Chicago-based Kiser Group, KIG and Enodo Inc.
I started my first brokerage firm in 2005 after being a successful broker of apartment buildings for eight years. I currently own three real estate companies all related to multifamily properties (two brokerage, one technology). I wish someone had given me some advice and/or tips on the business of brokerage — or that I had been smart enough to ask. Instead, I’ve taken some hard knocks by learning the difference between brokerage and the business of brokerage. I hope the following tips are helpful to you:
1. Don’t Confuse Brokerage With The Business Of Brokerage
Too many brokers think that because they have been successful selling or leasing properties that they should open their own brokerage firm. Shortly into the new venture, reality sets in that the business of brokerage requires a different set of skills than brokering (i.e., regulatory compliance, employment policies, employment and independent contractor agreements, insurance needs and analysis, research tools, operations, accounting, file management, risk management) and a host of responsibilities in addition to trying to lease or sell a property (which, by the way, you still have to do for income/revenue). Also, realize that all of these activities will time take away from you personally being able to sell/lease properties.
2. Create A System For The Production Of Analysis, Presentations And Marketing
You and your agents should not spend time recreating the wheel each time you have an assignment. Create a standardized process for analyzing or underwriting, converting to a presentation for the client, then converting that output to marketing materials. Without this standardization, your team will be spending too much time on non-selling activities on each assignment.
3. Invest In Your Business
Invest wherever needed — hardware, software, insurance, online resources, training, etc. Make sure you also invest in the right office space for your clientele (something with which they will identify and relate). Also, don’t scrimp on legal. It is critically important that you speak with the right attorneys to set up your entities correctly for tax and liability purposes. Unlike working at a company as a broker, keep in mind that commissions/revenue no longer equal profit. Make your investments count because they simultaneously help create revenue while eating away at profit.
4. Be Gracious And Flattering Of Competitors Regardless Of How You Really Feel About Them
Nothing communicates more to your clients that you are threatened by your competition than when you make negative comments about your competition. The old adage “If you can’t say something nice, don’t say anything at all” comes to mind. This doesn’t mean you have to be overly complimentary or flattering of your competitors. Be gracious when commenting on your competitors — then simply outperform them. Your results will destroy your competition, not anything you say.
5. Define What Differentiates Your Business
The mantra as a broker is that if you can’t state three good reasons why someone should buy/lease a property, you probably shouldn’t be marketing it. Likewise, you should be able to articulate three specific reasons how you’re different from your competition as a brokerage company. If you can’t, you probably shouldn’t start your own business.
Being a successful real estate broker requires an entrepreneurial spirit — and so does owning and running a brokerage firm. Just remember that one set of skills doesn’t necessarily translate to the other. If you’re making the move to open up your own business, I wish you the best of luck. It has been very rewarding to me.