Are you ready for a big change?
With the new year, we inevitably take stock of the past and contemplate improvements for the future. What are options for improving my practice? You may consider small changes are there advertising or networking resources that will help my visibility in the industry? Alternatively, you may consider big changes, like starting a new brokerage. Starting a new brokerage can be daunting, but is doable and there are resources at the ready to help you get started.
Before taking the leap, let’s talk about the big picture. You’ll need to develop a business plan. What type of brokerage do you envision? Will you be full service or will you have a niche practice only offering property management. You will want to outline your start-up capital, budget, expenses and evaluate your profitability. Timing is also important, how will the move impact your clients or whether this a good time of the year to make a change. Think about recruiting talent and how that talent will further the type of practice you want. There are great resources online with sample business plans and other resources: Creating Your Business Plan is one offered by the Small Business Administration.
With business plan in hand, you next need to go through the mechanics of setting up your new brokerage. I have a checklist for my clients that I’ll share:
- Division of Real Estate/Name Reservation Application – $10.00
- Secretary of State/Articles of Incorporation – $99.00
- Department of Treasury/SS-4 to get EIN (online)
- Open bank accounts: Operating, Trust (must be in-interest bearing and include words “Trust” or “Special Account” in name) and Property Management Trust (if necessary).
- Division of Real Estate/Limited Liability Company Application
- Broker’s License
- List of officers for company
- Affidavit from each of those persons attesting that they will not act as a broker on behalf of the brokerage
- Letter from bank on bank letterhead detailing name of trust account, account number and statement that account is non-interest bearing “trust” or “special” account.
- Division of Real Estate/Broker Transfer Reactivation Application – $25.00
Now that you’re licensed, what’s next? I absolutely suggest reviewing the broker guide on the Ohio Division of Real Estate’s Website: Broker Guide. It is an extensive list of resources for a new brokerage along with citations to the law or rule involved. It covers everything from advertising, agency disclosure, trust accounts, payment of commissions and general forms and resources. This list will help you to make sure you have everything in order from a regulatory perspective.
Next you’ll want to consider your firm’s business, forms and contracts. It is always a good business practice to have independent contractor agreements with your agents. Beyond your company policy on agency, you may consider a policy manual with office procedures and information. You’ll want to look at obtaining errors & omissions insurance and implement a marketing plan for the new company.
Best advice is to find a friend or mentor and to ask questions and receive guidance. When I started my firm, I worked closely my former legal writing professor who eventually became my mentor. Although he didn’t practice primarily in real estate, he offered advice on professionalism and gave me some sound business tips .. the types of things you don’t necessarily learn in school. 10 years later, he is more of a friend than a mentor, but I still on occasion text him a question when I need some fresh perspective. Don’t be afraid to ask for advice when you need it.
With some sound planning, useful resources and a little luck, this may be the year to reawaken that entrepreneurial spirit and make a big change. Are you ready?