5 min read · September 6, 2022

Is it difficult to start your own real estate brokerage?

 

If you have decided – for whatever reason – to quit your current real estate brokerage, you basically have four options going forward. The first is simply joining a different one, big or small. The second would be going into business for yourself, namely – starting a new brokerage from scratch. Then you also have the option of partnering with a cloud-based real estate brokerage to help yourself to a better commission split. And lastly, you can join a cloud-based real estate brokerage and go the white label route.

Now, the first option is fairly straightforward and the third one we’ve already covered in a previous article. In this one, we’ll take a look at what starting a new brokerage entails and why choosing the “white label sponsorship” option might be preferable for people who want to focus on real estate deals and not the nitty-gritty.

Should you start your own brokerage?

 

Becoming the founder of a brand new real estate brokerage certainly has its benefits. You can make your own rules and standard procedures, choose office location, and set the tone for workplace culture, select your property list and clientele, build a killer team, and more.

All of this, however, comes with a significant downside. When people think about going into business, they often focus on a desired, idyllic outcome, while neglecting the difficulty of actually starting a new brokerage and running it on a daily basis. In other words, aspiring entrepreneurs don’t always know what they’re getting into.

For starters, even a bootstrapped version of a real estate brokerage is going to set you back at least $10,000, while setting one up under a franchise will be closer to $200,000. On top of that, you’ll need to have enough savings to last you at least 12 months, as the first couple of years might not bring you much in profits.

In addition, you’ll need to complete a certain amount of pre-licensing education (varies from state to state), pass a broker exam, which is an extended version of the standard agent’s exam, and have at least 2 years of experience before you’re even allowed to apply for a license. And then there’s researching your competition, making a solid business plan, setting up your legal structure, and so on.

Just to be clear, all of this may well be worth it – but you’ve got other options, too.

 

What are the advantages of a white label brokerage?

 

Ever since 2006, when property listings became freely available online, there’s been little reason for clients to meet brokers in person, as they can now find homes of their dreams by themselves. Needless to say, the role of real estate agents has also been changing in response – going from home-finders to expert advice-givers.

The advent of cloud-based real estate brokerages has made it possible for agents to really focus on building their own personal brand, rather than boosting that of a major traditional brokerage. Becoming the go-to person for buyers and sellers, and developing one’s personal network have become key to staying afloat, this approach certainly has a lot going for it.

Nonetheless, if you really want to have something resembling a traditional real estate firm, why not go white label under an already established brokerage floating, as it were, in the cloud?

The way this works is very simple. You sign up with an online (cloud-based) real estate brokerage and create your own brand – whether on your own or with several partners. While this doesn’t make it an actual company, most of your clients won’t know the difference. 

With this approach, your brand will be visible on your website, email signatures, ads, brochures – you name it. In fact, your brand will be the only one your potential clients will see because with cloud-based real estate brokerages there is no co-branding at all. For all intents and purposes, you’ll have your own company without the usual headache (and massive investment) that comes with licensing, hiring staff, and running a complex operation.

In essence, the cloud-based real estate brokerage of your choice will provide the tech, marketing, and administrative resources, while you and your team will set up the brand, agree on standard operating procedures, and set whatever other rules you judge necessary. If you want, you can even have a physical office to make it even more like a regular business.

To really drive this concept home, consider the following two examples:

You can think of white label sponsorship as Shopify for agents – Shopify provides a platform for anyone to run their business, but none of the consumers know the business is “powered by” Shopify. All they know and see is the brand and the product displayed on the website.

And the second example of this being a B2B service is Wells Fargo. When you apply for a loan with Wells Fargo, the online application is powered by a company called Blend Labs. Not that you’d know about it just by looking – Blend Labs creates a white label service that allows you to experience it as though it was created and operated 100% by Wells Fargo.  

 

In conclusion

 

Starting your own brokerage is potentially rewarding, both financially and professionally, but also comes with a huge price tag, lots of administrative drudgery, and let’s be honest  – eating ramen noodles for several years before the business gets off the ground and becomes profitable. 

One good alternative to that is getting together your own team and establishing a brand in partnership with a cloud-based real estate brokerage. It won’t bring you all of the joys and miseries of owning a company, but in most ways, the difference will be negligible. If anything, it might be preferable as you won’t have to build any infrastructure or deal with complex legal issues.

Whether you end up going the white label sponsorship route or not, you should definitely at least consider it. Getting most of the benefits of running your own company with few (if any) of the downsides is a pretty good bargain, if you ask us!