How to Start a Real Estate Brokerage Company

Well here's something I know a little about!  After all, I started my first real estate company on September 1, 1978, called "Sam Ferreri Co., Realtors."  In fact, I was still a sophomore at Houston Baptist University at that time, but became a Junior by the end of that quarter.  Oh well, who cares? That was a long time ago, it seems.

The first step in creating that company was having some clients and a direction to where I wanted to go.  As a business student, I eventually wrote my senior thesis on building and developing a multi-office real estate brokerage, something I own to this day.

Hmmm . . . did you get point one?  As Walt Disney said, "if you can dream it, you can do it."  Taking that one step further with Richard Robbins, "what gets written down gets done."  (The corollary to that is "what gets measured gets improved.")  And yes, I, too, have seen variations of these points, but how many can you point to and say, "hey, he actually got what he wrote down and dreamed about?"

Though I had a plan from my senior thesis, I eventually went in a different direction, hoping to "fast-start" my progress.  So, in 1981, I bought an ERA franchise, which, at the time, was the second-largest real estate franchise in the Houston market (the first being Century 21).  Somewhere along the line, "Red Carpet" (remember them?) and "International Real Estate Network" (the "Lookie Loo" company) went by the wayside.

There are a couple of good "take-aways" here, as I always thought (and still think) that the name "Red Carpet Real Estate" was the bomb-dot-com.  But their thread-bare rug deteriorated.  Yet, a Google search revealed that they still exist in some format!  www.RedCarpetRealEstate.com  (I couldn't find the Lookie Loo company, but I did find a lot of "Urban Dictionary" definitions!  lol)

Oh well . . . I digress.  The ERA thing went away in 1986 for me, and I was an independent again, swearing "off" of owning a brokerage company.  It was (and still is) far more profitable to be a real estate agent and build a team than it is to be a broker/owner.  There.  I said it.  And I guarantee you it's true.  But top producing agents -- who are also entrepreneurs -- get motivated to "go to the next level" which, in the eyes of a top producing agent, is to be a broker/owner.  (I can say this with certainty because it has been my 40-year-real-estate-life.)

But I can also say -- with absolute certainty -- that this "progression" is a mistake.  Running a successful real estate brokerage business and running a successful real estate production team are NOT the same thing.  I know, I have both.  And keeping them both successful and productive requires far more than most people can imagine.

It comes down to understanding your customer -- who it is, how you serve them -- then finding a way to attract and serve more of them.  Most people believe that a real estate company's customers are buyers and sellers of real estate.

Before you start a brokerage, get the mission of who you'll serve and how clearly in your mind. Then get lots of money and assets to invest.  Real estate brokerage is a high volume, low margin business.

That's how you do it.  And, oh yeah, someone must have a broker license.  Interestingly, some of the most successful broker/owners do not have such a license, but rather use "rent-a-brokers."  (lol) (dig) There's a second point in this . . . do you know what it is?

I own one of the largest RE/MAX franchises in the world now . . . but so what?  Who cares?  Is that my identity?  Nay, verily, I think not . . . yet I've heard it said (very recently) that many broker/owners become broker/owners (or stay as owners) because that's their "identity."  That troubles me.  I'm reminded of a line from Stephen King's Dolores Claiborne, "sometimes being a bitch is all a woman's got to hold on to."  Hopefully, there's more!  -Sam Ferreri