Are You Planning to Launch a New Brokerage Business in California This Year?

Have you conducted your due diligence with regard to your broker business model?

The adage attributed to Benjamin Franklin tells us, “An Ounce of Prevention is Worth a Pound of Cure.” There are few businesses where the adage is more accurate than when creating a business plan for a new real estate broker venture.

What top issues must be addressed when developing the brokerage business model?

1. What types of services will your brokerage offer?

Listing and selling?

Will you also offer buyer representation?

Who is your target client?

Will the brokerage be a small boutique operation or do you envision multiple offices in many counties at some point?

Will you offer property management services to your clientele?

Will you offer escrow services?  Do you understand the limits placed on this type of escrow activity?

Do you understand the rules that apply when you handle money for clients?

2. What type of business model/entity will be selected?

Business formation and licensing must be considered. There are a number of factors that go into determining the best structure for a brokerage, including the number of licensed principals involved in the venture and tax issues.

You must plan ahead and understand how to navigate the licensing process.

3. What sorts of administrative help will be needed to support the brokerage venture?

4. Brokerage policies and procedures

Brokerage policies and procedures need to be established prior to launching the brokerages business activities because there are myriad issues which factor into operating in a compliant manner, including:

  • Contracts with Sales Agents and Broker Associates
  • Branch and Division Managers
  • Advertising rules
  • Unlicensed assistants
  • Training and Education

To set up an evaluation of your plan, please contact me at (310) 416-9800 to schedule an appointment.

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