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Real Estate Brokerages – what’s the difference?

Consumers and Realtors often are confused about how brokerages work, and what advantages and disadvantages the choice of brokerage makes for them.

I’ve fallen into gaps of understanding myself, so I can certainly relate when my clients are confused about how brokerages work. My first career was corporate, serving the C-Suite of Fortune 100 companies as well as start-ups in the 90’s. I must admit I brought that employee mindset to my real estate career as well, not truly understanding that the brokerage is the backing of my business, not the other way around.

Clients often perceive the brokerage as an employing corporate entity. As if there is some control on quality and process from the management level of the brokerage. I often work with sellers who were unsuccessfully served by another realtor and that is their perception, that the brand drove the process. In reality we are all independent contractors, and while a brokerage’s management and services can influence the agent’s success it’s not the same as an employer/employee model that is more familiar.

What does a brokerage do?

Realtors are independent contractors and unless they are licensed as a broker, must “hang their license” under a broker. That can be an independent office, a franchise office or a global cloud based brokerage like eXp Realty. The managing broker is technically responsible for the actions of the licensees, including compliance with all state regulations.

With a franchise model such as you find with KW, Coldwell Banker, RE/Max, Century 21, Berkshire Hathaway and most of the major brands, each office is an independently owned franchisee. That means that it’s up to each managing broker and ownership team how they guide and monitor the sales efforts by realtors within their franchise.

One of the fundamental differences with eXp is that it’s a cloud based brokerage, publicly traded with no franchises. As my local managing broker explained to me going through an audit of my files, we answer to the SEC as we are publicly traded. The level of compliance at eXp Realty with state and federal guidelines to protect consumers is by far the best I’ve seen in the industry.

As a client, what does that mean?

The oversight and quality control that clients believe is in place, such as with corporate leadership is not consistent. Each franchisee sets their own standards for their office’s sales force. I personally have seen profit placed before ethics by managing brokers and franchise owners. Keep in mind, the office broker is an employee of the franchise owners. So if the focus is on profit and sales, not compliance, that broker will follow their employers guidelines.

In contrast, again within my personal experience with eXp, our local broker forced a high producing team to leave the company when they refused to comply with regulatory standards in PA. The level of contract review, and strict compliance standards I’ve experienced in my 6 months with eXp exceed anything I’ve seen with the national franchises, and independent brokerages I’ve worked with during the past 18 years.

When a managing broker’s focus is on compliance and agent accountability vs. short term profit goals, that makes a safer environment for both buyers and sellers. It also sets a professional standard for realtors to exceed and build a risk averse, sustainable business. While each agent may be different, and business models vary, brokerage oversight is designed to protect consumers. I can attest to the strength of that within my experience at eXp.

What business model is best for you?

For insights into the best business model for your real estate business, let’s talk! I’ll gladly share various experiences with independent boutique brokerages, major franchises and unique models I’ve had the privilege to work with such as HawaiiLife. This is a pivotal time in real estate. Just as the early 90’s was for the internet.

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Susanna Kunkel

Susanna Kunkel brings her skills from a career in the executive offices of major corporations to her real estate business - treating each client like a VIP. With 18 years of experience as a real estate advisor, you can be confident in knowledgeable, personalized, confidential service. Hear what her clients say - www.AskMeAboutSusanna.com

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