Here is step by step list of “How to” start a real estate brokerage inside your company, primarily using the experience of Brent Low, CEO of MediaOne Utah, whose brokerage was founded in 2009 and is generating millions. A full case study on UtahMore.com after five years is here.
Setting up a brokerage (full disclosure, the author use to run an inhouse media brokerage at Sanjose.com) is actually fairly simple. The real complexity is in the go-to-market strategy.
1. Investigate state rules for obtaining a broker's license and for joining the MLS
Visit with the State Department of Real Estate which regulates how to become a broker both for an individual, and also for a company, as well as the requirements to join the MLS. All agents are required to have a broker, but the laws for companies having their own license and joining the MLS vary from state to state. Having an MLS bot on the site, with complete listings, is key. Don't try to launch with just your own listings. Every state is different; some MLS require a licensed broker in state and some allow an out-of-state license (so that a corporate broker could work with agents fed by MLS bots in a variety of states and cities).
If your company is a significant media in the community, forming a brokerage will ruffle some feathers in the real estate community. However, federal law says that Multiple Listing Services (MLS), though privately owned, cannot descriminate, ie pick and choose which customers it wants and which ones it will turn away.
2. Find out who on your staff has a license or is well-versed in real estate
It helps to have an executive on the team who is already immersed in real estate in some way, and to be able to reallocate current staff.
Low says he personally took on becoming a real estate expert. “I have a fair amount of family that is in real estate. I was commuting …and during the week, my family wasn't here I had a lot of time. So I got my license in the evenings. After I got the license, I started talking to people and interviewing brokers and were in the business."
At Sanjose.com, a weekly newspaper-owned city site, some of the initial staff was recruited internally: An administrative employee who once sold mortgages became the leads coordinator. A classified representative whose wife sold real estate became a channel manager, selling affiliates (Keep in mind that people whose family are in real estate may also consider your company a competitor, or your own staff may not be the best hires as brokers or agents, so it does not always work in your favor).
3. Join the Board of realtors, cautiously, but do not expect them to be helpful...at first
The Board of Realtors is composed of your competitors. Low says, “We joined, not a friendly situation initially. A few very angry real esatet brokers and agents stirred the pot.” Still, other brokers and agents who represent buyers will be selling your deals, so this will be a group that your company will need to participate in.
4. Create the business plan
Like any business plan, you want to cover all the bases, but here are a few pertinent to selling real estate:
a. What is the market size
•How many listings are currently on the MLS?
•Who has the greatest share and what percentage?
•What will the new company’s targets (numbers of listings, percentage of marketshare)?
c. Analyze the competition and key strategies
•Who are the significant discount brokers, what do they charge?
•What is your strategy to attract listings?
•What is your strategy to attract buyers?
d. Analyze the risk of business loss
•How much money is coming in from specifically brokers and agents? This revenue is at risk, while other real estate revenue from new home sales, FISBO's and related services are not. To preserve long-standing relationships - you may wind up share a sale on the buyer side one day, or hiring a few of their agents - it's better to inform these customers before the soft launch, even if that means they cancel.
e.Establish key elements of the site
What will be on the new site? Make sure that the new real estate site has its own URL and navigation, simply adding an MLS bot to the top of traditional listings will not cut it. As mentioned above, the MLS bot needs to be on the site in the hero position. News is secondary to consumers navigating and may not be neccesary at all. The navigation bar is key real estate and should include what users are looking for, such as new homes, foreclosures, commercial, lenders and so on. Finally, ad promotional positions such as two banner ads, a list of "Featured listings," and a "featured home builder" or mortgage company.
f. Promotional plan
How will you promote the launch? What kinds of recruitment ads will run in the legacy site/media? A full suite of promotional ads and emails that includes your key differentiators, such as additional promotion of agents and houses, discounts or rebates, should be pre-built and ready to go.
g. Choose the team
Now that you know who has some real estate experience, decide who the core group in the company that will launch the business will be - and who will lead the team. Typically, the team will include marketing, finance, a C-level person and someone with significant real estate ties. The leader can be a newly hired broker, or manager experienced in real estate sales (directors of Interactive are not really a fit for day to day running, promoting and recruiting). This team can then review plans for overall staffing such as:
•How many brokers and agents will be required at launch? What is the target?
•Will agents report to an inhouse broker or can they be part of a different brokerage, but share commissions?
•Will they be employees or independent contractors (the latter is a best practice)?
•Will you train new agents into the business (we don't suggest this)?
•How will you ensure business continues uninterrupted if the broker leaves?
•A traffic coordinator to collect and disperse leads on a timely basis will also be required.
5. Leave new products for Phase two; about six months to one year out
New products, such as advertising sales to mortgage companies and print spin-offs, will arise organically. “I would focus on the brokerage and the transactions first. Down the road, you may see other things,” Low says. However, by the second year, a number of new revenue streams will be available, include advertising on the site sold to new home builders and mortgage companies, as well as advertising in packets that go to sellers and buyers.
6. Create a financial model
Your models may well be way-off initiallly, but it is still a good idea to build-out several scenarios, including best and worst case, over a multi-year period. This will help justify the concept if some current real estate advertising falls off, or if sales take a while to ramp up.
Many thanks to Brent Low, CEO of MediaOne Utah for sharing his experience with us. A full case study on his experience is here.
The author, Alisa Cromer is publisher of a variety of online media, including LocalMediaInsider and MediaExecsTech, developed while on a fellowship with the Reynolds Journalism Institute and which has evolved into a leading marketing company for media technology start-ups. In 2017 she founded Worldstir.com, an online magazine, to showcases perspectives from around the world on new topic each month, translated from and to the top five languages in the world.