Passing your course is a huge step to getting your real estate license. Congratulations!!!

We know you’re now thinking about taking your exam…. but probably also wondering about how to navigate the next step of finding a brokerage.

Read on to to get some insights from our School Director, Eva on things to think about when choosing a brokerage, the types of brokerages, and 5 questions to ask when doing your interviews.

What's the Best Hawaii Brokerage?

People always ask me, “What’s the best brokerage?” And I always say… “it’s who’s best for you - and that depends on you” What do I mean?

Are you super independent and not a “joiner”, or…. Do you love to join groups, go to meetings, socialize with peers etc. ?
Are you super “techy”... or do you not love the tech? Do you want/need a lot of support or do you NOT need/want a lot of support?

You know you best, so I’ll provide you the info, and I want you to think about you, and what is the best match for you - personally…. That’s going to be the “best brokerage” - the one that fits you best. I’ll give some points of view, but also remind you that it needs to fit you (not me, not your friend etc.)

Keep in mind… You can always change brokerages, it happens and it’s fine to move… but….. if you have a bad experience, or not necessarily bad, but also not good - you may get discouraged as a new person.

So, I hope this info helps you to match with a great brokerage from the start and you have a positive experience. It is worth taking some time to consider before choosing! I’ll go over types of brokerages, commission splits, and questions to ask at the interview.

Let’s start with some basics - there are 3 types of brokerages.

#1 - Franchises - the names you know.

These are the big, household names you see on lawn signs and strip malls. They offer a highly structured environment that provides a solid foundation when you are just starting out.

- The perks are that you get instant brand recognition because of the name and a physical office space where you can connect with colleagues. Also, they can have a good training program for new people (you need to ask about this - more on this later).

- Things to keep in mind are that because they provide so much infrastructure, they often have higher standard commission splits and also… might charge extra franchise fees in addition to the higher commission split. Also, they tend to be rigid as they need to stick with the corporate rules, so if you have a specific situation, sometimes the corporate answer (which they have to give you) is a disappointment vs a small firm who can make their own decisions on things.

- Examples in Hawaii: Keller Williams, Coldwell Banker

#2 - Virtual, cloud-based brokerages.

What is that you may be wondering?

You may have seen these names, too, because they’ve kind of taken over in the last few years! These firms don’t have the physical offices in town like the franchises do and they use a LOT of technology.

- The perks here include better commission splits and lower monthly fees (or no fees at all), digital tools, and tech platforms. I would add that the digital tools and tech platforms can also be in the “con” category… because they can be difficult to learn, and also they tend to use other companies, other softwares that they purchase and they change them often so you have to re-learn new softwares frequently, and I (personally) find it really annoying… but that’s “me”... maybe it’s okay for you given that you do have a much better commission split typically, so I would say that yes - you are getting more money, and that’s always good - but there is a “price” that you pay for the more money.

- Things to keep in mind are that this setup requires a good amount of self-motivation since you won't have a physical office building and that can be hard for some. As mentioned a lot of softwares and subcontractors are used by these so you need some patience to learn / relearn software.

Also, these brokerages have a ton of agents and it can be hard to get personal attention from your Broker and this can be the biggest challenge as a new person because you need a lot of attention at first. However, if you're self motivated this could be a great match for you so I would suggest doing an interview with one of these to see what they have to offer a new person.

Examples in Hawaii: EXP, REAL

#3 - Then you have independent firms.

I call these “mom & pop” brokerages.

These are your local, independent offices that focus heavily on a specific community or a specialized market niche.

- The perks are that they usually have a tight-knit, family-style culture and deep roots in the local community, plus you often get to work directly with the principal broker on a regular basis. They have a “home-y” “Aunty” type of feeling and that can feel re-assuring as a new person and you feel supported. It’s hard to put a price on support, but I would say the value is quite high for a helpful mentor that is kind and easily approachable for a new person.

- For things to keep in mind, they do not have the massive tech budgets or administrative systems, and their name recognition is usually tied strictly to the local area. As mentioned before, tech can be both a plus or a minus depending on the person, so for some people less tech = less headaches (you know you best). For others, they’re already good with tech and want it.

Also a big one - the commission splits are usually not too appealing after you see those from the virtual brokerages, and/or they may have monthly fees. I think it’s not an apples to apples comparison as you are getting more attention and assistance with a “mom & pop” so it’s a trade-off you have to think about. When you get more from the brokerage, you pay more to the brokerage.

Examples in Hawaii: Too many to name, soooo many independent firms!

Now, let’s talk about the money…

Real estate commissions vary from brokerage to brokerage, even within the same brokerage, different agents can have different commissions.

Generally speaking, the commission split will depend on how much “heavy lifting” the brokerage is doing. For example, a brokerage that provides leads to agents will be spending a lot of money on ads and so they will want a higher percentage of the commission. A brokerage which provides no leads to agents and depends on you to find leads does not have this expense, so the commission split should be lower in comparison.

But, I know you want numbers… like how much is the split?

Well…. In the old days it used to be 50/50 … 50 to the agent 50 to the broker and then once the agent “proved themselves” and became more independent they got better and better commission splits with the brokerage, but - times have changed.

Now, you can expect to start in a 70/30 split or 80/20 split, or even 85/15 split!

Is there a catch? Of course! In the old days, you got a lot of “hand holding” and support, and also a structured in person training program like M-F 9am-5pm for two weeks, for example.

There’s been a shift that’s happened to compete for agents, brokerages have made the commission splits more appealing, but (compared to the old days) the training models have changed and a lot is now in technology, online, or there isn’t really any training etc.

The key take away for now on commission splits that I want you to understand is that they vary, there’s no standardization. And that you need to consider things like support, training, technology, leads etc. when you evaluate that number. On Shark Tank, Marc Cuban always says 10% of a watermelon is bigger than 50% of a kiwi - so you need to think about it versus just see the number and go for what’s highest.

Fees for joining:

For some brokerages, there are also monthly fees for joining… I would say this is also an “old time-y thing” that is changing - some still have this, a lot do not have it. Essentially - it’s a flat monthly fee that covers your access to office facilities, printing, or tech platforms whether you close a deal that month or not.

There is also Errors and Omissions insurance, which is your professional liability insurance. You will want to ask if it is charged per transaction, as a flat yearly fee, or if it is already included in your office dues - some brokerages have a system where you don’t pay anything for insurance, unless you close a deal and there’s a small deduction from the transaction… it’s good to check on this. Some don't have you pay for this at all.

Franchise fees are another factor, which are a percentage taken off the top of a commission check for national brand advertising before the final split is calculated. This is what I was referring to earlier in the types of brokerages above, this isn’t for all brokerages, if it’s a franchise, they can add a fee that is monthly, or just an additional percentage that is called a “franchise fee”.

You should check on this, too… Just ask about fees in general, and they will tell you. If they don’t mention one, just ask… “Oh, does this include E & O insurance?” … or…. “Is there a franchise fee here, as well?” Easy-peasy.

Some don’t have any fees, unless you do a transaction, so you don’t need to worry about a monthly charge when you’re not making money. No one wants to pay fees, no one likes to pay fees, so no fees is quite appealing.

Lastly for money items - another new-ish thing called a commission cap.

Some brokerages have this, some don’t… What is it?

Think of this as a graduation point where once the brokerage takes a certain dollar amount from your splits for the year, you get to keep one hundred percent of your commission for the rest of that year. For example: Once the brokerage (not you, them) makes $30K, if you have more sales, they won’t take their portion of the commission. You do 2 sales per year, and the commission cap for the brokerage is $30,000 per year.

So, you have 2 sales, the brokerage made $12K…. You’re not at the cap yet… You do 3 more sales, the brokerage makes $30K… if you do more sales WITHIN the same calendar year, they won’t take their percentage and you get to keep it… There will likely still be transaction fees, maybe other fees, but the large percentage amount that they get, you’ll get to keep it… Then you restart the next calendar year.

Some agents “make” the cap, most don’t. But it’s a good goal and great if you reach the cap.

Doing your Interviews with Brokerages

When you sit down to interview, keep it casual and friendly. You can simply call the brokerage and tell them you just passed your exam and are looking to speak with someone about possibly joining… The reception should know who to direct you to, and how they prefer communicating (email? text? etc.) It’s not like a job interview - where they are interviewing 10 people for one role… it is more like dating - you’re trying to see if you’re a good match. If all 10 people want to join, they take all 10, brokerages need and want agents! It’s not a job interview where you need to beat the competitors. It’s a conversation to see if it’s a “fit”.

But remember, the recruiters are highly skilled sales people so they will be great about telling you about the best things about the brokerage!

You may want to sign up right away, even at the meeting! But I don’t think you should… Do 3 interviews so you can get an idea of the options and consider it… and then move forward and pick the best one. This isn’t about analysis paralysis… move forward… don’t consider it for too long… but also know it does require you to think about it and compare the options, so my advice is not to sign up at any interview.

Here’s a checklist of 5 questions you should ask when you meet:

1. Does the brokerage do sales only? Property management and sales?

2. What is the commission split here…is there an annual cap?

3. Are there any fees to join? monthly desk fees, admin fees or franchise fees I have to pay every month? Are there transaction fees?... Could you go over the fees please?

4. What does training look like here? Online videos, in-person courses, one-on-one mentorship?

Weekly zoom calls? Ask: What’s the schedule?... so you can see if you can attend the trainings.

5. Who would be the broker that I would be working with, who I would call for help or guidance?

I hope this is helpful for you to start contemplating about, what is best for you?

Once you’ve passed your licensing exam, you’ll be ready to start reaching out to brokerages and doing interviews. I know taking the course and passing the exam is A LOT... the State of Hawaii allows up to 2 years for you to submit your application for licensure after you pass your state licensing exam.... I don't think you need 2 years to find a brokerage but it's good there's no time pressure. You can take some time after you pass your licensing exam if you need it, or if you already know where you're going, you can apply right away.

Also - look at the brokerage’s website and see if you know any agents who are there already and give them a call, or have a coffee with them. They will give you great feedback and tell you the great things about being there, and any drawbacks.

Most importantly, take your steps forward - don’t get stuck. Keep on moving toward your goal and you will get there!

I'm here if you’d like to chat as well.

I don’t know the latest commissions or packages at the brokerages, as they can change, but if you want to get an opinion or talk story, just reach out.

Aloha,

Eva