#11 Questions to Ask Before Starting a Real Estate Brokerage

Before you spend a single dollar opening a brokerage, I want you to answer these 11 questions. Not to talk you out of it but to make sure you’re not making an expensive, avoidable mistake. I built Best Homes Real Estate from a small team to hundreds of agents and $1.5B in sales… and I still see phenomenal producers open brokerages and lose everything because they never ask the hard questions first.

Time Stamps:
0:00 — intro begins (“Before you spend a single dollar…”)
1:09 — Question #1 (“why do you actually want to do this?”)
3:03 — Question #2 (“Do you want to recruit and manage or do you want to sell real estate?”)
4:48 — Question #3 (“How will you generate leads for your agents…?”)
8:19 — Question #4 (“What’s your real startup and monthly overhead number?”)
10:07 — Question #5 (“What makes your brokerage different…?”)
12:40 — Question #6 (“Can you handle the compliance and legal responsibility…?”)
18:45 — Question #11 (“What is your exit strategy?”)


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Transcript

SPEAKER_00 0:00

Before you spend a single dollar opening up your own brokerage, I want you to answer these 11 questions. Not because I want to talk you out of it, because look, I built a brokerage myself, Best Homes Real Estate, from a small roster of seven agents to bringing hundreds of agents, closing over 4,000 transactions, and doing $1.5 billion in sales. And I watched agents who were phenomenal producers, really good at what they do, open a brokerage and you're losing everything. Not because they couldn't sell, but because nobody made them answer these 11 questions first. Most agents make the jump because they are tired of splits. Or it's an ego moment. I could do this better than my broker. And six months later, they're buried in overhead. Compliance headaches and agents who do not produce, wondering what happens to the business they used to love. I'm gonna walk you through this exact 11 questions I wish someone had forced me to sit with before I built my answer those questions honestly. And you either save yourself from very expensive mistake or you walk in with your eyes wide open and you can actually win. Let's get into it. So the first question I would ask myself is why do you actually want to do this? And be honest with yourself here because this answer will get tested on your worst day. Now, if your answer is I want more control, it's not a real answer. Or I'm tired of my broker or the support sucks or the splits are not good, it's not a real answer. Those are reactions, not reasons. Here's the reality most people don't see going in. There are over a hundred thousand brokerages in the United States alone. The average one has seven to ten agents on the roster. Most of those agents aren't producing. And from my experience working with hundreds of broker owners, here's the part that shocks people the most. Most of those brokers are still in production themselves. Not because they want to, but because they have to. The brokerage isn't paying for their lifestyle. They built a business that needs them more than it needs anyone else. And that's what's waiting on the other side of I want more control or better splits, whatever. If that's all you got. Now the agents who build something that actually lasts are chasing one of two things. They want to build other agents up in a way that nobody built them up, or they see a real gap in their market that nobody is filling. If your honest answer is closer to an ego or frustration than to a mission, sit before you make that lease sign or file that single form. Because running a brokerage doesn't fix what's driving you, it amplifies it, good or bad. I had a conversation early on with an agent who wanted to break off and start her own brokerage, purely because she was frustrated with her split. Six months later in, she called me, burnout, agents leaving, not sure why she started this in the first place. So the split wasn't a problem. She never actually answered the question why am I starting a brokerage? What is my desired outcome? What could potentially go wrong? Question number two Do you want to recruit and manage, or do you want to sell real estate? This is the one that catches the best producers off guard. Owning a brokerage is a completely different job than being a top producing agent. You're no longer just closing deals, you're recruiting, you're training, you're resolving disputes between agents, dealing, and handling compliance and building systems. Some of the best salespeople in the world are miserable brokerage owners because what made them great at selling, independence, competitiveness, being in a field is the opposite of what makes someone great at building and leading a team of agents. Ask yourself honestly, do you actually want to spend your days developing other people? Or do you just want to go have a title and split percentages? There's no wrong answer, but you need to know which one you need before you build the wrong structure around yourself. Yep, I remember myself that first year as a brokerage owner, thinking it would be just more freedom. I can add more producing agents because you know I'm a top producing agent myself, and they will see all that value that I can bring to them. I can teach them to go from five deals to 20 deals, from 20 deals to 50 deals, right? And here's what happened within three months, I was miserable. I miss being on a phone with clients and hated spending my days chasing paperwork and settling disputes between agents instead of selling. I ended up bringing a designated broker who was pretty pricey at that time, but it freed me up to focus on agent recruiting, agent development, and retention. And then on top of that, selling real estate to keep the lights on. Alright, question number three how will you generate leads for your agents, not just yourself? Here's where a lot of new brokerages quietly die lack of compelling offer. Most brokerages say the same exact thing. I heard it millions of times. I have the best culture, community, tools, resources, etc., etc. etc. It doesn't really move the needle when it comes to attracting and recruiting agents nowadays. Agents more deal flow, they want predictable deal flow on top of their sphere and their past clients. They want more leads, more opportunities, and more deals close. And ultimately, they want to make more money. You can be a lead generation machine for yourself and still have nothing to offer to the agents you're recruiting. If your value proposition is just come work with me, that's not a brokerage, that's a roommate situation. Agents join and stay for one real reason. They believe they'll make more money with you versus someone else. And before you open the doors, you need to actually answer this question where do my agents' leads will come from? Are they gonna come from a shared lead gen system, a referral pipeline, a marketing engine, something beyond just SOI and figure it out? Because that's exactly what they can do without you. Now, early at Best Homes Real Estate, I recruited a handful of agents purely on culture and mentorship with no real lead system behind it. Now, good people, but within a few months, several of them were struggling to generate business on their own and started drifting towards other brokerages that were offering company-provided leads. That's when me and my business partner Tristan Horn built out our fastlead.io program because I learned it the hard way that the culture alone doesn't pay the bills. Consistent and predictable lead flow does. And when your lead engine is running, recruiting gets completely different. You stop competing on split percentages and start competing on value. And your offer becomes simple. We teach you how to generate your own leads and we provide predictable company leads if you meet specific standards. Now, producers love that because performance-based systems reward performance. New agents love that because momentum beats a blank calendar every time. And your brokerage wins because the math is compounding in your favor. More closings per agent equals more revenue. Better agents results, stronger recruiting story. More agents, more lead program revenue, more revenue, more reinvestment into the engine. Not only does consistent legion help agents close more transactions, it is the offer that attracts agents want to close more transactions. And more agents closing more transactions equals more revenue. More revenue creates more profit. More profit creates the business you actually set out to build. If you're an agent listening to this, let me ask you something. How predictable is your pipeline? Because most agents aren't struggling with the skill, they're struggling with the opportunity. You can be the best agent in the world, but if you don't have conversations with buyers and sellers, you're not closing deals. That's where fast lead.io comes in. We help agents create consistent opportunities. No random leads, no guessing where the next deal is coming from, a real pipeline that turns conversations into closings. That's what we're here to build. If you want my playbook to increase your business without burning out, book a call below. All right, question number four. What's your real startup and monthly overhead number? Now, most people underestimate this by a lot. The EL insurance, MLS, and association dues, broker licensing requirements in your state, office space if you're not virtual, a transaction management CRN system, right? Think about it. I mean, that all adds up. Marketing, and if you're doing it right, you gotta have a staff to support your agents. Now, when you write every single line item, you then have to add an additional 30% because something you didn't budget for will show up in the first year. Trust me on that. It happened to me as well. Know your break-even number in agents, how many agents you gotta bring in, how many transactions you have to close before you commit, not after. I remember when I sat down with my actual numbers in the first year of running Best Fums Real Estate, I realized very quickly that I underestimated my entire overhead. My insurance costs were up, my dues were off, the systems, staff, all of it. It ended up faster than I expected. But there were months when I had to cover the shortfall out of my pocket because I simply hadn't planned for it. And here's the part that nobody tells you growth doesn't fix the problem, it multiplies it. ENO insurance went up 30 to 50% a year because we were closing more transactions. CRM costs climbed because we kept adding more agents. MLS fees stacked up because agents wanted to sell in other markets. Every win on the production side came with a matching bill on the overhead side. And if you're not planning for that, growth will bankrupt you just as fast as staying small will. All right, question number five: What makes your brokerage different from the one down the street? What makes you stand out? How are you different? How do you separate yourself or differentiate yourself from the competition? There are 100,000 broker journals out there, right? So how do you stand out? Now, if your honest answer is a better split, you're going to lose your best agents to whoever offers a better split than you, probably in the next 12 to 24 months. Splits are the easiest thing in the world to compete on, probably the fastest way to build a brokerage full of agents who most of the time have zero loyalty. Now, if you're offering culture, training, lead generation, mentorship, a genuine career development, it's much harder to copy by a lot of brokerages out there. And that's what actually keeps your agents around when someone else tries to poach them with two extra points on their split. I had an agent get a call from a competing brokerage offering a better split, and I fully expected to lose her. She stayed. And when I asked her, hey, why did you stay? She told me it wasn't about the money, it was about the training. And the fact that she felt like she was actually becoming a better agent under our roof. That's the moment it really clicked for me. Because splits are important, don't get me wrong, right? But at the end of the day, it's much more than the splits. And it wasn't the only time I had conversations with agents trying to get post. I had another agent turn down $2,000 shining bonus from a brokerage down the street because she said, Hey, I finally feel like someone is invested in me, not just my production numbers. I remember I had a guy tell me he almost left twice, but both times he thought about the accountability call he gets every Monday from us, the one where someone actually noticed if he went quiet for two weeks. He said that call alone was worth more than 5% extra on his splits that he was getting by the other brokerage. None of them left for a better split. Every one of them stayed for something you can't put a percentage on. It was training, it was accountability, the feeling that somebody actually cared whether they made it or not. That's when it actually hit me. Agents don't leave for money nearly as often as owners think they do. They leave because nobody made them feel like staying mattered. But there were some also that did. And that's okay. Remember though, right? Some will, some won't, so what? Keep pushing, keep recruiting. Question number six can you handle the compliance and legal responsibility that comes with this? As a broker owner, you're not just responsible for your own transactions anymore. You're responsible for every agent under you, every disclosure, every contract, every potential lawsuit. This means real systems, transaction review, ongoing training on current law and forms, and genuine understanding of your state, brokerage regulations, not just a surface level one. If an agent under you makes a serious mistake, that liability doesn't stop at their desk. It's a lot to carry going in knowing that you're discovering it the hard way. I remember a situation where one of my agents did everything by the book on a transaction and still got sued for $130,000. And as a broker owner, that issue landed on my desk, not just theirs. After months of going back and forth, spending hours in mediation, they got resolved. But it was a wake-up call for me about how much oversight that this role actually requires. You're never just managing your own risk anymore. And the more agents you add, the more transactions they close, the more potential risk, liability, and stress we deal with. Alright, question number seven: who is your ideal agent avatar? And will they actually want to join you? Look, you cannot build a Vroker for everyone. Trying to will leave you with the roster with agents who don't fit with each other or don't fit your culture and don't produce or produce enough. You gotta get specific. Are you building for brand new agents who need heavy layer of mentorship? Are you looking for experienced agents who want more support and maybe better systems but do have the productivity history? Maybe investor focus agents, right? Your answer changes everything: your marketing, your training structure, even your onboarding process. You gotta know exactly who you're building this for before you start recruiting anyone who's simply willing to just sign. I remember early on I recruited a lot of new agents. The training I built were great for the beginners, but bored experienced agents to death. So I had to completely restructure once I got clear that Best Homes was really built for agents who wanted heavy mentorship and coaching, not experienced agents just looking for a better split. Also, you gotta keep in mind that most new agents don't get into a consistent production and usually leave brokerage within two years at a huge high turnover rate with the new agents in my first couple of years as a brokerage order. So don't put all of your eggs in one basket when it comes to roster building. In my professional opinion, and this is just from my experience, I would limit the new agent recruiting to about 20% of your roster. That's it. Now, question number eight what happens when your top agent wants to leave? It will happen. Plan for it now, not in the moment. Agents leave brokerages for more support, better splits, or simply a change. If your entire business is built around one or two Rainmakers, one departure can sink your ship. So build systems, culture, and pipeline of agent development so no single agent or two exit puts the whole operation at risk. The healthiest brokerages that I know are never one or two or three agents deep. They have a lot of producing agents. I remember I had a few of my top producing agents leaving my brokerage who were responsible for a real chunk of overall production. And when they decided to move on, it forced me to confront how dependent my business had become on a handful of people. At first it was hard. It was hard for a few months, but it's exactly why I shifted focus toward developing a deeper bench instead of just leaning on a few rainmakers. And here's the reality agents will leave. It's not if, it's when. So consistent recruiting will fix most of the problems. Question number nine: Are you ready to be a mentor even when it's not convenient or it's not really making you money yet? Look, new agents will call you with basic questions at bad times. They need hand holding through their first listing, through their first buyer experience, their first negotiation, their first this, their first that. And a lot of times it just goes nowhere, right? If you resent that role or you see it as beneath you, agents will feel it immediately. And they will not stay. The brokerages that thrive are led by people who genuinely enjoy watching someone else grow, even when it takes time away from their own production. And if this is not you, that's important to know right now versus six to twelve months down the road. I still remember getting a call from a brand new agent late on a weekend, panicking over a deal that was about to fall apart. I could have been annoyed by the timing, but talking to her through it and watching her close that deal a few days later reminded me why I actually enjoyed this part of the job. That's the moment mentorship stopped feeling like it's an obligation and really started feeling like the whole point of why I started my brokerage in the first place. Question number 10 Can you really survive the first two years financially? An emotional roller coaster. This is the one that nobody wants to talk about, especially when somebody's trying to sell you a franchise. Look, most of the new brokerages don't turn a real profit right away. You may be investing heavily into systems, marketing, recruiting before you see a meaningful return. Time site takes it two years, three years. And emotionally, you deal with agent turnover, difficult conversations, and moments where you genuinely question whether this was the right decision for you. Personally, I've been there multiple times. There were points when I was building best homes, real estate, where the easier path would have been staying just an agent, make a lot of money. But pushing through those early years is exactly what separates brokerage owners who make it from the ones who fold it in a year or two. All right, final question. Question 11. What is your exit strategy? Most brokers build a brokerage and never once think about how it all ends. And I think that's a mistake. Are you building something that you eventually sell? Something maybe you hand off to your business partner or a family member, something maybe you can merge into a bigger brand down the road, the way I move best homes to exp realty. Or are you building something that only works as long as you are the one running it every day? That answer changes how you build from day one. A brokerage bill to eventually sell needs real systems, documented processes, and a leadership team that isn't just you. Because a buyer isn't paying for your personal relationships, they're paying for a business that runs without you in the room. And if you never think about the exit until you burn out and ready to walk away, you have built something with no real value beyond your own two hands. When I decided to move best homes to exp realty, it wasn't a snap decision. It came out of realizing what I actually wanted long term, versus what running an independent brokerage day-to-day was demanding of me. I saw a virtual ceiling. More growth meant more overhead. More agents meant more complexity. More production meant more pressure, not more freedom. I didn't want a bigger version of the same ceiling. I wanted different building. I wanted leverage. I wanted alignment upside that compounds instead of resetting every January. I wanted revenue share, equity, ownership in a $2 billion company. The ability to build with agents not only across the country, but around the world, not just my backyard. And still got to keep everything I already built with best. The culture, the training, the standards. I wasn't trading that away. I just wanted a bigger engine behind it. Here's what that looks like. I grow my company best worldwide on the EXP platform. No risk, no liability, zero compliance for 85 bucks a month. And I'm also leveraging 2500 employees that EXP employs. You don't need the answer finalized on day one, but you need to be asking the question from day one. If you can honestly answer all of these 11 questions, you're not just ready to open a brokerage, you're ready to build one that lasts. If you're seriously considering this path, don't just watch this video. Actually write out your answers to all 11 questions before you take a single step forward. If this helped you, please like or subscribe because I'm going to go deeper into the exact systems I used to scale my brokerage in my next videos. And if you know another agent who's talking about opening their own brokerage, send them this video first. It might save them a lot of time and a lot of headaches. It might save them two years and a lot of money. Building a brokerage can be one of the most rewarding things you ever do in the industry. But only if you go in with your eyes open. Answer these questions honestly and build something that actually lasts. I'll see you in the next one.