After writing my last article (Brokerage stability: Time for due diligence, October REM), I received a number of emails from salespeople and brokers stating that they appreciated the fact that a light was shone on the broker stability issue. It appears many people did not equate the higher portion of commissions flowing to salespeople having an adverse impact on the financial viability of the brokerage owner.
Another consequence of declining owner revenue is that some managers/owners have been driven to sell real estate in order to survive and supplement their bottom lines. This is really a segue into possible questions that new or transferring salespeople need to ask when they are conducting their own due diligence prior to selecting a brokerage.
The following is a set of questions to assist you in the interview process for a prospective brokerage:
1. Does the branch or office manager sell? Many managers who sell use the argument that a selling manager is a benefit, as this allows the manager to keep on top of trends and keeps their skills honed and timely. In my opinion, a selling manager exposes a brokerage to potential conflict of interest scenarios, especially if the manager is responsible for disseminating leads or is competing in the same trading area as their salespeople. Some of the best managers that I know have chosen to manage over selling, and yet they maintain their currency and knowledge.
2. What are the manager’s hours of operation in terms of responding to problems from their salespeople? Not all deals occur during business hours, so a Monday to Friday 9-5 manager will be of little assistance at 10 pm or over the weekend when issues generally arise.
3. What is the best mode of communication to contact the manager? The answer to this question quite often reveals the technological sophistication of the brokerage. If the brokerage has a dedicated call centre and the manager gets a voice message that is emailed simultaneously, or you have direct access to the manager’s cell phone, their response time should be pretty good. Emailing and texting provides you with a written, recordable response for your records. Remember this process is all about you conducting due diligence on the brokerage. Look for tell-tale signs or red flags that could lead to potential problems down the road.
4. Does the brokerage conduct regular office meetings? In our new world of virtual or remote offices, it is always nice to have the opportunity to learn and connect with your peers. We live in a fast-changing industry and sometimes we don’t read every notification or update as we should. If the company holds regular monthly meetings, they probably have a corporate culture and a wider, deeper support network in place. Find out if the content of these meetings includes market conditions and trends, regulatory issues, products and services; or if they are just a forum to promote internal listings.
5. What kind of training and support does the brokerage offer? Do they hold regular CEU meetings? Do they have a “live” training program for new graduates? Do they have an advanced training program for experienced salespeople wishing to take their business to a higher level? Do they have a training calendar showcasing all the educational events? Do they conduct sales rallies? Do they have regular events with proven industry speakers? Do they offer mentoring for new registrants?
6. What are the commission plans or fee structure? This one is almost self-explanatory – just watch out for hidden fees. What other expenses are included with your plan? How often are commission cheques generated? Do they allow for direct deposit into your bank account?
7. Are there exit penalties or notice periods if you leave the brokerage? This is a very important question to ask because the exit penalties with some firms can be quite shocking. Find out if they may have extended notice periods before you can leave. The legality of upholding exit fines for independent contractors has yet to be tested in the courts. If a salesperson does not want to be with a brokerage, why in the world would a brokerage force someone to stay? Not to mention the ill-will that is generated by enforcing this type of punitive measure.
8. Does the brokerage execute a marketing plan? If yes, then ask for details about the plan. Ask about recent marketing initiatives. Some companies talk about past campaigns or brief ineffective campaigns as though they are still running. Do they have an experienced marketing manager or a marketing department? Do they participate in social media? Do they have an effective web presence? Do they have an intranet site? Is brand awareness important to the brokerage?
9. Does the brokerage give back to charities or the community? What charities or community initiatives does the brokerage participate in? A brokerage that is not financially viable will not have funds to direct to humanitarian or community causes.
10. Does the brokerage have physical premises should you need them? Are there closing rooms? What services are offered by the brokerage? Are computers and office equipment readily available and operational? Is the technology old or state-of-the-art? Does the brokerage have wireless capabilities for when you visit the office?
The first test for a brokerage is when you call or email a manager for an interview and they don’t get back to you quickly. This is your first red flag. The second test occurs when you arrive at the brokerage for your interview. Take a look around to see if the office has energy and life. The third test involves asking for testimonials or referrals from incumbent salespeople and see if they recommend the brokerage. And finally, remember that this is a two-sided interview. You should be interviewing the manager and the brokerage, just as they are interviewing you. Conduct your due diligence up front so you are not planning another move within the year. Every move will cost you some business and money.
Don Kottick is the president and broker of record of Right At Home Realty, with six office locations and more than 2,200 salespeople and brokers. According to Real Trends, Right At Home Realty is ranked 7th in units and 8th in volume for all of Canada, and is Canada’s largest independently owned brokerage.