Earlier this year, I bought a large commercial rental property. One of my goals that went along with buying that property was starting a real estate brokerage. Last week, my real estate office was approved by the Colorado Real Estate Commission. We opened April 6th, which was much sooner than planned. We have a temporary office in one of the units in the building while we remodel our permanent unit. We named the brokerage Blue Steel Real Estate, and I am going to tell you all about it in this article.
Why did I start a real estate brokerage?
I talk about why I wanted to start a real estate brokerage in a podcast I published a few months ago. You can listen to that podcast below:
I have worked at the same real estate office since 2002. I started out selling a handful of houses per year but eventually got to a point where I was selling 200 houses per year as an REO agent. I had a decent arrangement with my broker at that office, where I paid him a flat fee for my offices in the building, and I got to keep 100% of my real estate commissions. The downside to that agreement was I had to pay a pretty hearty price for the flat fee and three offices to house my team. I also did not have control over office policies.
I don’t want to sound like I am bashing my previous broker because overall he was a good broker who took care of his agents. My broker was happy to talk to other offices, lenders, or title companies that did his agents wrong. I am highlighting these issues to show why I started my own office. By sharing these experiences, I may be able to help other agents who are thinking of becoming brokers. There were a few instances where my broker really bothered me in my previous office:
- When I was a HUD broker, there were three companies that sold HUD homes. I was listing properties for two of them and wanted to get in with the third company. That third company opened up their network to applications from new brokers, which they only did once every couple of years. I had to submit a massive application that was about 80 pages long. The company I was applying with specifically said only one application can be submitted per office. I was the only HUD broker in my office; I conducted HUD training; and I took trips to attend HUD training for myself. I wrote a formal letter to my broker explaining the rules and why we should only submit one application. He allowed two other agents in my office to apply, and all the applications were thrown out without being looked at—even with all of my HUD experience and the specific instructions from that company to only submit one application.
- Another agent in our office had told agents he had a listing coming up and they could show it before it was listed. Someone on my team showed that listing, and their buyers wanted to make an offer. When an offer was made, the agent said he was not paying a commission. He would not even pay a referral to the agent on my team. The agent in my office with the listing took a 5% commission and paid out nothing. Our broker said this was unethical and unacceptable by the agent who paid no commission. He promised to bring it up to the agents in the office and have a talk with the other agent but never said a thing to anyone. That agent is still in the office and pulling similar stunts.
- The old office does not use technology that is available for agents. They have staff that set up showings when there are services like centralized showing that will set up showings 24 hours per day. There are contract management systems that could make the office much more efficient and compliant that are not used. The office fights websites like Zillow and Realtor.com instead of embracing them to help the agents.
- Our team uses Facebook, Twitter, websites, and many other technologies to promote ourselves. We have always been known as the Ferguson Team at *** Realty. I also sponsor many events like the local food bank dinner and habitat for humanity. Our previous office does very little to sponsor anything, but we ended up promoting them a lot with our sponsorships, posts on Facebook, and other advertising.
These are a few instances where I had no control over situations because it was not my office and I was not the managing broker. We were also spending money to advertise my team as well as the office that I have no ownership interests in. Many people actually think I was the managing broker and owner of that office. With my own office, I can decide what type of agents we want to work with, what policies our office will have, and all the money I spend will be going towards my business and not someone else’s.
Is it worth it to open my own real estate brokerage?
Besides having more control over the office, it makes financial sense to start my own brokerage. I will have to pay rent, but I will be paying rent to myself and my partner. It will actually save me money to have 4,500-square-feet of space for my own office than to pay for 3 offices in the old brokerage. This is assuming I have no other agents in the office except my team. If I get other agents to join me, I will be making much more money than I was before with my team. I will have to spend money renovating the space, but some of those expenses are split between the building owners (myself and my partner). I am able to create my own fun and cool space to work in, and I am improving the value of the property with the work I complete.
Is it scary opening my own real estate office?
Yes! I have wanted to start an office for years, but the timing was never right. One issue I had when I was selling REO properties was the accounts I had were not between me and the asset managers but between my broker and the asset managers. There was a chance I would lose a lot of business if I started my own office.
I am no longer an REO broker, which makes it easier to start my office, but it is still scary. There are many things you must do to start an office:
- Come up with a name
- Come up with a logo and colors
- File the correct paperwork to start a business
- Apply to the real estate commission for the new office
- Apply to the real estate commission to become a managing broker
- Set up MLS, insurance, Realtor associations etc.
- Create a website and Facebook page
- Change all my email signatures, LinkedIn info, etc.
- Set up bank accounts
- Create office manuals, policies, and contractor agreements
- Much more
None of this includes finding a space and remodeling it to meet your needs. In that space, you need internet, power, heat, water, bathrooms, a kitchen, and more.
It has been a lot of work setting up the office, and I could not have done it on my own. My team has been a tremendous help to me, especially Nikki, my project manager. She has helped with everything and gone above and beyond her job description. My wife has also been a great help as well.
It is scary to make sure we get everything done legally and on time. It is scary to think about managing agents when I already have a lot on my plate. It is scary to pick a name and hope people don’t hate it. I could focus on all of the things that are scary, but instead, I will think of the good things that will come. I will be careful to make sure we do it all right, but it does no good to constantly worry about it all.
Why Being Positive Will Help You Become More Successful
Why did we open our brokerage much sooner than planned?
I was planning to open my real estate office June 1st, but we ended up opening April 6th. I did not do this by choice as my broker asked me to leave early. I made the mistake of telling my broker I planned to leave in February. I was doing him a favor because I knew it would be a big hit to his business for my team to leave. After talking to other agents who started their own office, most of them did not tell their brokers they were leaving until the day they were ready to quit. I guess it is common for brokers to cut agents loose as soon as they know they are leaving.
It was a bit stressful having to move early, but in the end, I am glad it happened. Ironically, the real estate commission approved my office the same day I was supposed to leave. I had to set up shop in a temporary unit since our main unit is not ready yet, but it was really fun and exciting setting up shop for my own business.
How did I think of the name for my real estate office?
It took a long time to pick a name for the business. I started by brainstorming as many names and core values as I could think of. We came up with a lot of choices, but they were all boring. Then my wife texted me a few name ideas and one of them reminded me of Blue Steel. For those of you familiar with the movie Zoolander, yes I was thinking of one of the “looks” that Ben Stiller’s character creates in the movie. However, I also have a blue Lamborghini and blue Lotus, which are blue steel as well. I also love the color blue and my friends used to make fun of me for constantly wearing blue. The name also sounds cool, is unique, and easy to remember. We were able to get bluesteelrealestate.com for a website URL (the site is still a work in progress) and get Blue Steel Real Estate for our Facebook page.
I was super worried that the name would annoy some people who hate the movie Zoolander. The number of people who loved the name compared to the few who did not like it won me over. Many people also do not know about the reference to the movie, and they almost all thought the name was cool as well.
You can see the Blue Steel Facebook page here. We are posting a lot of pictures and videos of the progress on the office so be sure to like the page.
I have wanted to start an office for a long time, but this year turned out to be the right year. I keep myself pretty busy with the blog, my flips, my rentals, my team, and my family. By purchasing this large building, it created the perfect opportunity to start an office, and I am glad we moved early. I am not a patient person, and the faster things get done, the better for me. I plan to start with just my team for now, but we have plenty of room to add more agents. I want to get things established before we get too crazy. I will keep everyone posted on the progress of the main office, our brokerage, and everything else going on. If anyone has questions, feel free to post comments below.
I will be posting a video of the progress on my YouTube channel soon. You can subscribe here to get notified when it is ready. Subscribe here.