Imagine starting your very own real estate brokerage.  I know what you’re thinking:  But I don’t have the $20,000 for a franchise fee, or the $10,000 for a deposit and rent, for that matter.  I don’t have the $50,000 it will cost me to buy desks, tables, chairs, fax machine, copy machine, and endless stuff — never forget the stuff — that I need to get things started.  I can’t begin to afford to advertise to get agents, and to attract them I need to be competitive in my commission and fee structure.

So you resign yourself to continue to schlep houses until you drop.  Riding in cars with buyers.  One frustrating transaction after another.  Not that you mind making new friends, but enduring the daily grind of chasing from deal to deal gets old.  Let’s be honest.  You have ambitions to get out of the trenches and you have vision for how things might be.  There has to be more than this.  Right?

Well I have great news!  There is so much more!  I’m going to show you how you can own your own virtual office brokerage, and how you can do it inexpensively.  I’ll share how you can recruit agents, train them, and manage them better than in a traditional model company.  Most importantly, I’m going to show you how you can make more money in the process — much more money.

What’s more, in this model you can be up and running in days, not weeks or months.  You don’t have to be able to ride out a long start-up period with yet another big slice of your hard-earned savings.  And what’s even better is that this model is thriving during the current depressed housing market.  Sounds too good to be true, right?  It’s not.

You could become a virtual office brokerage with us and never miss a transaction.  I want you to imagine the person in the plan I’m about to lay out for you.  It could very well be you, and the transformation could take place in a few days.  If you are already a broker, your growth could be faster, but if you’re not, it’s no big deal.  You’ll see.  I know you have your doubts, so we’ll just call you Thomas (doubting Thomas).  Okay, Tom.  Here is your plan:

Tom’s Day 1. Get everything in place.  A building, a managing broker, and your virtual office technology platform.

• Building. Some states require (at least for another few years) you to have a physical brick-and-mortar location.  For mail and legal requirements, that can be your house.  But I’m not suggesting you use your house to meet clients.  I’m assuming you are a working agent, so you have been using both a lender and a closing attorney.  Start there.  Go and ask either of them — no ask both of them — if they will allow you to use a conference room to meet clients if you continue to send them your business.  If they won’t (which is rare), then find another who will.  This will be the simplest negotiation of your life.  I’ve never heard of an agent being turned down when they asked.
• Broker.  If you are not legally able to manage yourself or other agents (for whatever reason), don’t panic.  The beauty of our industry is that we have lots of agents who are qualified and yet leaving the business.  Find a qualifying broker and make him or her a deal to pay them $X per deal to be the “legal oversight”, and to review your work.  It shouldn’t take more than a few phone calls to set that up.  Remember, the deal can always be changed as you grow bigger.
• Virtual office technology platform.  Call FavoriteAgent.com and get licensed.  How easy was that?!

Now it’s been a pretty busy morning, so go ahead and treat yourself to a nice relaxing lunch.  Have you decided on a name yet?  Well, with our technology platform, you have the rights (but not the requirement) to use the FavoriteAgent.com nationally recognized trade name, and immediately associate with nearly 15,000 other real estate professionals across the globe.  We have agents in all 50 states, in every province of Canada, as well as Mexico, the United Kingdom, Australia, and New Zealand.  Let’s see: “FavoriteAgent.com Premier Properties” has a nice ring to it.

Ok.  Lunch is over.  It’s time to think about a few logistics.  You need to order some business cards.  I guess you could print your own on the fly, but as cheap as cards are today, just splurge and get them.  A thousand full color cards should be under $75, printed on both sides.  Make sure your voice mail has your new company name and recording.  Now download the list of email addresses of all the area agents and start focusing on a list of possible recruits.  Don’t worry, recruiting will be easy.

Here is your pay plan:  Agents keep 100% of their gross commission and pay you $120 per month for their virtual office technology.  It gives them state-of-the-art lead capture technology, a personal website, and an integrated contact manager.  It’s a bargain for them because they’re already spending more than that for their website and their contact manager alone.  Their only other fee is a per-transaction fee of let’s say $499.  This amount would vary based on the average sale price in a market.

While we’re on the subject, let’s talk about where all that money goes.  The technology fee of $120 goes to FavoriteAgent.com, who then pays you $20 of the license fee.  If you start by recruiting 10 agents, then you have $200 per month coming in from technology licenses and you do nothing to earn it.

Next, of the $499, $100 off the top is a recruiting bonus.  Whatever agent recruited that agent gets $100 from each paid transaction fee.  If you did the recruiting, you would keep the fee.  If one of your agents did, they would receive it.  That leaves us $399 that is the net transaction fee.  It is divided three ways.  One-third goes to FavoriteAgent.com for the use of our name and technology platform.  Another one-third goes to you, the independent business owner.

A final one-third goes to whoever does the record keeping and accounting.  Here is one of the coolest parts of our model.  When first getting started, many agents don’t have the ability to do the agent accounting and record keeping, or they simply don’t have the time or inclination to do it.  Our company provides that service for agents who don’t want to spend the month of January issuing 1099’s, or stop what they’re doing every time an agent needs to get paid.  We maintain a legally compliant copy of all files in our secure online document storage archives.

Many agents would prefer to hand off the accounting and record keeping until their business grows to the point it makes sense to bring it in-house.  Another possibility would be to let your broker keep the files and hire a bookkeeper to issue agent checks on a per-check fee.  Many small home-based accounting offices will be glad to do that service for you.

How easy do you think it is to attract agents when you can pay them 100% with no franchise fees for a national brand, with a transaction administrative fee of only $499 per closing.  Or an ongoing recruiting bonus for every transaction from every agent they ever recruit?  Their total cost is lower than the 5-8% most national companies charge for just their franchise royalties, and if they do any recruiting, they might just get paid to work and keep all their money!  How easy do you think it is to attract agents when you can offer them a state-of-the-art technology platform and the ability to forever solve their lead problems?

Ok, it’s been a tough day but well worth the time invested.  Take the night off and get some sleep.  You’re going to need it.

Tom’s Day 2. Today you have your initial coaching session with FavoriteAgent.com.  It will take about an hour, during which time you will learn to set up your online advertising.  By the end of the day, you’ll have a steady supply of new leads coming to your virtual office contact manager.

The coaching staff suggests you take an hour making sure that everything is set up just like you want it.  They also tell you to put your contacts into your software.  While you’re at it, you decide to go ahead and email the customer service department your list of local real estate agents, complete with the phone numbers, fax numbers, and email addresses that you downloaded yesterday.  Within an hour or so, they have them all in your contact manager and ready to use.  Was that easy or what?!

Tom’s Day 3. Now it’s time to start recruiting agents.  Better check your Pipeline.  Oh my!  You have seven new leads waiting to be called.  Sure, you continue to practice real estate while you build your team, but now you get to keep 100% of your commissions instead of giving over a third to your old broker.  Now you can spend less time drumming up business too, because it is coming to you faster than you can handle.  Now you can actually think about building your business by recruiting.

Let’s take a look at a realistic scenario comparing this model to the traditional model.  Let’s say you recruit 30 agents over the next few months, and those agents average one single transaction per month.  Here is how your income looks:

• Traditional Model.  With 30 agents and 30 transactions per month, a typical traditional office broker split of 38% (you pay your agents an average of 62%), and an average GCI of $6,000 per transaction, you would have a franchise fee of $14,400.  That plus any note payments you might have, and any mandatory signs and supplies you had to purchase.  If you run your brokerage like the typical traditional brokerage, you will bring 2% to the bottom line or $3,600!  Don’t forget, you might not have that much business coming in, and your expenses will still march on, but for purposes of this illustration let’s say your agents come through and business is good.
• Virtual Model.  With the same 30 agents and 30 transactions, you make $7,590 (this is the transaction fee split if FavoriteAgent.com does all the accounting and record keeping, recruiting bonus for the agents you recruited and technology overrides for each agent.  In other words, you make more than twice as much money and have virtually no risk.  No rent.  No utility bills.  No company advertising bills.  No additional staff.  The very picture of simplicity.  No training.  No wasted time in sales meetings or caravans.  You have lots of time available to actually do some production, which of course pays you handsomely.

Remember, in the traditional model, your cash outlay was well over $100,000 and your risk is high.  At that level, your return on investment is minimal and you have basically bought a job.  Unless you can live on $43,200 gross income, you are going to have no choice but to sell houses every day and compete with your agents.

In the virtual model, you’d make just over $91,000 on the revenue produced by one virtual office of 30 agents.  Since most of us could survive on that revenue, you’d be free to continue to open additional virtual offices.  You’d probably hire someone to do the accounting and record keeping functions as well, netting you nearly twice as much money.

And if you opened two per year of that same size, for five years, your net profit would be roughly $1.4 million dollars per year and you’d have no risk!  Your company would be a virtual real estate money-making machine and you’d have very little, if any, stress.  Your agents would make more money, and your customers would be better served.  You’d have the benefit of a national brand and state-of-the-art technology, and you’d own a business valued at roughly seven times EBITDA (EBITDA is your Earnings Before Interest, Taxes, Depreciation, and Amortization) or nearly $10 million.

Contrast that to the traditional alternative where you would likely still be leveraged to the hilt in your one brokerage of 30 agents, taking on a huge risk of capital, and working with diminishing margins as agents continue to demand more and more money and brokerage commissions continue to erode.  Suppose you wanted to expand.  You’d have to reinvest the same capital to do it all over.  Your risk would continue to escalate with every expansion, and unless you’re a rare agent, you’d still be selling houses and own a business nobody would buy.

Tom’s Day 4. Now comes the fun part… all you do from your fourth day on is make money.  Now how cool is that!

Well I hope that helps you understand exactly how I’d recommend you open your own virtual office.  It is simple, and our company even has 100% financing plans available to qualifying agents who have big dreams but small balances.  We hold your hand every step of the way, and help you become successful.  The only thing standing between you and a very enjoyable and rewarding life is your own fear to act.  Call us, and we’ll help you get started doing real estate this new way!