…..Or if you work at my office, Bob is in charge. He is our Principal Broker. Public perception is that the Broker makes lots of money for just allowing a bunch of agents to work out of their office. I’m often asked why I don’t open my own office. Truth is, salespeople generally have pretty big egos, are set in their ways, love attention and they really don’t want to be supervised anyway.
When it comes to real estate, some agents are extremely competent, while others need constant supervision. Here’s the thing, state law makes the Principal Broker responsible for all actions of the agents working under their supervision. Some offices recruit any agent with a license while others prefer to recruit proven talent. Of course, with so many things going on between sale and closing it takes sound office procedures to insure things are done according to law and office policy.
The biggest issue usually relates to reviewing contracts. Some offices allow a buyer or seller to sign a contract prior to Broker review, others do not. Some do a cursory review or even review contracts over the phone. For “one man shops”, the same person writes and then reviews the contract. My first principal broker lived in Waikoloa and required us to drive the contracts to him for review. In those days fax machines were rare but even for experienced agents, a second set of eyes is critical.
Because principal brokers usually own the brokerage firm, they provide office space, utilities and basic office equipment such as a copy machine, office furniture and phone system. There is significant expense in owning a real estate brokerage firm. So how is it that a principal broker gets “rich”? There are basically 2 models for compensation. Some offices split commissions with the agents. Newer agents start some place around a 50-50 split. The Broker normally takes less from an experienced or productive agent. Other offices pay 100% to the agent and charge a fee for office space and support.
The real issue, of course, is why the public should care. From a marketing perspective, sellers have to consider the marketing plan and how the business model of the office supports getting their property sold. One of the most important responsibilities of the principal broker is training and education. Much of this effort flows through the principal broker. A good indication of supervisory success is the lack of complaints filed with the Dept of Commerce and Consumer Affairs and the Board of REALTORS®. Because the principal broker is responsible for everything that happens in their office, they are named in any complaint.
It’s not a stretch to understand that there’s a direct relationship between supervision, education and performance. Recommendations of previous clients are a good indication of job performance. Ask the agent to share the production numbers for both them and their office. Busy agents gain valuable experience with each transaction. Consider the length of time the office has been in business. Agents, offices and principal brokers are not created equal. Choosing yours carefully can make all the difference…as for me, I’m just thankful Bob is in charge!