Before the national housing bubble burst in 2008, Pauly Presley Realty in Austin was doing pretty well for itself in a specialized niche: condo development representation. Operating since 2005, the company was funneling most its efforts into a market that was “all the rage at the time,” says Brad Pauly, broker-owner. “But after 2008, selling any type of condos became really tough. The market basically collapsed.”
Licensed as a salesperson since 1999, Pauly got his broker’s license four years later. It took just a few years for Pauly to learn what would become his most valuable business lesson to date: Don’t ever pigeonhole yourself into one category of real estate. “We really dedicated ourselves to one aspect of the industry.
When that business went away, making money became extremely difficult,” Pauly recalls. “For a couple of years, it was hard just keeping the lights on.”
Fortunately, Pauly wasn’t ready to give up just because the company had narrowed its focus a little too tightly. In 2010, he restructured the company in a way that would not only help it get out of the red, but that would also ensure its longevity through the next downturn. Along with diversifying into other housing sectors and adding more versatile agents to its team, for example, the company added a leasing division.
To new brokers who may be tempted to focus on one or two narrowly focused markets, this seasoned broker recommends being well-versed in a number of different ways to make money in the industry. “If the sales market slows up, we’ll always have leasing and other options to fall back on,” says Pauly. “And while the market downturn hasn’t happened, if and when it does, we think we’re well-prepared to weather it.”
Here are additional business strategies and advice that seasoned Texas brokers wish they’d known as rookies.
Don’t Try to be the Rock Star
Nick Good is the first to admit that when he started building out his team, he wanted to be the rock star. All roads would start and end with him, and he’d be the center of the show. Looking back, the associate broker for The Good Home Team at Keller Williams Realty Dallas says that probably wasn’t a very good go-to-market strategy. “My team was a ‘selfish team’ in the beginning,” says Good, who was licensed in 2006 and joined the brokerage in 2007. “Everything was designed and centered to be around me.” All agents, for example, were buyer’s agents, with Good as the sole listing specialist on the team. “If you handed a seller over to me, you didn’t get paid off of that deal,” says Good. Because his agents weren’t making enough money, turnover was high. That changed in 2014, when Good completely revamped his business model in the interest of fairness—something he says all new brokers need to be thinking about. “Make sure you compensate your agents fairly, and that you set them up for success,” he advises. Today, the Good Team’s 12 agents have unlimited growth opportunities and income potential, he says, where before they were limited by the number of buyers that they could work with at any given time.
Get Your Back Office In Order First
It can be tempting for new brokers to dive into the real estate business and start listing and selling without establishing the systems, platforms, and policies needed to support those operations. But laying the groundwork for your brokerage is one step that Steve Stovall, owner of Stovall, REALTORS® in Abilene, considers mandatory for all new brokers. It can be a daunting task for an independent broker who can’t tap into a franchise’s systems.
Stovall started his own company 10 years ago after managing another company for 14 years, and says establishing back-office systems was one of his earlier challenges. “What I worried most about when I started in this business was systems, including payroll, accounting, contract flow, and other back-office operations,” Stovall says. “I also knew that I didn’t really want a franchise; I wanted to be independent.” To get the ball rolling, Stovall researched the basics of setting up systems and talked to other brokers about how they did it. The process wasn’t nearly as onerous as he thought it would be.
Stovall encourages new brokers to put in the time and effort into their back-office systems first, before business picks up and they get too busy to deal with it. “Once the systems are in place, you can always adjust them if they’re not working well,” says Stovall. “The important thing is to get started.”
Make Your Agents Your New “Clients”
In real estate for 10 years, LaTisha Grant got her broker’s license two years after earning her salesperson’s license (which was allowed at the time) and began managing an office and agents soon after. What she didn’t realize was that this transition would shift her customer base from buyers and sellers to agents. “My new clients were my agents,” says Grant, who heads up the 14-agent TAS Realty Group in Houston. “I realized that my value proposition had to be dedicated to those agents.”
That realization took some time to come about, especially since Grant was helping grow a new practice that had only a few agents at the time. She says everything she’d been doing for the previous 24 months for her buyers and sellers now had to be transferred over to her agents. Instead, Grant says she should have been focused on ensuring that her agents fully understood how to represent their own buyers and sellers. “If I’d thought about this when I first started as a broker, I think I would have done things differently,” she recalls. “At the time, I was really caught up in making sure my buyers and sellers were taken care of.”
Along the way, Grant says she’s also learned the value of forming close, personal relationships with all of TAS Realty Group’s agents, both in and out of work. Every Monday the team holds a “power call” on Zoom so that all agents can participate from anywhere. They also get together outside of work and go to the movies or have dinner as a group. “From the broker’s perspective,” she says, “knowing each one of our agents independently and individually has, I feel, been more successful than any other strategy.”
To newer brokers, Grant says “don’t be so hard on yourself,” and embrace the strategies and solutions that work best for you and your company. “This is a business where people tend to struggle with trying to be everything to everyone,” she says. “That’s impossible. Instead, figure out who you are as a broker, and the role that you want to play, and the right agents will come along.”
Beware Too Many Chefs in the Kitchen
Good thought he had an excellent idea when he partnered with his brother, Austin Good, to start The Good Home Team in 2009. They paid themselves about $500 a month and reinvested all of their early commission checks into their new business venture. Early in the game, they realized that having two chefs in the kitchen was not a recipe for success.
In fact, the two brothers found themselves stepping on each other’s toes and not making the kind of progress they’d envisioned when they joined forces. Rather than go their separate ways, the Goods sat down and came up with a plan to add an investment division to their existing residential brokerage activities. Today, Austin and Nick Good own over $70 million in real estate investment holdings. “Austin built that out from scratch while I ran The Nick Good Team,” says Good. “I don’t mess around on the investment side of the business, and he doesn’t mess around on the residential side. It works out perfectly.”
When Nancy Almodovar decided to start her own brokerage in 2014, she didn’t know she’d be making the choice between managing an office and listing and selling property. “No one told me that I’d be handing off my sales hat and that, as a successful broker, you really can’t sell and run a company at the same time,” says Almodovar, broker at Nan and Company Properties/Christie’s International Real Estate in Houston. “Everyone sugarcoats it and makes it look easy.”
Channel Your Efforts
Licensed since 2004 and a broker since 2012, Almodovar initially tried to bridge both worlds. She soon learned that competing with her own agents wasn’t a success strategy for her as a broker. “As soon as I stopped competing with them for business, my team started growing and achieving more success,” says Almodovar, who refers nearly all of her listing and buyer business out to her team of 50 full-time agents.
To new brokers, Almodovar advises focusing your energy on being a broker and starting a business. And if two years down the road, the business isn’t living up to expectations, it may be time to try something else. “Just like you would do with a new relationship, set some time parameters around just how much you’re going to put into this new venture,” says Almodovar, who feels that the transition from sales agent to broker-owner is often made to look easy for people who don’t know the ins and outs of the brokerage business.
“Not everyone gets to see what goes on behind the scenes here,” says Almodovar, who spent two years getting the right systems and technology in place before opening the doors to Nan and Company.
“Organization is everything, so have a plan, goals, and systems in place. Then, in two years, evaluate where you’re at and go from there.”
Don’t Try to Scrimp Your Way to Prosperity
Bootstrapping is a common business startup approach. But getting the job done with limited, existing resources doesn’t necessarily translate well in the real estate brokerage business. Agents need office supplies, equipment, technology, and other resources in order to run their own businesses. “I learned early on that you can’t be a penny pincher,” says Stovall. “If you’re too rigid about spending and resources, you’re going to run people off.”
Stovall adds that he erred on both sides of that equation as a new broker. “If you’re too loose, then people will run right over you.” In some instances, Stovall says he gave away too much. In others, he pinched his pennies just a little too hard. “When I was first starting out as a broker, I did everything by the book,” he recalls, “not always realizing that you have to be flexible with your policies.” For example, Stovall says brokers need to be extremely careful about the deals that they strike with individual agents—namely those who think they’re more valuable than the next agent. Rather than caving in to requests like higher commission splits for agents who close more deals, brokers should use quantifiable milestones to create arrangements that are fair to the entire team. “Develop some written policies and try not to deviate from them,” says Stovall, “but remember that you also have to be flexible when it does make sense.”
No one wants to be known as a broker who’s always looking over agents’ shoulders to make sure everything is being done right—but sometimes a broker has to be hands-on. “If an agent wants or needs me to be involved in the transaction, I don’t mind jumping in and getting my hands dirty,” says Stovall. “A broker has a responsibility to supervise his or her agents, and that means helping them through difficult transactions … sometimes talking directly to the clients and other brokers.”
Other hats that new brokers can expect to wear include trainer and coach. “You really have to be able to achieve a balance across all of those titles—something that’s not always easy to do in a world where agents operate independently and have a lot of autonomy,” says Stovall, who admits that he leans toward being a more “hands-off” broker-manager. Today, to put himself into more of a trainer role, Stovall holds training meetings every Thursday morning. While he knows that life can get in the way of attendance, he says agents appreciate the extra education and support. “This is just one way to achieve the multi-hat balancing act.” he notes.