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I just passed my state test in NJ and am going to be interviewing with brokers. I am coming from the world of always working for someone else so please forgive me if some of the questions are dumb.
1. I was told in school it is smart to form an LLC prior to getting employed. Does anyone have any good links where I can do some research and get started with this? And should the LLC name be my own name or a name I come up with?
2. I have a couple of important days I need off at the end of March and the end of April. If I agree to work with a broker soon, do I mention these days at all during the interview? I know we are considered independent contractors, but I am not sure how to approach this or how to handle clients during these days off.
3. Can experienced agents in their opinion give me the top 3 things I should be looking for when selecting a broker?
1.
a. You may want legal advice, why to form, how to form, and how to structure if you want a credible corporate liability veil between the entity and your personal assets.
Yes, one can often form an LLC online for cheap. I might do that, too, but not the first time. There are several topics that an attorney can clarify for you.
And, as far as naming goes, you may want to register a "DBA," "Doing Business As ......" Attorney can discuss that with you, also.
b. You may want input from a CPA, if your attorney will not advise you, regarding structuring an entity in regards to the new tax code.
Maybe you want a corporation rather than an LLC, for future tax reasons.
2. This should be very workable. The only wrinkle may be scheduling any mandatory firm training.
But, they all want you to associate with them, and should find a workaround easily enough.
3.
a. Good training. The value of training eclipses commission splits, nuisance fees, etc.
b. Who owns your book of business?
If/when you move onto another firm, does the firm put a claim on your clientele, or will they prospect your clientele to attempt to retain them?
c. Are you encouraged to build your own brand identity? To be portable, use your own phone number, web domain, and to put your name above and more prominently than the firm name in ads and signs?
Last edited by MikeJaquish; 03-04-2018 at 02:14 PM..
I am going to defer on #1... because I'm not sure our way is the best way... I'll hear what others have done.
Number two... as an independent contractor, your days/hours/on/off are your own. You don't need to tell anyone about your planned days off, but as a real estate agent, you will probably never go anywhere without at least monitoring your phone and your messages, ever again! .
Top things you should look for in a first brokerage are friendly/accessible people/leadership/mentoring, and good training.
Other advice... you are about to be inundated with sales calls trying to sell you every advertising, marketing, lead generation gimmick under the sun. Don't buy any of it.... The best leads are personally generated from contacts you already know and places you already go, and don't cost anything but time.
What would be the purpose of the LLC? If it's to be the holder of your license you may want to check your state law. In Michigan, a Real Estate Brokers license can be held by a legal entity, but a salespersons license is solely for a person.
Oftentimes the best shield for your personal assets is to simply have a good insurance policy.
What would be the purpose of the LLC? If it's to be the holder of your license you may want to check your state law. In Michigan, a Real Estate Brokers license can be held by a legal entity, but a salespersons license is solely for a person.
Oftentimes the best shield for your personal assets is to simply have a good insurance policy.
Also, not all states allow a sole member LLC.
I think the OP is wanting to send the commission checks through an LLC rather than to them personally.
1-You should check on this. I've heard a counter argument that the LLC isn't licensed - you are and therefore an LLC doesn't really provide any legal protection. I personally don't understand the point of it myself.
2-You are self-employed though the brokerage holds your license. You don't need to put in for vacation.
3-What is the split schedule? (the commission scale at which you're compensated and when does it improve?
4-How do you generate and give out leads?
5-Who gets sign calls?
6-What are the referral fees?
7- Tell me about your training, (most important - pick the best training and you can always leave later for a better split)
These are not dumb questions! Personally, I think the fact that you're asking them is a good thing. "You don't know what you don't know" is one of my favorite sayings. Always ask questions to increase the odds that you'll get things right the first time especially if you're a real estate agent in New Jersey where you're dealing with high value homes and therefore a large sum of money and a large percentage of one's personal wealth.
Quote:
Originally Posted by HugoSnyder
1. I was told in school it is smart to form an LLC prior to getting employed. Does anyone have any good links where I can do some research and get started with this? And should the LLC name be my own name or a name I come up with?
Did your instructor mention why you would want to do this? I asked my accountant about forming a corporation and was told it wasn't worth it in my personal situation that I would be paying roughly the same taxes after including all the fees associated with forming and maintaining a corporation. You might want to speak with your accountant to see if forming a corporation is right for you.
The other possibility is they might have suggested this as a good idea from a liability perspective. After all, LLC stands for "Limited Liability Corporation." If you know an attorney, it might be a good idea to ask how forming a corporation may protect your personal assets and that can help you decide if the expense is worth it for you.
Quote:
Originally Posted by HugoSnyder
2. I have a couple of important days I need off at the end of March and the end of April. If I agree to work with a broker soon, do I mention these days at all during the interview? I know we are considered independent contractors, but I am not sure how to approach this or how to handle clients during these days off.
Unless you're going to work for Redfin, then you're an independent contractor. So, you make your own schedule. Stop thinking that you're an employee and start thinking that you're starting your own business. You're going to associate with a broker for two reasons:
1. The law in NJ likely requires that you do so.
2. To form a partnership between you and your broker which will be mutually advantageous in that your broker will earn money from you but in return will give you the tools to be successful.
Quote:
Originally Posted by HugoSnyder
3. Can experienced agents in their opinion give me the top 3 things I should be looking for when selecting a broker?
Here are three things you need to focus on when selecting a broker to associate with:
1. Training and mentorship
2. Training and mentorship
3. Training and mentorship
You need to align yourself with the broker who will teach you how to be successful and how to be an effective agent for your clients. Here are two things new licensees focus on that are not important at all:
1. Split
2. Number of leads promised by the broker
You need to know how to generate business and be effective for your clients once you bring them in the door. Split is inconsequential because if you don't have clients then you are not bringing in any commissions to split. 100% of nothing is still nothing as the old saying goes. Don't get caught up in being promised leads by a potential broker either. As an agent, it's icing on the cake when you get a lead from your broker. However, you want to learn how to generate them yourself in order to be the most successful and also to prevent yourself from becoming dependent on the broker. This will give you the most flexibility in your career.
Lastly, keep in mind that most brokerages are independently owned franchises. So, the Century 21 office on the west side of town may be completely different than the C21 on the east side of town because the owner of the franchise is a different person.
Wow thank you everyone for the detailed replies! I am glad that everyone is saying training is the most important thing as I believe so myself. In regards to the LLC, I guess it had to do with if a client came after you with a lawsuit and it was more protection besides E/O insurance. I know laws are different in each state in regards to LLCs being able to accept funds from a broker. I will have to do some more research into this.
I come from a management and sales background, but got tired of breaking my back for others and making them money. I felt real estate would be the right field for me. Very excited to get started! Thanks again for the feedback!
Don't do the LLC until you figure out who your broker will be.
Then ask their advice. There may be restrictions on how you name it.
There may be licensing restrictions.
You don't want to waste money on things you can't use.
Try your best to LEAD with Revenue. That means don't spend money until you make money. At every point you need to consider how you can do it with less or no money. You don't have to buy a new laptop, ipad, realtor car, suit, etc.....see if you can use your brokers computers, do your presentation on paper instead of the ipad, door knock instead of mailouts, have the client pick you up to see houses, while you navigate.....you start making money, then you can spend a little....buy the LLC or whatever else gives you leverage...to do more with less.
the top 3 things I should be looking for when selecting a broker?
Money
Money
Money
Quote:
Originally Posted by jackmichigan
What would be the purpose of the LLC? If it's to be the holder of your license you may want to check your state law. In Michigan, a Real Estate Brokers license can be held by a legal entity, but a salespersons license is solely for a person.
Oftentimes the best shield for your personal assets is to simply have a good insurance policy.
Exactly.
An attorney who regularly posts on other sites has this to say about LLCs:
Quote:
The LLC form of business, like thecorporation, protects the owners of the business from personal liability forthe debts of the business. For example, if the LLC enters into a contract witha third party and breaches it, the LLC is liable for that, but the LLC membersare not unless they personally guaranteed the contract, which is something thatlenders and astute business people often insist upon. The LLC member is alwaysresponsible for his own debts and wrongs, including liability for the negligentacts he performs for the business (and for which the LLC might also be liable).There is also the possibility of “piercing the corporate veil” (google it)which is an even bigger risk for single member LLCs.
I think the OP is wanting to send the commission checks through an LLC rather than to them personally.
Wouldn't need an LLC to do that. An LLC is a disregarded entity for income tax purposes. He could keep a separate account in his own name or DBA for the depositing of checks and the paying of expenses (a good idea, anyway).
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