Getting Started as a Broker

ThatGuy111's picture
Rank: Baboon | 100

I have spoken to brokers in my market about what they did starting out, but understandably nobody wanted to get too specific. Since this is an anonymous forum I figured I'd see if you guys could help me out.

How did you handle the financial strains of the first 1 or 2 years of being a broker? Did you have money saved up? Help from your parents? Go on a draw?

I'm 23 and happily married, currently in sales. I've been wanting to become a broker and I am currently getting my license. I was planning on saving up a years worth of expenses before making the jump. I just wanted to get an idea for how you guys got your start and any advice you might have. Thanks

Comments (59)

Mar 11, 2018

Interested in this as well.

Mar 12, 2018

Not sure if you mean commercial or residential? Two very different things.

Mar 12, 2018

Commercial

Mar 12, 2018

Totally depends on the brokerage firm, real estate class (industrial, office, retail, [multi-family for sales]), and transaction type (sales or leasing).

This is some background on leasing brokerage: I started out as a retail leasing broker at a dominant local brokerage firm with good mentors. It took two years to get a semi-dependable pipeline going. Generally the first year you're salaried at a token amount ($25k for me) with no commission earning potential. The thought is that you are learning the ropes while working on other people's deals. Then, hopefully, you've gophered enough and engraciated yourself with the guys you've been working with that you start getting a piece of their deals, again usually token amounts like 5-10% of total deal. Hopefully you've started to branch out on your own and get your own connections that you can leverage during that first year. You can expect to be splitting these new relationships with the team/individuals that have shepharded you through your beginning to repay them. The mentors will not be hands on with these new relationships but will be willing to help you in LOI/Lease negotiations.

It's a tough industry and certainly not for everyone. I decided to drop out after two years and use the knowledge and connections that I gained to do a little work on the side. The lag time between closing a deal and getting paid could be 6 months to a year.

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Mar 12, 2018

Piggy Backing off this.

I am not a broker, but I have a friend I graduated from our MSRE program with who went into brokerage. He had an internship with them during grad school and signed with them after graduation.

He was paid a salary for 6 months, after which he went to a "draw schedule" where he was getting paid the same amount but any deals he closed goes towards paying down the draw amount. It's been 2.5 years and he seems to really like it.

He works in Industrial Leasing and tenant rep. He's been pulled into buyer rep by some older brokers after he was there for a little over year. The idea is very relevant to what Holeymoley said above...He is getting token amounts to basically do the grunt work, but he's also the one getting face time with clients, showing, etc. Other than that, he spends a good part of his day Cold Calling on businesses, trying to build his own client book.

The idea is to spend 5 years or so getting around in the business, networking and building and then you really start to come online and get momentum. He said lots of the top earners in his office were just straight shooters with no gimmicks, worked hard and then got a few big fish. He said he gotta be thirsty and you have to be successful.

Brokerage is not for everyone. I seem myself working in brokerage eventually, but for now, I am content working for the debt side.

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Mar 12, 2018

What market do you work for on the debt side?

Best Response
Mar 14, 2018

Piggy backing off the piggy back...

I can add some color for the investment sales side of things. I spent about a decade doing this for both small and large firms, and now I work directly with brokers at all the big national firms regularly.

I'd first like to define a "highly successful" broker as someone who makes $1mm or more a year in commissions from their brokerage. If the split is 60/40, then that means gross commissions around $1.7mm gross commissions. Keep in mind, this is just net from the firm. After that, they may have further expenses depending on the firm they work for. Some of these folks also have staff and operating expenses on top of that. And then they have to pay taxes. And if they are good, the firms will often hold-back some of your checks, kindof golden handcuff style. Also remember, b/c you are 1099 for virtually all these brokerage jobs, you also pay self-employment tax, you get no employer match for 401(k), you buy your own health insurance, etc. I only point all this out b/c one of the big misunderstandings is that $1mm is a huge number, but after all these effects, what's left is often nowhere near as awesome or brag-worthy as the headline figure.

I don't know that much about leasing, but I don't know any brokers who fit the above description that do both investment sales and leasing. Further, I don't know any that do more than one property type. Yes, occasionally they will do an oddball deal, but most are very closely related. Like a rockstar multifamily broker will do a student housing deal, or one who specializes in office might do a retail deal. But these are definitely on the margin, not the rule. And several of the firms that do investment sales don't even do leasing. Like HFF, Eastdil, or Marcus & Millichap. That strategic choice is another discussion entirely, but regardless even at firms that have more comprehensive offerings, the individual brokers don't really do both unless you are at a really small local shop or are working for a firm that does primarily residential but happens to have a couple people who do commercial.

So my suggestion is to pick investment sales OR leasing, and pick a property type and stick with your choice. It really doesn't matter so much WHICH you choose, just that you pick one of each and stay there. I know people in brokerage of every property type that are highly successful, even niches like student housing and self-storage.

But kindof as you allude to, it's going to be extremely tough to start with a wife and kids and responsibilities. While I was doing this, I saw lots of people come in the door, show up every day in a suit and tie, work 80+ hours a week under the promise of future fortunes, and do this for YEARS without ever cashing a single check. Most of them have second jobs, live with their parents, or are married to someone else who is the breadwinner.

An interesting story, there was this one guy who came in actually had a full-time 6-figure job that he somehow kept the entire time he was doing brokerage. He was able to kindof "hide" from his other job and just make calls on his way into and out of the brokerage office. He was there about a year and a half until his other job got wise and fired him. He never closed a deal and quit the day after to go get another job selling insurance or something like that.

When I first interviewed as a broker, the guy who hired me asked me if I had a trust fund. It was many years before I realized why he asked me that. What they don't tell you in the beginning is this job is all about staying power. If you can be detached (not chasing crappy listings) and still stick around (not go broke) then it's a job that will ultimately lead to big paychecks. The first 3-ish years are super tough, potentially just making enough to make minimum payments on your credit cards as you max them out. The next couple years you should be able to dig yourself out of the hole you go into in the first three years, and from then on out you should be pretty good to go. Again, assuming a reasonably stable market.

It's definitely not easy, and it also depends highly on the market. Basically when the market is super hot, newbie brokers can come in and get listings just by pricing them higher than experienced folks and waiting for the market to catch up. If they can get enough experience and traction while the market is hot, they will eventually get to the tipping point that their track record allows them to take listings that aren't overpriced and still get enough of them to make money.

If you can start with a team that has track record and work your way up inside that mini-firm inside a larger firm, that's a great low-risk way to get into the business. But because it's low-risk, it's also low-return, which is what a few other people have alluded to here. If the team is very established, the obvious clients will basically always be off-limits to you or will be available but your cut of those deals will be minuscule.

Luck has a lot to do with it too. Because of the specialization thing, each office often has a "most senior" agent for each property type. So if you come in as retail, for instance, and there is only one retail agent above you, this could be a good spot if that agent leaves. I saw this happen several times where a successful team left and created kindof a power vacuum that allowed other agents in the firm to quickly move up. Of course, there aren't really too many "formal" positions, it's all about closing numbers, but what tends to happen is when someone gets a retail deal, they bring in a retail agent to get it closed. So if you are the top retail agent in the office, then you will get brought into a lot of deals regardless. And like I said, you really have no way of predicting when someone will leave for another firm, if all their team will go with them, or if someone will retire, die, move into ownership, etc.

I don't see the market collapsing like last time, but when the market turns, brokers go broke. There were several agents in our office in 2007/08 that made ZERO who had made over a million dollars in 2006. The ones who didn't save their money are now selling insurance. Those that had balance sheets stuck around and are now making 3x or more that figure.

Remember that success at sales and success at this type of sales are not the same. This is the most hard-core type of pound-the-phone sales I have ever seen. Similar to the pressure level you see in Boiler Room or Wolf of Wall Street type sales. It is truly old-school eat what you kill stuff. There are no "leads" handed to you, you don't "manage accounts" and you won't have a "protected territory". And someone will be genuinely trying to screw you out of your commission check on every single deal. Sometimes those people are your clients, sometimes your colleagues, sometimes people you don't even know.

Here's another example, there was an attorney in our area who signed up for CoStar and would watch for deals to show up as pending, then he would go in and look for ADA non-compliance. He would call the listing agent on the deal and basically tell them he wanted $10k-ish to go away or he was going to file a complaint, and that complaint would hold up any closing for months. The broker would have to either pay the guy or risk not having his deal closed.

The success rate is extraordinarily low. I'd say that fewer than 1% of brokers ever reach the "highly successful" level I describe above over the long-term. Some might hit that level once or twice, or they do so every so often but have lots of terrible years in-between. But perennial high-earning investment sales brokers are very few and far-between, despite the way they are portrayed.

Also remember that once you have been a broker for a while, if you ultimately fail at it your exit options are limited. There is an extremely long list of failed real estate brokers. So if it ends up not being the right gig for you, find out fast and move. Once you have been in the biz for several years, you kindof become lumped together with every other failed salesperson from a hiring standpoint and the only people that will really hire you are those who are looking for all-commissioned salespeople and you are back at stage one just in a different industry where the sales isn't quite the same. Lots of people who leave go sell insurance, become "financial advisors", or some other job where there are virtually no qualifications required but have "unlimited upside potential".

I hope this helps...

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Mar 12, 2018

Above is a good overview of leasing. If you're thinking of investment sales/capital markets as well, I'd say that it is very difficult to prospect/do business development as a young guy on your own. 9/10 of the successful young brokers I've seen come through have always hitched their wagon to a strong established investment sales teams and they work their way up through the ranks and have the relationships 'transitioned' to them during the course of their junior/mid-level years. Very hard to get someone with millions of $ in property to trust a very junior person with the dispo of it without any support/experience/infrastructure backing them up.

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Mar 13, 2018

MonkeyWrench,

Your post raised a few questions that I haven't been able to get answered. You mind if I ask them here in case others have the same questions?

Mar 13, 2018

I mean... sure, free country.

Mar 12, 2018

I have an offer of 50k salary for capital markets as a first year sales associate (not analyst, broker) working under an established broker at CBRE/JLL/Cush type firm. The senior broker isn't working nearly as hard as he used to (he's older and approaching retirement) and his business has suffered but he still took home $400k+ last year.

Year 2 and on is 100% commission. He is predicting conservatively $150k - 175k in commissions in year 3 after learning the business and up from there as I continue to establish my own name. I'm not entitled to any commissions in year 1 and will have to split anything I bring in year 2+ with the senior broker.

I'm currently in residential selling 60+ homes a year netting basically what I would make in year 3 in commercial after all marketing and other expenses (car, gas, insurance, etc). For anyone who is currently a commercial broker, if you were in my shoes would you make the switch or keep growing the residential business and crushing it?

Mar 12, 2018

If you have the chance to jump into commercial, I'd take it. Mostly since you've already proven that you can make it in residential, which would be a nice fall back if the commercial doesn't work out.

Mar 12, 2018

Thanks for all the insight everyone. If it matters, I'm interested in industrial (doing leasing and sales for owners) as I got along well with all the brokers in that space and I think it's an interesting asset. It just doesn't seem like anyone in my market is willing to give any money to a junior besides a draw. While I'm confident in myself, I don't think that's a hole I want to get into. How common is getting onto a team with a low ($25,000) base salary or something of that sort?

Mar 12, 2018

Extremely common. Expect a 50/50 split when you get out of your first year.

Mar 12, 2018
ThatGuy111:

How did you handle the financial strains of the first 1 or 2 years of being a broker? Did you have money saved up? Help from your parents? Go on a draw?

I had a unique situation where I wasn't on a draw and instead got a (hilariously low - sub $30k) salary upfront for a lower % of the commission. Eventually I would have transitioned to a draw or zero salary, either with a higher commission %. I also lived with my dad 45 minutes into the suburbs and did commission work on the internet for money. Ultimately, I wasn't right for it and didn't last.

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Mar 14, 2018

What were you able to leverage your brokerage experience for in your next job since most people say the skill set in brokerage can pigeonhole someone? Is there any way to network into something such as corporate finance?

Mar 14, 2018
CRE1017:

What were you able to leverage your brokerage experience for in your next job since most people say the skill set in brokerage can pigeonhole someone? Is there any way to network into something such as corporate finance?

Not sure about corporate finance, because as an office leasing broker I really didn't do much financial work at all outside of lease terms, but it's definitely something one can leverage into other roles in commercial real estate.

Mar 16, 2018

Thank you for this.

I was considering going into CRE as a broker, but with this description of how it is, I think I will stick with my current goal and go into SaaS

Mar 16, 2018

hahaha...

well that's investment sales brokerage for a large firm. there are lots of other ways to get into real estate brokerage. landlord rep, tenant rep, property management, mortgage brokers, etc. also plenty of people make reasonable livings as small-balance-commercial type brokers who work on small deals of every type in their local area. like do a 3yr lease for a chinese restaurant one day, work with a doctor to buy a medical office condo unit another... that sort of thing. hyper-local, very small deals.

and you definitely don't have to start out as a broker. a more reasonable path is to start as an analyst for a broker and do that for a few years until you really get what the game is all about and then help the lead broker branch out into a new market or property type.

that might change the economics of it, but regardless you should expect to be thrown to the wolves once you switch b/c it doesn't do them any good at all to have you calling the same people they already know. you need to be expanding their business in some way, so the same process takes place, perhaps with the occasional small deal tossed your way. but even if they do toss deals to you, they are going to keep the lion's share of the commission anyways.

investment sales brokerage is definitely not for everyone.

but the ones who are super-successful at it make more (net from the firm) than professional athletes and movie stars. there may be a tiny number of those people nationwide, but they do exist. and always remember that what they actually bring home at the end of the day is probably vastly different.

and remember, while only a tiny percentage do this. some other small percentage, maybe like 10% make around $300k/yr with no employees and work 20hrs a week. it's a sweet, quasi-retired job for some of the older people. but it is absolutely not possible to start there. that option doesn't exist at all. and u gotta be able to take the wild swings in income.

i know a guy who in good years sells one or two deals and makes $300k, in bad years makes $40k or less. he's like 57yrs old now and works from home most days, others comes into the office. sounds like an easy job now. but you gotta be able to take the ups and downs. this january he sold a deal and got a $750k commission check. starting off the year good. but in 2009 all his credit cards were maxed out, he was broke and in foreclosure, and wasn't sure how he was going to eat. in 2007 he made like $150k, in 2008 made zero. in 2009 like $20k. the swings are truly nuts. some would say gambling is more reliable.

no idea what your SaaS plans are, but i'm not sure being an entrepreneur is all that much more reliable... hahaha. good luck either way, hope this was at least informative.

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Mar 16, 2018

Very informative thanks. Honestly after hearing this, idk how great brokerage sounds (for someone in my position, it might be different for others) and will probably do a different kind of sales. At the end of the day I just want to own rental property, I don't care how I get the money to buy it. A very successful broker in my market is married to a commercial insurance broker, and she made it sound like that job was pretty sweet too (big money, eventually lax schedule), but without the wild income swings. But seriously thanks again, I'm sure all of this information will be really helpful to a lot of people considering the career

May 1, 2018

My 2 cents...

I work in a very small operation consisting of 3 agents working under a very hands-off 79 yr old broker that hasn't given any relevant guidance since the 1980s. I do tenant rep of industrial clients for the vast majority of my business and have a handful of industrial property listings that serve to garner leads for tenant rep assignments.

To get at the initial question, I am just at the beginning of my 3rd year and the first year was very lean. In year 1, after my 60/40 split with my broker, I net $35K. That was not what I had in mind, but my pipeline was becoming more robust by the day and in year 2, I net more than 3X my first year earnings ($111K). Starting out year 3, I am on a pace to exceed the previous year by 1.5X (shooting for $175K).

In my case, this is in a 100% commission, eat what you kill environment, where the ropes were learned on your own time, but if you get past those initial lean years, it can be good to you. I'm not going anywhere.

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May 1, 2018

Read Naked Broker from Euroweek.

May 1, 2018

is it significantly different in new york as opposed to London

May 1, 2018

A recent developement in my knowledge of brokers. In London there is a group of 10 brokers who call themselevs the top 10 under 30, they were in a club i was in on friday, pathetic guys.

May 1, 2018
Oreos:

A recent developement in my knowledge of brokers. In London there is a group of 10 brokers who call themselevs the top 10 under 30, they were in a club i was in on friday, pathetic guys.

hahaha, yes there are weirdos in the market and i've unfortunately had my encounters. I am IDB myself, hopefully I can provide some insight.

-Breaking in? - ICAP has a fresh grad program, so try applying. Otherwise connections would be the other options, this is how I got in.

-Comp/Career paths? - Entry salary is competitive with other positions at an IB. Bonus increases as you generate more money, big base = smaller bonus vice versa. Start as a junior, build relationships, make more money and eventually move up as the seniors leave (senior, manager, head of desk, head of department, regional head, global head). Although your title changes, you're still doing the same thing up until regional head position, from that point on you're an executive function. Good brokers make between 150-300k total comp, star brokers can make millions.

-Different products/players? - As long as their is an OTC market for the product there will be an IDB for that product, banks and hedge funds trade in the OTC. Most reputable IDBs are (BGC, Cantor, GFI, ICAP, Newedge)

-Day in the life? - Similar to any other sales job. In 30-60 minutes before market open, read up on news, review market movement, chat with the clients, market opens call and ask guys for markets and hopefully get them filled on their interests. Night time is use for socializing and networking. During bull mkts you can be extravagant , bear mkt you are less extravagant.

Hope this helps.

May 1, 2018

Clients will give you a lot of shit, know when to back down and when to stand up for yourself. You don't let the client get run over on a misprice, but you also have to know when to motivate your client into the trade.

May 1, 2018
drifter:

Clients will give you a lot of shit, know when to back down and when to stand up for yourself. You don't let the client get run over on a misprice, but you also have to know when to motivate your client into the trade.

touche good sir

I banana back

May 1, 2018

Check out lipsey co for more companies. You can find answers as to commission/draw/salary on here. And unless Illinois is different you get your salesperson license for 2 years then go for brokers. If you have no experience and are about to graduate, why did you turn to real estate? If the answer has to do with family/knowing someone in it there is your networking answer.

May 1, 2018

if you are set on brokerage then yes, get your license while you are still in school. it will show you are serious about committing to the industry. you don't need an actual broker's license unless you want to start your own shop, it is a waste of time and money for a recent college grad.
search for brokerage on this forum. you will see most people start off with a covered draw from their company, which is effectively a conditional salary to be paid back if you make commissions from sourced deals.
you need to figure out how you want to sell your real estate story long term to know where to start. brokerage is great as you will understand the fundamentals of leases which drive the value in most asset classes. you should take a look at development, acquisitions, or Asset Management as potential alternative tracks.

May 1, 2018

If you're set on RE, working at M&M for a few years isn't a bad idea. It's a great way to break in, learn a thing here and there, build relationships, and move to the principal side if that's your ultimate goal. It's a company that every RE professional has heard of which is not a bad thing. Is their brand strong like Eastdil? No. Will they open doors? Yes.

If you're set on brokerage then I believe it's 100% commission. Not as easy as it sounds, but very rewarding if you do well.

May 1, 2018

Thanks guys. Appreciate the advice!

May 1, 2018

unless you just want to sell...
If you can get on an Institutional Sales desk that is a different story.

May 1, 2018

hey man, glad to see WSO is truly global, welcome.

some quick tips:

1. delete your actual name, the internet is public domain so protecting privacy should be important to you

2. browse the top threads of all time as well as the FAQs to see what each part of "wall street" is, what they do, and you'll begin to see where your interest lies (you can't just say you want to get to wall street, you should have an idea of what part of finance interests you and WHY so you can target your networking and job search efforts).

3. take some communication classes or just practice your English. it's not bad by any means but the better you are at writing the less chance there is of it being a "ding" on your resume/CV. plenty of foreigners are on wall street with thick accents, but the one commonality is they all have good to great writing. no need to spend money, what I would do is look at some free learning websites, like MIT open courseware, coursera, khan academy, and others. take classes taught in English, or take communication/writing/literature classes. the more you are exposed to a language, the better off you will be.

4. figure out why you want to come to America. I truly have no idea how difficult it is to get admitted as a foreign student or as a foreigner applying to American schools (though I will say it's easier if you went to American schools to get into an American company in America. I would imagine it'd make more sense to go to a top European school and getting a job there, but either way, figure out where you want to live, talk to expats, and see where you should go to school to accomplish your goal. as an example, if you want to go work for Morgan Stanley in Canary Wharf, you'd be better off going to Oxbridge instead of somewhere like Carnegie Mellon.

best of luck dude.

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May 1, 2018

Thank you thebrofessor, i am currently studying English, on regular bases some private school with Oxford certificate, I'm not really concerned what is someone gonna do with my name, my its wrong but that's just how i feel about it. Well I have a collage that says that has some deal with sa FINRA (Financial Industry Regulatory Authority - ex. NASD) and the collage is about Investment Banking and Economics, so I think that would be the best one for me, although i don't know yet how could i get where i wanna be, but I think this is the right way, and that i have enough years in front of me and that i will succeed at it.

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May 1, 2018

I'm by no means discouraging you from your goal but you should also think about how you're going to finance a US education. College here is very expensive and from what I remember foreign students don't get financial aid.

May 1, 2018

Thank you DingDong08 for you replay, however i do not plan to study in the US, just work there, and hopefully live there one day, I'm thinking about finishing the Belgrade Banking Academy (the name of the collage) and then start finding a job, in the US, the BBA has some deals with the FINRA like said, so i hope i could use that in some way, and of course get spotted by the Brokerage firms, since i will try to get strait A's on the collage.

May 1, 2018

if you're trying to get into brokerage (called private wealth management or PWM on this forum), check out some of my posts, I greatly advise against entering PWM as newly graduated person, I'd try for some private banking gigs, of which there are many in Europe.

May 1, 2018

Brini se za Visu prvo. I kakav broker mislis? Kao stock broker?

May 1, 2018

@Thebrofessor I will read your posts for sure, thank you for the advice sir.
@"EUGTR" Pa ne znam, iskreno zanima me delatnost gde najvise para mogu da zaradim, Visa nije problem, idem u Gimnaziju trenutno 5.0 prosek, a za fakultet planiram BBA da upisem, koja su vasa misljenja o tome? Hvala unapred.

May 1, 2018
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May 1, 2018
Jul 30, 2018
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