Perhaps it’s time to leave your current real estate broker. You’re reading this post likely because you’re considering leaving and starting a new opportunity at another brokerage. so, are you wondering how to tell your real estate broker you are leaving?
Or, you might be thinking about quitting real estate altogether and finding a new career.
A realtor spends about three years with a broker before moving on, according to the National Association of Realtors.
So, are you wondering how to tell your real estate broker you are leaving? Or maybe even quitting?
In this post, I will share with you how to properly prepare to leave your current brokerage, and how you can tell your real real estate broker you are leaving.
Is It Really Time To Leave?
Real estate agents leave their current broker for several reasons. Sometimes it’s for money, the real estate agent has outgrown their broker, or they made a mistake when they picked their sponsoring broker.
Before you leave, it’s a good idea to honestly look at your current brokerage and figure out where problems are and what’s leading to your dissatisfaction.
Sometimes, problems can be resolved. For example, if you want a higher commission split, many real estate brokers will negotiate a new split with you, especially if you’re a productive and high producing real estate agent.
Most real estate brokers wish to retain talent rather than recruiting new real estate agents.
When It’s Time To Move On
On the other hand, if you’ve outgrown your real estate broker, it is time to move on. I see this when real estate agents join teams and want to go solo. Or, when a new real estate agent becomes more established in their career.
They often don’t need the tools and support a broker is offering. Over time an agent will build their own database, sphere of influence and real estate team.
As a result, they may feel like they are paying too much in brokerage fees and wish to move to a broker with a cap or more favorable commission split.
It happened to me when I was looking for more ways to scale my real estate business. I wanted to make more money, but couldn’t sell any more real estate because of my time limitations.
I had two options: build a team or find another business model, like the Exit formula, which allowed me to add an additional income stream to my real estate business.
There are also agents who start out at the wrong brokerage. They don’t get the support that was promised to them. A lot of real estate agents who join Exit Realty share a similar story as this one.
Check Your Contract
When you first joined your real estate broker, you signed an independent contractor agreement. Before you take the steps to leave, make sure that you check and read your agreement carefully so that you don’t violate any terms to the contract.
For example, my very first real estate broker had a clause in their independent contractor agreements which required a real estate agent to stay for two years or pay the cost of all training provided by the company (about $2,000).
Now, I’m not going to get into the enforceability of this agreement, but you need to be aware that these clauses may exist in your agreement. If you’re wondering about the enforceability of a certain clause, then you should seek legal counsel.
When I was ready to leave my first real estate broker, I ended up staying a few months longer to avoid any issues with this clause. I didn’t want to chance it.
However, nothing in the agreement can prevent you from leaving. Your real estate broker is legally required to hand your license back to the state within a reasonable time frame.
Failure to do so creates grounds for filing a complaint against the broker.
Avoid Telling People Before It’s Official
While I’m always a big fan of transparency, this is an area you will want to keep quiet until it’s official. You don’t want your broker to hear about you leaving from the office gossip.
Plus, until it’s official, it’s not worth mentioning. You could change your mind before you officially join another real estate brokerage.
For example, imagine if you plan to switch brokerages and go in to sign paperwork at your new brokerage and realize the commission splits weren’t explained the way they are laid out in the independent contractor agreement.
That’s an issue if part of you leaving was dependent on the commission split. What do you do at that point?
You either have to move forward to save face or walk it all backwards. Both situations aren’t fun to go through. They can be avoided though.
Know It’s OK To Disappoint
You do what’s best for you. Understand people will be disappointed that you’re leaving. It could be your broker, clients, or fellow real estate agents.
There are negative feelings you have to deal with and overcome in order to leave your current brokerage. Remember, you’re making this decision for yourself and what’s best for you.
I know you will have a feeling of loyalty, but trust me when I say that it’s not a shared sentiment. You’re not doing any favors to anyone, especially yourself, by staying around.
Once I felt loyal to my broker and without notice my broker sold their franchise location to a conglomerate. I can assure you the sentiment of loyalty obviously wasn’t shared. My broker was willing to make the move that benefited them without the concern and welfare of its agents.
What Am I Required To Do When Leaving?
As a real estate agent, you’re an independent contractor. You aren’t an employee, so you don’t have any responsibilities to your current real estate broker. You can leave at any time any way you want.
I have seen real estate agents and teams move in the middle of the night without any notification to their real estate broker. Often, management will just walk by the office or get papers in their email they need to sign to make the transfer official.
But, just because you can leave any way you want, doesn’t make it a good idea. There may be some consequences if you don’t leave in a proper way. You don’t want to leave burning bridges down.
In the worst case, you may decide you want to go back to that broker. At best, you’re going to have to work with them or agents from your brokerage. How you leave can have a rippling effect on all agents within the company. That could make your job as a real estate agent more difficult later on.
It’s best to give your broker advance notice. I recommend doing this with a letter of resignation rather than going in and speaking to them off the cuff.
Switching brokers is common, so they won’t be surprised about you quitting.
Write Real Estate Agent Changing Brokers Letter
A proper resignation letter forces you to articulate your thoughts and avoid any hard feelings. Your changing brokers letter doesn’t have to be anything complicated. It should include some basic information.
- How they helped
- A general reason you’re leaving
- Your plan for moving
- The date of your move
- How your broker can reach you to discuss further
I recommend that you keep your letter short and to one page. Start the letter off how the brokerage has helped you. Find the good in working there — whether it’s your fellow agents, the leads provided, or something else.
Then, briefly state your decision to move on. You don’t have to give a specific reason just something to the effect of, “After careful consideration, I have decided to move on from X real estate broker”
Next, outline your plan to move, the date of moving, and offer an opportunity to discuss the letter.
It’s a good idea to use the letter to start the conversation in-person rather than letting the letter be the final statement and final word of leaving.
Before you hand your letter to your broker, I recommend doing it only if you’re committed to moving on. It’s common to receive a counter offer when giving notice. You don’t want to be in a situation where you’ve made a decision to switch brokerages and then renege on the decision.
That’s horrible and can burn a lot of bridges.
Here is a sample letter you can use:
“Dear Broker Manager,
I’ve enjoyed my time working at [broker name]. Throughout the years I learned a lot about real estate and selling homes.
After careful consideration, I have decided to leave [broker name] to pursue opportunities at another brokerage.
I plan to start my transition for moving over the next three weeks. My target date for leaving is [insert date].
During this time, I will be working on transition client data and my clients, as needed.
Of course, we will need to make sure you, me, and my future broker work together on this transition and handle all clients with care. We will need to work out a plan and agreement for moving listings or clients.
Please reach out to me so we can schedule a time to chat about the plan.
Thank you.”
Download Lead Data
Prior to your move, you’re going to need to collect all of your client data. If you happen to have your leads and clients in your broker’s CRM, you will need to download the data and consider uploading the data into a free real estate CRM, like Google Sheets or another alternative.
Your database is the lifeblood of your business and then data almost always belongs to you, especially for leads or contacts that are your friends and family. You will need to check your contract, though, as sometimes company provided leads may still be owned by your broker.
Inform Your Clients
Once you’ve told your broker, it’s time to work on the transition with your current and future brokerage. If you have buyers and listings, you will need to inform your clients immediately that you are making a switch.
It’s common for your current broker to own any existing real estate listings you have. However, buyers will often cancel their current agreement with you at your current brokerage and sign a new one.
The way these clients are handled will depend on common and best practices in your area. For example, some brokers may allow you to switch your listings and request a referral fee. Others will hold on to the listing and pay out a referral fee to the new broker.
It requires a conversation and plan with your current broker and future broker.
Time Your Brokerage Switch Right
For this reason, it’s often a good idea to time your switch right. If you’re thinking of leaving your real estate broker, it’s a good idea to do it when sales are slower and a majority of transactions have closed. In Michigan, we see a lot of real estate agents make their moves during the winter months.
That’s because the months of December, January and February are traditionally the slowest months. It lowers the hassle of switching listings and clients. You will avoid costly referral fees and headaches of switching mid-transaction.
What Do I Need To Switch Real Estate Brokers?
Each state will have different requirements for how to switch brokers, but it usually involves a simple process. First, you will need to rescind your license from your current broker.
Your broker will release you and you will become an unsponsored real estate agent. Next, your new broker will need to claim you. At this point, they will become your sponsoring broker.
After that, you may have some other transfer fees, like MLS transfer fees. It’s a pretty simple process. In Michigan, real estate agents are able to do it online and then each broker needs to sign some paperwork.
That’s it.
Takeaway On How To Tell Your Real Estate Broker You Are Leaving
It’s time to move on when you feel like it’s time to move on. The first time I moved on from my real estate broker was because I outgrew them. I was paying far too much in commissions and I didn’t need the same level of support from them anymore.
I left my second brokerage because the culture changed. They were acquired by a large conglomerate franchise company where I went from a family member to being just a number in their system.
Usually the urge to leave your real estate broker just comes on and you know when it’s time to move on. Leaving your real estate broker is common.
If you’re thinking about moving, consider all of the things Exit Realty has to offer. Maybe it’s a fit for you. Maybe it’s not.
