How to Start a Realty Company

A realty company might be nothing more than one person who is the designated broker and the only sales agent for the company. A realty company might also be a large company with hundreds of sales agents working under the designated broker. In either case, there are certain steps that must be completed when starting a realty company. Laws and procedures may vary between states.

Things You'll Need

• Office
• Desk
• Desk chair
• Cell phone
• Computer with printer
• Fax machine
• Copy machine
• File cabinet
• Phone system (optional)
• For sale signs
• Lock boxes
• Copy paper
• Business cards

Instructions

1. Arrange for a designated broker. A realty company must have a designated broker. All agents in the real estate company will work under the designated broker. The designated broker must have a current broker's license in the state where the realty company will be established. If you are unable to find a designated broker, then there is no reason to complete the rest of the steps.

2. Discuss with your accountant or attorney the options of setting up a corporation or LLC for the business. You should complete this step before applying to the state real estate board for the brokerage license. The name of your LLC or corporation will not necessarily be the same as the name of your brokerage/realty company. For example, your corporation might be named Acme Corporation, but the realty company might be Sunshine Real Estate, which would be a business owned by Acme Corporation.

3. Find a location for your realty company. When you apply for your license, the state real estate board will want to know where you will be doing business. When you do open for business, the name of the designated broker must be displayed on the entrance to the office.

4. Apply to your state's real estate department for a brokerage license for your realty company. Each state's real estate department is responsible for the licensing of real estate companies, agents and brokers. Contact your real estate department for application requirements. They will want to know the name of your designated broker, and will need the address of your business office.

5. Apply for a local business license. Not only will you need to be licensed with the state's real estate department, in most areas you will also need a local business license. This is usually obtained through the local municipality, and is renewed annually. The local government will typically want the name of your LLC or corporation and the brokerage name.

6. Arrange for Errors and Omission Insurance (E & O). Typically the rates will be based on your projected business or historical rates. This might be a scheduled payment or a payment per transaction. For help in locating insurance companies, check with your state's Realtor Association for referrals or with the National Association of Realtors, a professional organization for real estate agents (see Resources).

7. Develop a commission schedule that you will offer to real estate sales agents who come to work with your firm. Real estate agents are typically paid by commission. The commission is paid to the designated broker, and from that a percentage is paid to the sales agent.

8. Set up your office, and paint the broker's name on the front window or door.

Tips & Warnings

• The name of your corporation or LLC will need to be approved by your state's corporation department, and the name of your real estate brokerage will need to be approved by your state's real estate department.

Resources

• National Association of Realtors