Why You Need a Partnership Agreement for Real Estate Business

Why You Need a Partnership Agreement for Real Estate Business

If you’re thinking of starting a real estate business and working alongside one or more partners, you’ve probably asked numerous “What happens if…” questions.

Thankfully, you’re not left without recourse.

Partnership agreements are designed to provide answers for such scenarios. They act as a roadmap giving direction on how issues are to be addressed in your business.

Here is a more in-depth definition of the term.

What is a partnership agreement?

Investopedia.com defines a partnership agreement as:

“…a legal document that dictates the way a business is run and details the relationship between each partner.”

What does this mean?

Partnership agreements contain rules surrounding how partners will conduct business, carry out management, handle profits and losses, as well as outlining their individual responsibilities.

It’s worth noting that partnership agreements go by different names including:

  •         Partnership contract
  •         General partnership agreement
  •         Business partnership agreement
  •         Articles of partnership

This brings us to the next point – the different types of partnership agreements you need to know.


The 3 types of partnership agreements

1. General partnership agreements

In this type of partnership, each partner has an equal share in the brokerage’s assets, liabilities, and profits.

2. Limited partnership agreements

In partnerships involving unequal capital investment, limited agreements exist to protect each partner. In limited partnerships, those with larger capital and asset investment are entitled to more profit as they also take on greater risk and liability than the other partners.

3. Limited liability partnership agreements

With limited liability agreements, partners share profits, assets, and liabilities equally with the only distinguishing feature being that each partner has limited personal liability. 

Now, let’s take a look at the benefits of having a partnership agreement.

Advantages of a partnership agreement

There are numerous reasons why you need a partnership agreement. We’re going to outline three of the major benefits.

Benefit #1 Partnership agreements provide legal protection

Even if you’ve spoken at great lengths with your partner(s) and you feel that you see eye-to-eye on matters regarding the company, it’s never enough to simply end with a verbal agreement.

Having expectations written down will protect the business in the event of disagreements and misunderstandings. 

Failure to have a partnership agreement may result in court mediation and because each state has its own legislation regarding partnerships, things may not always turn out as hoped.

Benefit #2 Partnership agreements dispel responsibility ambiguity

Sometimes partners may have a misunderstanding about roles and responsibilities. Partnership agreements serve to clear up any ambiguity about duties and expectations.

These agreements will also outline the course of action a partner is legally allowed to pursue when the other party is being negligent to the detriment of the entire company.

Benefit #3 Partnership agreements clearly define the purpose of the business

Partnership agreements will also clearly outline what the business is about and its objectives. 

In this manner, there is no confusion about what exactly the brokerage is supposed to be doing. This makes running the business easier.

Do you want to talk to an expert about brokerage partnerships?

Real Estate Back Ops (REBO) is one of the Nation’s most reliable brokerage service providers. We assist with commission structure design, transaction management, valuations, growth through M&As, and ancillary revenue plans.

Contact us for more information.

3 Things Your Brokerage Can Do to Distinguish from Your Competitors

3 Things Your Brokerage Can Do to Distinguish from Your Competitors

Do you want your real estate brokerage to stand out from the competition?


That’s great. 

We’re going to show you how to do exactly that in this post.

First things first, however: You cannot improve what you don’t know.

Therefore, the premier step to establishing a strategic plan that will set your brokerage apart is to conduct a competitive analysis. 

  •         What is your competition getting right?
  •         What are their weaknesses?
  •         What are your own strengths and weaknesses?
  •         What can you introduce to the market that’s not being offered yet?
  •         What market share do your competitors control?
  •         What are the pricing models offered by your competition?
  •         How would you rate the quality of their service?
  •         What are people saying about them?

You can only develop a competitive edge if you’re introducing something new that’s not already there or are improving a system that’s not quite perfect. 

Taking into consideration the insight gleaned from the competitive analysis, here are three things you can implement today that will immediately make your brokerage stand head and shoulders above the rest.

Best Practice #1 Stay On Top of New Tech Trends

According to the Real Estate in a Digital Age report, 48% of real estate companies disclosed that keeping up with technology was going to be their biggest challenge as the years progress.

What does this mean?

Brokerages that are able to stay on top of the latest technology, mastering and using it effectively in their campaigns will automatically have a competitive edge and advantage.

Best Practice #2 Get Rid of Legacy Marketing

Did you know that only 1% of home buyers found the property they bought in print newspaper ads? 2% of buyers already knew the sellers. And 6% via a yard or open house sign.

It’s clear to see that the days of legacy marketing methods are long gone.

Do you want to know where the majority of people discovered the home they eventually purchased?

Online. More than half – 52% – found their dream home online. And just 29% through a real estate agent.

Moral of the story: adopt more online-based marketing efforts – go where the people are.  

Best Practice #3 Nurture Relationships With Your Clients

How important are good service and excellent customer care for your real estate brokerage? 

Extremely vital, if we consider the research conducted by the National Association of Realtors where 74% of sellers said they would certainly work with the same agent again.

That’s not all.

41% of sellers cited having found their agent from referrals by family and or friends. 

So, if you want to be a real estate brokerage that people are happy to refer, invest in building long-term rapport with all your clients.

Do you need help building your brokerage?

Real Estate Back Ops (REBO) is one of the Nation’s most reliable brokerage service providers. We assist with growth through M&As, commission structure design, transaction management, valuations, and ancillary revenue plans. Contact us for more information.

Growing vs. Scaling? And How Your Brokerage Can Do Both in 2021

Growing vs. Scaling? And How Your Brokerage Can Do Both in 2021

Can a real estate brokerage both grow and scale at the same time?

The short answer? Yes.

The longer response however is that while both can be done, ideally it is better to focus on one process at a time as they each require different skill sets.

In this post, we’re going to tackle the differences between scaling and growing real estate brokerages. We’re also going to list some of the steps brokers can take when attempting either of these activities.

What is business growth?

Attractcapital.com defines business growth as:

…a stage where the business reaches the point for expansion and seeks additional options to generate more profit. It is a function of the business lifecycle, industry growth trends, and the owners’ desire for equity value creation.”

Growing implies a desire to become bigger, take up more market share, and generate increased revenue.

Growth characteristics include:

  increase in revenue

  increase in market share

  increase in human resources

  increase in operating expenses

What is scaling?

Investopedia.com defines the scalability of a business as:

“…a company’s ability to grow without being hampered by its structure or available resources when faced with increased production.”

It is relatively easy to scale brokerages thanks to the ever-growing adoption of technology across the industry. 

Tech makes customer acquisition faster than before and using resources like digital advertising real estate agents can reach target audiences quickly. Low operating overheads and no physical inventory also contribute to rapid growth.

In a nutshell, scaling is all about implementing more streamlined processes that boost operational efficiency.

Scale characteristics include:

  Increased revenue and cash flow

  Revenue growing faster than expenses

  Streamlined operations thanks to technology adoption

  Brokerage gains outpacing losses

Steps to take to grow a brokerage

In order to efficiently grow your brokerage, there must be a strategy.  Here are steps you can implement to encourage growth:

1. Quantify growth in your own terms

Write down the metrics you’d like to see as part of your brokerage’s growth plan. What does success look like in numbers i.e. homes sold per year, revenue made, etc.?

2. Hire a real estate marketing agent

Every brokerage is in the business of selling. Bring on board a marketing expert to coach and train your agents on the nuances of selling.

3. Get expert advice

Sit down with other brokers who have successfully grown their businesses. Subscribe to newsletters and podcasts by industry leaders. Learn as much as you can.

Steps to take to scale a brokerage

Scaling requires diligence and focuses a lot more on internal processes and systems.

1. Build a strong brand image

Before scaling your brokerage ensure that you have a strong brand image. What’s your reputation like in the industry? Invest in branding campaigns. Get your brand before as many people as possible.

2. Establish an all-star team of agents and advisors

You’re only going to be as strong as your people. Advisors will assist with strategy and top talent will run with the vision.

3. Upgrade your technology

In our digital-centric world, having the right suite of management tools that allow for the measurement of progress will enable you to scale faster than competitors.

Do you need more help with brokerage scaling and growing?

Real Estate Back Ops (REBO) is one of the Nation’s most reliable brokerage service providers. We assist with growth through M&As, commission structure design, transaction management, valuations, and ancillary revenue plans. Contact us for more information.

4 Processes Your Real Estate Business Should Be Digitizing

4 Processes Your Real Estate Business Should Be Digitizing

Is your brokerage still using outdated, analogous, legacy processes?

If yes, it might be time to consider upgrading, modernizing and digitizing your key processes.

You see, brokerages that embrace digitization can anticipate average revenue gains of up to 26%. That’s a big margin that can make a difference in any real estate business

In addition, digitization improves operational efficiency, cuts back on manual data entry, and promotes process improvement while empowering your agents.

If you plan on beginning the digitization journey, but don’t know which processes to digitalize first, you’re in the right place.

We’ve compiled a list of the top 4 processes you should be digitizing within your real estate business.

Process #1 Agent hiring

Do you have real estate recruiting targets but are currently limited in terms of budget? Don’t have the time to manually create job ads to post?

Well, good news.

Do you know that there is dedicated agent recruitment software that you can take advantage of to improve the real estate hiring process?

Example software includes Brokerkit, IXACT RecruiterTM, OnTask Recruiter, and ThirdPool Recruiting.

The hiring process is undoubtedly one of the most time-consuming processes. By digitizing it and relying on industry-specific resources you can scale without going through recruiting agencies or using crowdsourcing platforms.

Process #2 Property listings

Creating property listings to be posted in the Multiple Listing Service is no small feat. It’s a laborious task as the listing agent has to write detailed ads for the property being advertised.

What if we told you there was a way to digitize this entire process? You can use automated marketing resources such as Point2Agent and Z57 Solutions PropertyPulse.

In addition, you can also boost your listings with high-quality pictures shot and edited using apps such as iMovie.

Process #3 Closing procedures

How are you currently signing contracts and other documents? Are you still signing manually and in person?

Embrace technologies such as DocuSign and say goodbye to legacy contract management processes. In a COVID-world, take advantage of these convenient solutions.

When it comes to real estate transaction management solutions, DotLoop is one of the leading software on the market. It allows you to edit forms, eSign, and monitor compliance all on a single platform.

Process #4 Lead generation

In our digital-centric world, lead generation is such a pivotal aspect for any brokerage. Finding and qualifying leads can be exceedingly difficult if you opt to do things manually.

Fortunately, you don’t have to.

Using lead generation software the likes of BoomTown, FollowUpBoss, FreshWorks, and BoldLeads you can capture and qualify leads faster. 

Keen to discuss digitizing with a consultant?

Real Estate Back Ops (REBO) is one of the country’s most reliable brokerage service providers. We assist with commission structure design, transaction management, valuations, growth through M&As, and ancillary revenue plans. Contact us for more information.


5 Tips for Managing Your Real Estate Brokerage Cash Flow

5 Tips for Managing Your Real Estate Brokerage Cash Flow

Are you actively looking for ways to improve cash flow in your real estate brokerage business?

There is no denying that cash flow is the lifeblood of any business and it is always important to pay close attention to how the business manages its cash flow.

Before taking a look at how to improve you cash flow, let’s review what exactly cash flow is and the different types you need to be cognizant of.

What is cash flow?

The Corporate Finance Institute (CFI) defines cash flow as “the increase or decrease in the amount of money a business has.”

Before you can increase your cash flow, it’s imperative to understand which type of cash flow you need to improve from the four kinds of cash flow that exist.

  •         Cash From Operating Activities
  •         Free Cash Flow to Equity (FCFE)
  •         Free Cash Flow to the Firm (FCFF)
  •         Net Change in Cash

Cash From Operating Activities

This is money that comes from the brokerage’s core business activities.

Free Cash Flow to Equity (FCFE)

FCFE is the money that’s readily available after fixed assets have been bought, maintained, or improved.

Free Cash Flow to the Firm (FCFF)

FCFF refers to the state a brokerage finds itself in when it has no debt.

Net Change in Cash

This type of cash flow pertains to the change experienced between one accounting period and the next.

Armed with this information, here are our five tips to improve cash flow in your real estate brokerage business today.

Tip #1 Audit your cash flow

How often do you study your cash flow statement – the report that analyzes your cash flow? Without a proper audit, you don’t know where your money is going and how it’s being used. A cash flow analysis is simply vital.

By studying your income statements, balance sheets, and other financial metrics you get a clear overview of the state of your finances.

Benjamin Franklin is accredited with the maxim, “Small leaks can sink great ships.” This  idea should be applied to operations within a brokerage. Seemingly small expenses can compound leading to financial distress hence the need for proper tracking systems and regular investigations.

If you are interested in have a complete Cash-Flow Analysis performed on your brokerage reach out to Real Estate Back Ops today and we can get you set up for an initial consultation! Contact us here.

Tip #2 Reduce your operating costs

Following on the heels of carrying out a cash flow analysis is the idea of mitigating your operating expenses. By ensuring your back-end is lean, you can maximize cash flow.

Take a look around the brokerage. What can you downsize or purchase pre-owned or lease? Things that may be swapped out to save on expenses include cars and equipment.

Pre-owned cars mean less insurance, vehicle taxes, and interest payments.

Consider a home office too in lieu of leasing an actual commercial space. Outsourcing your administration requirements can also keep costs lower.

Tip #3 Charge a premium for your services

Many brokerage owners are hesitant to increase their fees. However, this could be setting you back considerably. 

Carry out a survey to establish what the current market rates are and adjust your pricing accordingly. 

Ideally, your prices should be competitive enough to keep your operations running, but not too low such that you struggle to stay afloat.

Not sure if your fees are competitive or worried that your agents will want to leave? Let Real Estate Back Ops review your current Fee Structure and show you what changes you can make that will keep your agents happy and improve your bottom line! Contact us here.

Tip #4 Become a title agent

Instead of having a third-party title insurer handle the title insurance of all the transactions you close, how about adding an ancillary business to your existing brokerage by offering title insurance to your clients?

Setting up a title services business is not as complex as most brokers think. 

In fact, with over 5, 432 firms across the country and a market size worth $16 billion, there is no reason why you should not be tapping into this lucrative cash flow avenue.

Earn hundreds of extra dollars on each transaction you’re already doing. 

Tip #5 Apply for real estate broker loans

Competition among real estate agencies in the U.S. can be tough as there are currently more than 100,000 real estate brokerages.

Securing a loan to inject much-needed cash into your business just when you need it can be the difference between closing shop and keeping your doors open until you get your commissions.

Fortunately, you can obtain real estate business loans from reputable institutions such as National Funding, Become. co, and SBA Loans

These loans can also be used and leveraged for acqusition of other brokerages as a growth strategy. We have helped hundreds of brokerages through mergers and acquisitions.

Do you need help improving cash flow?

Real Estate Back Ops (REBO) is one of country’s most reliable brokerage services providers. We assist with cash flow analysis, valuations, growth through M&As, commission structure design, and ancillary revenue plans. Contact us for more information.

How Administrative Mistakes Can Cost You as a Broker

How Administrative Mistakes Can Cost You as a Broker

What is the real cost of administrative mistakes? As a broker, your clients depend on you to handle things professionally. Administrative mistakes by a broker can have a domino effect and affect everyone involved in the deal. Let’s take a look at some administrative mistakes to avoid and how they can cost you as a broker.

1. Grammatical and typographical errors

Part of a broker’s responsibility is handling paperwork between clients. The correct use of grammar and punctuation is imperative. One misplaced character and failure to carefully proofread documents can cause untold damage. The following incidents are examples of the catastrophic consequences that may arise from such errors.

In 2006, a typo by Alitalia Airlines resulted in business-class flight tickets being sold for $39 instead of $3,900. The result? More than 2,000 people purchased the $39 tickets leading to a $7.2 million loss by the airline. Another incident, albeit more costly occurred in Tokyo when a typing error saw the shares of a renowned company go on sale leading to a $340 million loss. Moral of the lesson? Grammatical and typographical errors are administrative mistakes to avoid.

2. Poor advice and or unethical behavior

When a client hires you or chooses to work with you as a broker, they expect you to act professionally and do your job in terms of giving them good advice. They are paying for your expertise and experience. Doing a half-hearted job and failing to provide clients with honest, accurate, and fair assessments of their situation can result in you being sued if the client loses money in any way.

You may be surprised to learn that as many as 25% of homebuyers said they would never work with their broker or recommend them to anyone. Brokers do get sued for a variety of reasons – fraud, breach of duty, giving advice that’s not within their scopes (e.g. offering legal advice) negligence and breach of contract. These are all administrative mistakes to avoid.

3. Poor data management and failure to document

If there are two administrative aspects of being a broker that should never be overlooked, its documentation and filing papers properly. Poor data management can result in you not being able to find a critical document when it’s needed. There is no excuse for not having a defined records system. This is certainly high up in the list of administrative mistakes to avoid.

4. Hiring the wrong brokers for the brokerage

Do you have a strategy for hiring people? Not having a time-tested solution can result in you hiring the wrong person. This can be extremely inconveniencing not to mention expensive. You’ll want to avoid having to repeatedly post job openings and screen candidates. By following our advice on hiring better agents, you can improve your retention rate.

When you cannot afford administrative mistakes look no further than Real Estate Back Ops (REBO). We’re one of the leading real estate technology and consulting companies in the US. For the best brokerage services don’t hesitate to contact us.