Real Estate Brokerages Support Your Agent: What Does That Mean When You Sell a Home?

Real estate agents in the United States are required to “hang their license” with a brokerage — a business run by a licensed broker who has significant experience working as an agent and has completed additional training. The brokerage supports the agent with resources, assistant staff, and often an office space in exchange for a portion of the agent’s commission fees.

If you’re selling your home, the agent you choose matters far more than the brokerage they work under.

“The brokerage is the second piece or the support for your agent,” comments Shawn Hartmann, a leading agent in St. Paul, MN, who works with 84% more single-family homes than the average agent.

Still, it’s worth researching an agent’s brokerage to ensure they’re providing the agent with everything they need to pull off a successful sale. We’ll fill you in on how brokerages work and provide you with an overview of the most popular real estate brokerages in the country.

Two agents discussing real estate brokerages.
Source: (Christina @ wocintechchat.com / Unsplash)

First, let’s look at exactly what a real estate brokerage is

Real estate brokers are individuals who have completed additional training and have obtained a license to manage their own business. State laws that determine the specific licensing requirements for brokers vary.

The business a broker manages is called a brokerage. Real estate agents who are not licensed brokers are legally required to hang their license with a brokerage to professionally help people sell or buy property. Real estate agents work for the brokerage as independent contractors, not employees. Through this arrangement, most brokerages make their money by taking a cut of the agent’s commission after every successful transaction.

With this revenue structure, it’s in brokerages’ best interest to guide their agents toward success. Hartmann shares that “Ultimately, a brokerage’s goal is to build a business and have a stable of strong agents who specialize in a specific area.”

For sellers, the most important thing to think about when considering an agent’s brokerage is what kind of support brokerage provides their agents. Support may include:

  • Training: Brokerages often give agents free classes and educational resources (here is an example) so that they are up-to-date on the best practices for real estate transactions
  • Access to marketing networks: Brokerages leverage their extensive networks to generate quality leads to their agents. Hartmann says that “because of strict rules about marketing outside of your brokerage, it’s important to think about the size of the brokerage’s database and buyer network.”
  • Tech: Many brokerages supply their agents with useful software that helps them organize their business and makes the transaction process more intuitive for agents, buyers, and sellers.
  • Agent support and services: Commonly, brokerages include support staff to assist agents. Staff may include legal and tech support, human resources, accounting, and more.

The difference between independent and franchise brokerages

There are over 106,500 brokerages in the U.S. which fall into two main categories: independent and franchise.

Franchise brokerages are typically owned and operated by brokers who are part of a franchise group. This means that the broker agrees to abide by the franchise’s regulations and guidelines and pay a portion of their brokerage’s profits to the franchise. In return, the brokerage gains the right to use the franchise’s brand name and access to that franchise’s agent resources. Most of the largest brokerages in the U.S. are franchise brokerages.

Independent brokerages are owned and operated by brokers who have no relationship to a larger franchise. These brokerages don’t pay any franchise fees and must independently find and supply resources to their team. Independent franchises have more freedom when it comes to branding, marketing, and operations decisions.

The National Association of Realtors (NAR) reports that around 48% of U.S. real estate agents belong to an independent brokerage and 46% are with a franchised company. The remaining 6% fall into the “other” category.

A map used to find a real estate brokerage.
Source: (Joey Csunyo / Unsplash)

Comparing the leading U.S. real estate brokerages

Every brokerage has its own approach to business. While it’s impossible to review all of the real estate brokerages in the U.S., we can learn a lot by looking at the largest five.

Keller Williams Realty

Headquartered in Austin, TX, Keller Williams Realty is the country’s largest franchise real estate brokerage. According to the company’s website, their business model focuses on “equipping agents with a technological edge and the ability to offer customers whatever they wish.”

The company works closely with its agents in a collaborative design process to produce “The Keller Cloud,” a software suite that helps agents, sellers, and buyers with many different aspects of real estate transactions. The software provides online platforms for agent-client communication, marketing tools for agents, and much more.

Stats:

  • Number of agents: 169,317
  • Number of offices: 1,060
  • 2019 total sales volume: $9.4 billion
  • 2019 transaction sides (the combined number of completed seller and buyer-side transactions): 32,161

Re/Max

Re/Max is a major franchise brokerage founded in 1973. Re/Max’s philosophy is to allow its agents as much freedom as possible to run their own businesses. When the brokerage was founded, the company made its money by charging for offices and marketing rather than taking a cut of agents’ commission. Today, the company offers agents a few different payment structures but most agents opt for the 95/5% commission split. By focusing on agent independence, the company aims to attract more experienced agents interested in controlling their business.

According to Real Trends, the company boasts the highest number of top-rated U.S. real estate agents.

Stats:

  • Number of agents: 130,889
  • Number of offices: over 8,000
  • 2019 total sales volume: $7.9 billion
  • 2019 transaction sides: 16,694

Realogy Holding Corps

Realogy is a publicly-traded company that owns and operates some of the most well-recognized franchise brokerages, including:

  • Better Homes and Gardens Real Estate
  • Century 21
  • Coldwell Banker
  • Sotheby’s International Realty

Realogy describes itself as a company that provides its agents with “innovative technology, data and marketing products, best-in-class learning and support services, and high-quality lead generation programs.”

Ethisphere recognized Realogy as one of the “World’s Most Ethical Companies” for nine consecutive years.

Stats:

  • Number of agents (U.S.): Over 187,500
  • Number of agents (international): Over 130,800
  • 2019 sales volume: $170 billion
  • 2019 transaction sides: 325,652

Compass

Launched in 2012, Compass is the country’s largest independent brokerage. The brokerage describes itself as a “tech company reinventing the real estate space” that claims to have “the solutions-driven mindset of a startup and the sophistication of a luxury brand.” In 2016, Compass launched a mobile app that provides homebuyers and sellers with real-time market data on major U.S. cities.

Statistics:

  • Number of agents: Over 17,000
  • Number of offices: 26
  • 2019 sales volume: $91.2 billion
  • 2019 transaction sides: 84,732

HomeServices of America

Founded in 1998 and headquartered in Minneapolis, MN, HomeServices of America is a brokerage affiliated with Berkshire-Hathaway, a holding company that also owns major brands like GEICO, Dairy Queen, Pampered Chef, Duracell, and more. HomeServices of America allows all of its brokerages to “operate autonomously” to foster “professionals who know and understand the unique dynamics of their area, their community, and their neighborhood.” The company boasts the highest number of residential transactions out of any U.S. brokerage.

Stats:

  • Number of agents: 43,258
  • Number of offices: 883
  • 2019 sales volume: $132 billion
  • 2019 transaction sides: 325,652
A person thinking of what real estate brokerage to choose.
Source: (Daria Pimkina / Unsplash)

Ultimately, your decision should come down to your agent, not their brokerage

When choosing a real estate agent, it’s wise to research their brokerage to ensure they have adequate support. At the end of the day, though, your agent is an independent contractor responsible for managing their home sales. It’s their expertise that matters, not their brokerage’s.

HomeLight’s research shows that the leading 5% of real estate agents in the U.S. sell homes for 10% more money on average than the average agent.

For a curated list of the top-performing real estate agents in your area, plug your property details into HomeLight’s Agent Finder. Our tool connects you with the three best agents for your home sale based on stats like list to sale price, transaction speed, and average client reviews. When interviewing your final candidates, remember to ask them a few questions about their brokerages. A brokerage’s quality might just serve as the tie-breaker if you’re between two favorites.

Header Image Source: (Christina @ wocintechchat.com / Unsplash)