What to Think About if Moving Brokerages?

Brokerages are like snowflakes and fingerprints, no two are alike. From office size, demographics, compensation models, training, tools, culture, and every other possible variation, a brokerage is a stand-alone business that fills a need for its REALTORS^® in a hand-and-glove kind of way. Like all good things in life, however, brokerages change over time and so do REALTORS^®, which may provoke a decision to move brokerages. Let’s consider some of the things to think about before taking the plunge.

Look Before you Leap

It is important to understand that a part of the brokerage business is to develop features and benefits for REALTORS^® and then use whatever options available to promote those features and benefits to REALTORS^® not currently at the brokerage. Like when you already have a car, even a great car, but that ad for the shiny new car tugs at your heartstrings creating a desire for improved features. Before deciding that you need to move brokerages, take inventory of the things the current brokerage offers that you may not be using, and the indirect value that you get by being part of the brokerage you are currently with knowing that change almost universally includes gain as well as loss.

Consider the Cost

Like all things in life, change comes with costs. Before deciding on making a move take some time to calculate those costs so you can be prepared and not find yourself in a bad position. Make a list of the direct costs such as:

• New business cards
• Rebranding websites
• Signs
• Bus benches
• Other marketing

Also be sure to check your contract with the brokerage to see if there are any fees associated with leaving the brokerage as well just so you know all the associated costs as part of the process.

Communication is Key

I really cannot emphasize this one enough. When leaving a brokerage, there is rarely a time in the year when there isn’t some kind of representation agreement in play with the brokerage and a client the REALTOR^® has been working with. This means that the brokerage needs to be involved in the logistics of ending or transferring the agreements, as well as managing the different stages of the transaction. The best way to manage the situation is to have a clear conversation with the broker as to the way the specific agreements will be handled, rather than trying to deal with things after a move when the REALTOR^® loses authority to sign anything on the brokerage's behalf.

Brokerage Model Consideration

After doing all the homework, it was still decided to move brokerages. Now it is important to know how things will progress with existing business and agreements in place. Representation agreements in general will be decided based on the current brokerage model of either common-law or designated agency since the representation agreements handle things differently.

In the standard AREA representation agreements either seller or buyer indicate what happens when a REALTOR^® ceases to be registered with their current brokerage. For designated agency brokerages, the contract states that in such a situation the contract ends immediately UNLESS the client requests to stay with the brokerage and be assigned a new designated agent. For common-law brokerages, the exact opposite is true in the same situation where the default is for the brokerage to reassign a new agent UNLESS the client requests and the brokerage agrees for the contract to be ended.

Transferring Agreements

Because of these differences in brokerage model operation and contracts, there is only one situation where listing contracts or buyer agreements can be amended to facilitate a change in brokerage and that is when a REALTOR^® moves from a common-law brokerage to a common-law brokerage. In such cases, the client, REALTOR^®, and both brokers will need to agree to the amendment of brokerage information in the agreement as well as for the brokerages to share the full file. Since this is messy and rare, the best practice is to assume existing listings and buyer agreements will need to be terminated by the broker, and re-written by the REALTOR® when they are properly re-registered with the new brokerage. REALTORS^® cannot sign agreements on behalf of brokerages they are not registered to at the time of the signing!

Active Listings

Once the broker, REALTOR^®, and client have sorted out the brokerage model issue and have agreed to move with the REALTOR^®, an active listing with no current purchase contract can simply be terminated and re-listed under the new brokerage once the REALTOR^® is registered to the new brokerage. An active listing that does have a current unconditional purchase contract will stay with the brokerage where the transaction is firmed and then paid out on closing as normal. The complexity comes in when a listing has a current offer that is pending and may require some transaction management on behalf of the brokerage after the Realtor^® leaves. In such situations, the REALTOR^® should discuss each specific transaction with their broker before deciding the best course of action on these on a case-by-case basis.

REALTORS^®, like all people occasionally change locations, needs, and situations that require a move from one brokerage to another. Like moving homes, a REALTOR^® who wants to move brokerages needs to be sufficiently motivated to see it through to the end, and to do that with eyes wide open. By researching and planning appropriately, as well as spending time coordinating with the broker, it can be done with minimal relationship damage and should always have the client's best interest in view.