A brokerage business may take many forms. It may be a sole proprietorship (a single-owner company), a corporation, or a partnership. The office may be independent or part of a regional or national franchise. The business may consist of a single office or multiple branches. The brokerage office may be located in a downtown high rise, a suburban shopping center, or the sponsoring broker’s home. A typical real estate brokerage may specialize in one kind of transaction or service, or it may offer a variety of services.
No matter what form it takes, a real estate brokerage has the same demands, expenses, and rewards as any other small business. A real estate broker faces many of the same challenges as an entrepreneur in any other industry. In addition to mastering the complexities of real estate transactions, the real estate broker must be able to handle the day-to-day details of running a business and to set effective policies for every aspect of the brokerage operation. This includes maintaining space and equipment, hiring employees and real estate licensees, determining compensation, directing staff and sales activities, and implementing procedures to follow in carrying out agency duties. Each state’s real estate license laws and regulations establish the business activities and methods of doing business that are permitted.
In Illinois, every real estate office must have a sponsoring or managing broker of record, neither of which is required to be the owner of the business. After April 30, 2012, all licensees acting as a managing broker or self-sponsored broker must have a managing broker’s license or acquire one within 90 days after being named managing broker.
Sponsoring brokers
By Section 1450.100 definition, the sponsoring broker is the entity holding the company real estate license, whether the entity is an individual who operates as a sole proprietorship, partnership, limited liability company, corporation or registered limited liability partnership.
- A sponsoring broker may be self-sponsored.
- There may be only one sponsoring broker for any one real estate company.
- A sponsoring broker may authorize a managing broker to issue sponsor cards in the name of the sponsoring broker.
Likewise, the sponsoring broker may assign escrow account bookkeeping duties to a qualified company employee or independent contractor and may delegate authorized individuals to sign on behalf of the sponsoring broker. The sponsoring broker may authorize company personnel to sign contracts entered into by the sponsoring broker according to the sponsoring broker’s company policy. Even though the sponsoring broker may delegate authority, ultimately, the sponsoring broker is responsible for all activities.
