After about seven years of working at an independent real estate company in Lenox that later became a Century 21 franchise, Brigitte McDonald decided it was time to venture out on her own.

McDonald, who has broker’s licenses in Massachusetts and New York and more than a decade of real estate experience, opened Brigitte McDonald Realty in November, operating out of her spacious Stockbridge home.

Roughly 125 miles away and in a vastly different housing market, Norman O’Grady took a similar plunge late last month, opening Prime Realty Group in Boston’s Brighton neighborhood. O’Grady, who had worked for two different franchises in the Allston/Brighton neighborhoods, is currently leasing a 1,500-square-foot office on Washington Street.

I don’t see it as a major challenge – opening up my office – because it’s just an extension of what I’ve been doing, O’Grady said last week.

Many real estate brokers have toyed with the thought of opening up their own business at one time or another. But most, afraid of the risks and daunting challenges and generally content with their current work environments, haven’t actually followed the path that O’Grady and McDonald recently took.

According to experienced Realtors, the competition of larger, established independent real estate companies and franchises is fierce, and the logistics of setting up an office and staff can be just as challenging.

It’s tremendously difficult to open up a real estate business today, said Ralph Miller, president of the Realty Guild and broker/owner of Hughes & Hughes Real Estate Co. in Natick.

It’s not unusual for a broker/owner to put in 60- to 70-hour workweeks, according to Miller, and owners are also responsible for meeting their agents’ needs.

Many Realtors are unwilling to take on those kinds of responsibilities, he said, and instead end up at companies like Re/Max where they independently pay for desk costs, and other fees but generally keep a large percentage of their earnings.

Miller also said that unless the new company owner partners with a professional group, like the Realty Guild or a local real estate board, it may be difficult to afford steep advertising and market costs. Groups like the Realty Guild often get special advertising rates for members.

‘Building Relationships’
It’s also critical for new firms to be able to offer the full services that competitors do, and often that means having an experienced staff, according to David S. Drinkwater, president of the Massachusetts Association of Realtors.

Drinkwater, who opened Coastal Countryside Properties in Cohasset with six top-producing agents almost five years ago, said a staff of least six or seven qualified and experienced people is needed just to handle the day-to-day tasks. To draw qualified agents, who might be tempted to go to a bigger company with more resources, a new company owner must offer a good commission split or offer other benefits and incentives.

In addition, Realtors need a good nest egg to fall back on to pay for office space, computer and other equipment that may be needed, not to mention a consumer-friendly office location to draw customers in, he said.

The first few months will be a struggle, said Drinkwater.

Despite the challenges, the Massachusetts real estate world is still dominated by independent real estate companies, like Coastal Countryside Properties. According to the Massachusetts Association of Realtors, out of 3,356 real estate offices that are MAR members, 537, or 16 percent, are franchise-affiliated.

In order to be successful, according to experts, Realtors have to be aggressive about notifying past clients and customers that they’ve opened up a new office. That can take some time, said Drinkwater. At Coastal Countryside Properties, it took about two years for Drinkwater and his colleagues to get well established within the community.

In Stockbridge, McDonald has been trying to reach out to former clients. She has been sending mailings and making phone calls to previous clients informing them of her move.

Her biggest challenge, she said, is trying to distinguish her company and the personalized service she offers from the larger real estate companies that won’t tailor their services to each individual buyer and seller.

Currently, McDonald is primarily working with buyers and has had a few land listings.

Getting [home] listings is certainly a challenge for smaller firms because you’re competing with franchise firms, she said.

Both McDonald and O’Grady seem undaunted by the franchises and larger offices. They maintain that savvy buyers and sellers are not loyal to companies but to the agents they’ve established relationships with.

McDonald said she left Century 21 because she wanted to spend more time marketing homes and working with clients instead of focusing on conforming to a corporate conglomerate’s rules and regulations.

My goal was to go out on my own or form a partnership, she said. It’s certainly more comfortable to have someone to partner with, but I just felt I had to really give it my best shot.

According to some Realtors, the other drawback to working for larger franchises is that they are increasingly pressuring agents to sell products – like insurance and mortgages – that they know little about. That has been frustrating to some Realtors.

But O’Grady, who worked at a Century 21 office in Brighton, said that inexperienced real estate agents can benefit greatly by working for larger companies because they offer training and support.

Unlike McDonald, who mostly works with second-home buyers and investment buyers, O’Grady’s customers tend to be first-time homebuyers.

O’Grady said he is not overly concerned about the current economic climate because first-time homebuyers are always searching in the Allston and Brighton neighborhoods.

This market is easier than a Newton and Weston market where people are looking to upgrade, he said. No matter what the economy is, there will always be buyers that are out there that have to buy.

O’Grady also sees another plus to the economic downturn. He believes it will weed out those agents who are not as serious or experienced in real estate.

With 10 years of real estate experience in the Allston and Brighton neighborhoods, O’Grady hopes that many of his former clients will follow him at his new business.

Like McDonald, O’Grady is making phone calls and sending mailings to old clients. He also is very involved in community service projects and hopes to hire experienced agents who also participate in community activities.

Real estate is creating relationships. It’s building relationships. You can’t just go in your office and wait for the phone to ring, he said. It’s not the consumer’s job to remember Norman O’Grady is in the business. It’s my job to remind them.

O’Grady gets support from an assistant he hired two years ago. While he currently does not have a lot of listings, he is hoping to draw more sellers in upcoming months. He has done several listing presentations recently and has already launched a Web site,

O’Grady said it takes self-motivation and perseverance to succeed. Of course, it also takes money.

O’Grady said at least five months of savings is needed to get started just to pay the bills.

I think the scary part is making that initial step to start a business, said O’Grady. Now that I’ve taken that initial step, it doesn’t seem half as scary.

Independent Firms Form In Berkshires and Boston

by Banker & Tradesman time to read: 5 min