How to Finance a Realty World Franchise: Four Office Models
By Marc Cornella
A Realty World franchise loan is usually a modest one by franchise standards. A real estate brokerage does not need a kitchen, a drive-thru or a building, so most of the money goes to the franchise fee, signs, an office lease, furniture and technology, and, above all, enough cash to carry the office until closings start to pay the bills.
This article covers the four office models, the two fee options, the brand’s SBA Franchise Directory listing and how lenders size a Realty World franchise loan when revenue arrives in uneven commission checks.
US Professional Funding is not affiliated with, sponsored by or endorsed by Realty World; the name is used only to describe the business. Figures from the franchisor’s disclosure document can change, loan programs and terms vary by lender and borrower, and every loan is subject to approval. Nothing here is legal, tax or investment advice. Review the current Franchise Disclosure Document (FDD) and franchise agreement with a qualified franchise attorney and accountant before you sign or borrow.
Realty World Franchise Loan at a Glance
- Franchisor: Realty World, Inc., a Nevada corporation based in Newport Beach, California, according to the FDD issued August 24, 2023, the most recent full disclosure document we could review.
- Initial franchise fee: $18,000 for a standard conversion or start-up office, $3,500 under the Boutique Conversion Program and $2,500 under the MOBI Program.
- Royalty: the franchisee elects either 4% of gross revenue on the first $1,000,000 each year and 1% above that, or a flat $74 per sales representative per month, capped at 100 representatives.
- National advertising fund: 1% of gross revenue on the first $1,000,000 each year, or a flat $50 plus $25 per sales representative per month under the flat option.
- Estimated initial investment: $34,200 to $110,000 for a conversion office and $60,000 to $195,000 for a start-up office, with smaller ranges for the Boutique and MOBI programs.
- Term: 5, 7, 10, 15 or 20 years, at the franchisee’s choice.
- Franchisor financing: the standard initial fee may be paid in installments over up to 6 months.
- SBA Franchise Directory: listed as Realty World (code S5543), with no special directory notes.
What Is Realty World?
Realty World is a network of independently owned and operated real estate brokerage offices. The franchisor cites more than 40 years of brand history and a strong U.S. presence. The current franchisor entity was incorporated in 1997, took the Realty World name in 2006 and has offered franchises for real estate brokerage businesses since June 2000, according to Item 1 of the 2023 FDD.
Four office models. The 2023 FDD describes:
- Conversion office: an existing brokerage that adopts the Realty World name. Rent and leasehold improvements are excluded from the estimate because the broker already has space.
- Start-up office: a new brokerage opened under the brand, with an estimate that assumes roughly 500 to 3,500 square feet of space.
- Boutique Conversion Program: a modified program for existing brokerages with three to five agents.
- MOBI Program: a virtual model for up to two agents who work through online tools and have no dedicated office.
How lenders see a brokerage franchise. A brokerage has little collateral, and its commission revenue depends on agent count and local housing activity. Lenders focus on the broker’s track record, production history and personal strength.
Realty World Franchise Costs
Initial franchise fee. The 2023 FDD sets the standard fee at $18,000 for both conversion and start-up offices, paid as a lump sum and nonrefundable. The Boutique Conversion Program fee is $3,500 and the MOBI Program fee is $2,500. Standard franchisees may be allowed to pay it over up to 6 months.
Real estate and office space. A start-up office budgets $12,000 to $50,000 for real estate and improvements. Conversion and Boutique estimates exclude rent and leasehold improvements, so a converting broker’s loan request is smaller.
Equipment, furniture and signs. Start-up offices budget $12,000 to $40,000 for equipment, fixtures and furnishings and $1,000 to $5,000 for signage. Conversion offices budget $700 to $15,000 for building signs and $1,000 to $5,000 for yard signs.
Opening costs and working capital. This is the biggest variable in a Realty World franchise loan. Every model carries an “additional funds” line covering 8 months: $13,000 to $60,000 for conversion and start-up offices, $13,000 to $45,000 for Boutique conversions and $10,000 to $30,000 for MOBI offices.
Total investment. Here are the 2023 FDD’s Item 7 estimates.
Conversion office: $34,200 to $110,000
- Initial franchise fee: $18,000
- Building signs: $700 to $15,000
- Yard signs: $1,000 to $5,000
- Start-up supplies: $1,000 to $10,000
- Insurance: $500 to $2,000
- Additional funds (8 months): $13,000 to $60,000
Start-up office: $60,000 to $195,000
- Initial franchise fee: $18,000
- Real estate and improvements: $12,000 to $50,000
- Signage: $1,000 to $5,000
- Equipment, fixtures and furnishings: $12,000 to $40,000
- Start-up supplies: $1,000 to $10,000
- Insurance: $500 to $2,000
- Miscellaneous opening costs: $2,500 to $10,000
- Additional funds (8 months): $13,000 to $60,000
Smaller programs. The Boutique Conversion Program totals $21,700 to $83,500. The MOBI Program is shown at $18,600 to $58,800 on the FDD cover page and includes a vehicle line of up to $800 and vehicle signage of $100 to $3,000.
Ongoing Fees and How They Affect Your Loan
Royalty and advertising: percentage or flat. At signing, the franchisee elects one of two fee structures. Under the percentage option, the royalty is 4% of gross revenue on the first $1,000,000 per year and 1% above that, and the advertising fund contribution is 1% of gross revenue on the first $1,000,000. Under the flat option, the royalty is $74 per sales representative per month, capped at 100 representatives (a maximum of $7,400 a month), and the advertising contribution is $50 plus $25 per representative, up to $2,550 a month.
Other recurring fees. The 2023 FDD lists a support fee of $225 a month, a TechPack technology fee of $39.99 per registered user per month (at least 75% of sales representatives must register), and a website fee of $300 a year per office. Dollar-denominated fees rise 3% a year after the franchisee’s 10th anniversary.
Transfer and renewal. The transfer fee is $3,500 and the renewal fee is $1,500.
How lenders factor these costs in. Most of every commission dollar goes to the agent. Lenders start from what the office keeps after splits, the company dollar, then subtract franchise fees, rent, technology and payroll. A small high-producing office and a large office of part-time agents may each pay less under a different option, so model both before you sign. Our explainer on brokerage company dollar and cash flow shows how lenders read these numbers.
Franchisor Requirements for New Owners
The 2023 FDD does not require the owner to personally run the office, but it does require:
- A Designated Manager who completes initial training to the franchisor’s satisfaction within 10 months of the agreement’s effective date
- A designated broker of record, with the franchisor notified of any change
- Personal guarantees from the owners of an entity franchisee, with spousal consent to the guaranty
- Commercial general liability and real estate errors and omissions insurance of $1 million per occurrence each
- Use of the TechPack platform and the designated web provider
Training and opening. Initial training lasts about 2 to 3 days for the Designated Manager and one additional person, in person or online, at no extra charge for two people. The FDD says an office typically opens about 90 days after signing (4 to 6 weeks for MOBI) and must open within 180 days (90 days for MOBI).
Net worth and liquidity. We could not verify a minimum net worth or liquidity requirement in the franchisor’s materials; ask during discovery and check the current FDD.
Ways to Own a Realty World
Converting your existing brokerage. This is the brand’s core path and the easiest Realty World franchise loan to underwrite. A broker with a lease, agents and production history adds the Realty World name, replaces signs and plugs into the franchisor’s technology. Lenders can underwrite the brokerage’s actual results, which is the strongest basis for any request. Read more about financing a franchise conversion.
Opening a new office. A start-up office has no history, so lenders rely on the owner’s own production and management record, a recruiting plan and enough reserves to carry the 8-month runway the FDD budgets. Our page on real estate brokerage start-up financing covers this route.
Boutique and MOBI programs. These lower-cost models suit small teams and agents who work virtually. The FDD says the franchisor’s installment option is not available for these two programs, so the small fee is paid up front.
Buying an existing Realty World office. A transfer requires franchisor approval and a $3,500 transfer fee. The buyer is really paying for the agents, listings and pending transactions, so agent retention after closing is the key risk. See our guides to brokerage acquisition financing and transferring a brokerage franchise.
Financing Options for a Realty World Franchise
SBA 7(a) loans. Because the brand is listed on the SBA Franchise Directory, an SBA 7(a) loan can fund a start-up office, a conversion that includes an office move or remodel, or the purchase of an existing brokerage.
SBA 504 loans. The 504 program finances owner-occupied real estate and long-lived fixed assets. It only fits if the broker is buying the office building and will occupy enough of it to meet program rules.
Conventional term loans. Established brokers with strong financials may use conventional business loans for small requests or a quick conversion.
Equipment financing. Office furniture, computers, phones, printers, signs and a branded vehicle for MOBI agents can be financed or leased separately, which preserves cash for agent recruiting.
Working capital and lines of credit. Commissions arrive at closing, weeks after a contract is signed, while rent and fees are due monthly and housing activity slows in some seasons. A line of credit can bridge those gaps. See our brokerage working capital options.
Seller financing on resales. When an existing office is sold, the seller may carry part of the price. A seller note must be acceptable to the senior lender, is typically subordinate to it, and loan programs may limit how it is used.
SBA Loans for Realty World Franchisees
The SBA Franchise Directory lists brands whose franchise agreements have been reviewed for SBA eligibility, and SBA lenders generally require a listing. It clears the franchise relationship; it does not approve any borrower.
Realty World’s listing. Realty World appears on the SBA Franchise Directory under code S5543 with no special notes. In plain terms, the usual SBA rules on credit, equity, collateral and repayment apply with no extra brand conditions. Directory status can change, so confirm it with your lender when you apply.
Loan size. The SBA 7(a) program maximum is currently $5 million, though program rules can change. Most Realty World requests will be far smaller.
SBA application tips. Bring personal and business tax returns, production reports if converting, a realistic agent roster and recruiting plan, and the franchise agreement. Budget the full 8 months of additional funds the FDD describes. Our page on SBA loans for real estate brokerages goes into more detail.
How Lenders Evaluate a Realty World Deal
Personal credit, net worth and liquidity. Lenders review credit, tax returns and a personal financial statement, and expect a personal guarantee. Reserves matter more in a brokerage than in many franchises, because a few delayed closings can empty an operating account.
Industry and management experience. The strongest borrowers are producing brokers or managers who have already recruited and retained agents. A license alone is not enough; lenders want evidence that you can build and keep a team.
Business plan and projections. Start from agent count and production, apply splits, then deduct your fee option, support and technology fees, rent and payroll. Include a downside case.
The FDD and franchise agreement. Under Item 17, a compliant franchisee may acquire one successor franchise, and renewal can require remodeling to then-current standards. Item 12 states that franchisees do not receive an exclusive territory, which lenders will weigh against local competition.
Site and lease. For start-up offices, lenders review the lease term, rent and build-out. For conversions, they check that the existing lease runs at least as long as the loan or has renewal options.
Historical financials. Buyers and converting brokers should provide several years of profit and loss statements, closed-transaction reports and agent rosters.
Technology and Signs
A brokerage’s equipment list is light but not free. The FDD requires the TechPack platform and lets the franchisor require new hardware or software within 90 days of notice. Budget for computers, phones, network equipment and branded yard signs in volume, and plan for technology refreshes during a long term. These items can be part of a Realty World franchise loan or a separate lease.
Multi-Unit Growth With a Realty World Franchise Loan
Growing brokers often add a nearby office or acquire and convert a small brokerage. Each office needs its own franchise agreement and approval, and lenders will study the first office’s company dollar and agent retention before financing a second.
The FDD notes that area developer franchises were offered only between 2009 and 2012 and that none exist today, so growth happens office by office rather than through development rights.
Real-World Scenarios
An independent broker converting. A broker with a small team and a long lease converts. The loan covers the fee, new signs and a cash cushion, underwritten from the brokerage’s tax returns and closed sales.
A top producer opening a start-up office. An experienced agent with a broker’s license opens a new office. An SBA loan covers improvements, furniture, technology and the 8-month runway, backed by the owner’s production record and a recruiting plan.
A manager buying a retiring owner’s office. A sales manager buys an existing Realty World office. The lender reviews agent tenure and pending deals, and the seller carries a subordinate note tied partly to agent retention.
Common Mistakes to Avoid
- Choosing the percentage or flat fee option without modeling both against your agent mix
- Underestimating the time between signing agents and receiving commission checks
- Treating the 8 months of additional funds as a ceiling rather than a minimum
- Forgetting that the franchise does not include an exclusive territory
- Ignoring the 3% annual increase in dollar fees after the 10th anniversary when you pick a long term
- Paying for an existing office without a plan to retain its top agents
For more pitfalls, read the franchise loan mistakes buyers make most often.
Next Steps to Finance Your Realty World Franchise
Step 1: Pick your model. Decide whether you are converting, starting fresh, joining as a Boutique office or working virtually under MOBI.
Step 2: Review the FDD with advisors. Request the current FDD and read Items 5, 6, 7, 10, 12 and 17 with a franchise attorney and accountant.
Step 3: Model both fee options. Use realistic agent counts and production.
Step 4: Talk with a financing specialist. Our SBA loan calculator can help with planning estimates, which are not an offer or approval.
Step 5: Line up space and people. Confirm your lease, broker of record and Designated Manager.
Step 6: Apply and open with reserves. Submit the loan package, align closing with the franchisor’s timeline and keep working capital in place until closings stabilize.
Realty World Franchise Loan FAQs
How much does it cost to open a Realty World franchise?
According to the 2023 FDD, a conversion office is estimated at $34,200 to $110,000 and a start-up office at $60,000 to $195,000. The Boutique Conversion Program runs $21,700 to $83,500, and the MOBI Program $18,600 to $58,800.
What is the Realty World franchise fee?
The standard initial fee is $18,000 for conversion and start-up offices. The Boutique Conversion Program fee is $3,500 and the MOBI Program fee is $2,500.
What royalty does Realty World charge?
Franchisees choose either 4% of gross revenue on the first $1,000,000 a year and 1% above that, or a flat $74 per sales representative per month, capped at 100 representatives. An advertising fund contribution and monthly support and technology fees also apply.
Is Realty World eligible for SBA loans?
Yes. Realty World is listed on the SBA Franchise Directory under code S5543 with no special notes. Borrowers still have to qualify under SBA and lender rules.
Does Realty World offer financing?
Item 10 of the 2023 FDD says the franchisor may let standard franchisees pay the initial fee over up to 6 months. That option is not offered for the MOBI or Boutique programs, and other costs are financed through outside lenders.
How long is a Realty World franchise term?
The franchisee chooses a 5, 7, 10, 15 or 20 year term. A compliant franchisee may acquire one successor franchise on the then-current terms.
Can I buy an existing Realty World office?
Yes, with franchisor approval and a $3,500 transfer fee. Lenders will focus on the office’s history and on whether its agents are likely to stay.
Can a first-time broker owner get a Realty World franchise loan?
Yes, if the franchisor approves and the borrower qualifies. Lenders weigh the owner’s production and management record, a recruiting plan and personal reserves more heavily when there is no office history.
Does the FDD include financial performance information?
Check Item 19 of the current FDD. When converting or buying, rely on the office’s actual records.
Final Thoughts
A Realty World franchise is one of the lower-cost ways to put a recognized name on a brokerage, but low entry cost does not mean low risk. The loan works when it is sized to the office’s real company dollar, the fee option fits the agent mix and the owner keeps enough cash to ride out slow months.
US Professional Funding helps franchise owners and buyers finance start-ups, conversions, acquisitions, equipment and working capital. Learn more about our franchise financing and real estate brokerage financing solutions.
