Posted by Rich-CA on November 18, 2008 at 17:04:03:
Well, based on how e&o is rated, it doesn’t really matter except that the premium based on annual revenue, which may make it less expensive for the broker to carry it for multiple associates, but at least the ins cos I talked to won’t do deal by deal coverage. Maybe its different in RE than in contract work.
100% Commission - Posted by Attila_FL
Posted by Attila_FL on November 17, 2008 at 19:39:53:
Do you know of any real estate brokerage firms in South Florida where sale associates get to keep 100% of their commissions? Thank you.
YES!!! - Posted by Mr. Obvious
Posted by Mr. Obvious on November 17, 2008 at 20:47:27:
I did know of 1 broker who gave his sales associates 100% of their commissions. He was the first guy ever to start selling real estate by hiring other people to sell for him, hence the name ‘sales associate’. Of course at that time he was known as the ‘head sales associate’. After a couple of weeks of using his business model, he found out that he was making a lot less money then the people around him. In fact, he wasn’t making any money at all. When he brought up the fact that he was broker than the rest of the sales associates, they just laughed at him and went on their merry ways. From that day forward, the main person of the sales office was forever known as the ‘BROKER’.
But now, people are smarter. The only way to do it now is to be a broker and not hire anyone. Then you can keep 100% of it all.
Re: 100% Commission - Posted by Sailor
Posted by Sailor on November 17, 2008 at 20:31:15:
Why should the broker work for free?
Tye
Re: YES!!! - Posted by brandoncbsre
Posted by brandoncbsre on November 18, 2008 at 04:59:23:
Real estate brakerage is in a way like multi-leval marketing…the more people the broker has below him the more money he makes.
You cannot possibly believe that a broker is better off not hiring salespeople. Even splittingg 50/50 with 5-6 good workers is going to make you much more money than you can on your own. It’s called leverage…real estate investors understand this as well.
This is why we hire plumbers, property managers and so on. It frees us up to make better use of our time.
Even then it is expensive to run a brokerage. I am part-owner of a small brokerage and it is amazing how much money flows out the door in the form of advertising, franchise fees, etc.
There are a couple of offices in my area that give their agents 100%. However the office pays for NO advertising, provides NO office space and charges a transaction fee of $300-400 per deal. The broker does well because he has a ton of agents paying that $300-400 per deal and very little overhead.
Re: 100% Commission - Posted by ken in sc
Posted by ken in sc on November 18, 2008 at 05:14:17:
Tye
Yes, nothing is free. Those companies that pay out 100% commission charge “desk rent”. It was actually ReMax which came up with this idea, and is the reason they came out of nowhere and became so big, getting the best agents quickly. The premis is that the owner of the business can buy a nice commercial office building that would normally rent for say $2000 per month. They get 10-15 agents in there paying $500 a month desk rent and the agents also pay all their own advertising and Realtor/mls fees. So, the owner gets way above average rent for his building, and pays it off in 10 years or less. Some of the new companies that pay 100% run the same program but rent a small building for say $1000 a month, get 10 or 15 agents paying $500/month to be a member and work from home, and they make the difference between their rent and the fees they collect from the agents. I know a small local company that only charges $350 per month to the agents, but they basically get to hang their license there and use of the conference room and that’s it.
In the 100% model, each agent is basically running their own business. Many pay their own staff. So, the 100% would only make sense for an agent who does enough business and has enough money to run their own business under the guise of the brokers name.
Re: YES!!! - Posted by Mr. Obvious
Posted by Mr. Obvious on November 18, 2008 at 21:25:52:
Agree with everything you said----100%. Attila was just wondering how s/he could keep 100% of his/her commission, and you gave a great example of how to do that. BUT, a $300-$400 fee still comes out of the sale, although a lot less than 3% to a broker, so I would consider that not getting 100% of the commission. But really close though, really close. And of course there is the possability of having to pay for the ads,office space etc.
So I’ll modify my statement to say—You can keep 100% of the commission for yourself if you are the broker and sell your own listing.
So who pays the E&O - Posted by Rich-CA
Posted by Rich-CA on November 18, 2008 at 11:42:05:
and other insurance coverages? Is this done by the broker and charged back, embedded in the $500/mo or what? E&O insurance is very expensive and some jurisdictions require a broker carry it, so the cost allocation is of interest to me.
Re: So who pays the E&O - Posted by ken in sc
Posted by ken in sc on November 18, 2008 at 11:50:33:
Sorry Rich, I don’t know. I have my own brokerage co and just know what my friends have told me about how those companies work. My guess, based on what the have said, is all costs are passed on to the agent. The point is the agent pays all costs, thus has a small price to pay the broker. This way the broker just reviews the file to make sure all the docs are in there and correct and pays the fee back to the agent when it comes in. If an agent makes 5 sales in a month, the broker reviews 5 files and makes $100 per. So a good agent who knows what they are doing and needs no help can make more. A part time agent with one closing a month and many questions needs a different company to work for.