The 100-percent commission brokerage sounds like a pipe dream, but the model has been around for decades..   If anything, the 100-percent brokerage is increasing in popularity. Real Trends’ President Steve Murray told Inman, “They are a huge part of the industry; it wouldn’t surprise me if they were getting to be 15 to 25 percent of the industry. They are all over and they are multiplying.”

However, is this model really 100-percent? Most of us have heard the cliché, “nothing in life is truly free.” Brokerages have to make their monies somewhere. After all, brokerages support agents with services like office space, marketing, back office, and deal support. Brokers oversee compliance and ensure the contract closes in accordance with local legislation.

Breaking Apart a 100-Percent Brokerage

So how do 100-percent brokerages cover the costs of providing agents with the necessary physical and technological tools to successfully run a real estate business?

Think about the full commission model like a “á la carte” brokerage. How the different brokerages make up the difference varies, but common methods include one or combinations of:

• A flat, fixed monthly fee

• An annual fixed fee

• A per-transaction fee

• Handling fees

• Desk fees

The various fees provide the agents access to the various brokerage services, systems, and office access. Some 100-percent models offered tiered pricing plans. Naturally different amenities are available at each level. Others charge a flat fee for basic services and leave the agent to foot the bill for their marketing costs.

When considering working for a full commission brokerage, compare what services come with the fees. Some brokerages under this model might lack the technological tools necessary to adequately be competitive in today’s market. In other cases, adding together the total fees may reveal working for that particular brokerage will cost more than working for a traditional, split-fee brokerage.

Regardless of the financial terms a brokerage offers its agents, all brokerages need to provide value beyond any commission spilt number. These could be training opportunities, in-house software, included integrations with leading data providers, or access to a winning back office team. A competitive compensation package is only part of what attracts and retains real estate agents.

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Do you want to know what are 100% Commission Real Estate Pros and Cons?

Have you thought about going to a split where you earn more money?

100% commission real estate pros and cons begins by comparing them to traditional brokerages. 

1) Do the math.

In a traditional real estate brokerage model commissions split from 50% to 80% for the agent depending upon the company.

Example:

If an agent earns a $10,000 commission, and the commission split is 50/50, the agent keeps $5,000. In an 80/20 split, the agent keeps $8,000.

With many 100% commission brokerages, a flat per transaction fee may be paid such as $600. In that scenario, the 100% commission agent keeps $9,400. Far better than any of the splits mentioned above.

However, not every 100% commission office charges the same fees. While many use a per transaction fee, others may charge a lower fee but also charge an additional monthly fee (called a desk fee). Some may only charge an annual fee.

Read about different brokerage fees below to better understand 100% commission real estate pros and cons.

2) 100% Commission Real Estate Are Gaining Popularity…

While 100% commission real estate offices have been around for many years, their popularity only recently increased. That’s due to using modern technology with services like DocuSign offering electronically signed (e-signatures) for legal documents. To read about the 10 top e-signature apps on the market Click Here.

Removing the required paperwork outside of the real estate office changed the real estate industry. This enabled real estate agents greater independence without relying on typical office infrastructures and support.

Modern technology provides real estate agents with independence making 100% commission brokerages popular.

3) MLS Data Exclusivity

Up until only a few years ago, MLS data was only available through member offices.

Now, much of the MLS data can be accessed from private websites. Buyers and sellers also access MLS data easier online nowadays.

100% commission real estate pros and cons includes public access to MLS data making traditional real estate brokers MLS monopoly obsolete.

4) Work at Home Popularity

100% commission real estate pros and cons must consider the rising popularity of 100% commission agents. Two important reasons for the work at home popularity:

Offices are no longer needed for meeting clients.
Online access exists for all of the essential tools required by agents.
Should agents contribute a large portion of their commissions for office related overhead they no longer need?

 

How 100% Real Estate Brokerages Differ
 

A 100% commission realty also requires looking at what individual brokerages offer. Some 100% companies provide more benefits than others.

Consider these pros and cons when deciding to join a 100% commission real estate brokerage: 

 

1. Stability
 

Real estate markets constantly change. Over the years, some markets experience fast growth while others slide into a downturn. Then, the climate changes making some markets hotter than others.

Today’s hottest property markets may turn cold tomorrow. The ability for a real estate brokerage to weather the storm during downturn times matters.

According to a recent report, many new real estate companies close within two years. Others keep floating through the good and bad times.

Will the 100% commission brokerage you think of joining provide stability?

 

2. Costs
 

100% commission real estate pros and cons also consider costs.

As explained above, not every 100% commission real estate broker charges the same fees. The three most popular fees include:

Flat Fee per Closing;
Monthly “Desk” Fee; and
Yearly Fee
Each option has its pros and cons dependent on the agent’s production level.

Do the math based on your past year’s commissions compared to each broker’s fee structure above. Then, you will know which option works best for you.

 

3. Hidden Fees
 

100% commission real estate pros and cons also consider hidden fees.

Here is where the biggest difference between realty brokerages shows. The hidden fees need to be explained before jumping ship from one brokerage to another. Typically hidden fees include:

Administrative Fee
Compliance Fee
E&O Fee
File Review Fee
Franchise Fee
Technology Fee
Training Fee
Do the math. Add up what each 100% brokerage charges you as additional fees.

 

4. History
 

Also mentioned above, is the fact that new real estate brokerages often close within two years. Many startups don’t take into consideration all of the overhead costs compared to the income. Shortfalls occur and reserves dry up leaving the broker with no alternative than to close the doors.

Inquire about the history of the brokerage to determine whether they withstood the bad market times along with the good ones.

Stability over a long period of time counts heavily towards predicting future success.

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5. Leadership
 

How popular is the broker? Does he or she maintain a good professional reputation? Consider what achievements, professional certifications, honors, and community recognition the broker possesses.

What does the local media say about the broker? How about social media reputation?

Look towards the future. Will this broker lead you towards innovation, keep up with modern technology and lead you into a successful future?

 

6. Insurance
 

Errors & Omissions Insurance (E&O) coverage for the brokerage and its agents is mandatory. But, not every insurance policy provides the same benefits. Consider what the brokerage insurance policy includes such as:

Coverage Amount
Coverages (What is Covered)
Deductible
Exclusions
All Other Perils (AOP) Coverage
Insurer Representation
Did the broker obtain minimum coverage or spend a little more for an “A” Rated Insurance Policy?

Look for ultimate protection in case of a lawsuit. Seek high coverage and low deductibles. Obtain All-Inclusive Coverage with Quality Representation.

 

7. Support
 

Some 100% commission brokers just collect checks and do nothing else. An inaccessible broker provides the agents no favors.

Inexperienced brokers don’t know how to provide support to their agents. California licensing laws don’t require highly experienced brokers.

Look into the amount and quality of accessibility and support the brokerage gives to its agents.

 

8. Technology
 

The infrastructure of a modern brokerage determines the efficiency of conducting business. Having to email your contracts to your broker should frighten you.

Learning what modern technology tools your broker provides indicates whether the brokerage supports your growth.

 

9. Strategic Partners
 

Brokerages often partner with service providers and suppliers in order to control costs.

Expect the best services and products. Don’t rely on a company who won a bidding war to get the service provider contract from your broker.

Don’t let the bottom line reduce you and your clients’ needs.

 

10. Brand Name
 

Join a 100% brokerage with a good brand name. Never get caught meeting a new client who questions the legitimacy of your realty company.

Do you want to associate with a “Z” realty company or an “A” brand name image that consumers like and trust?

Don’t be afraid of small companies. Boutique brokerages achieve success due to the marketing of their brand name and reputation. Brand marketing allows small companies to thrive based on their excellent reputation.

 

Why Join a 100% Commission Real Estate Brokerage?
 

100% Commission Real Estate Pros and Cons explained here lead to one conclusion.

Earn more money by associating with a 100% commission brokerage offering:

Stability
Lower Fees
Leadership
Technology
Support
Brand Name Recognition
Steven Rich, MBA – Guest Blogger

Want to know more about San Diego real estate? Click to talk to a local Real Estate Pro

 

We hope you liked our blog on “100% Commission Real Estate Pros and Cons”. For more local real estate related articles check out one of our many blog pages here.

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What is the 100% Commission Real Estate Broker Model?
Making more money on every real estate transaction is possible. So what is the 100% Commission Real Estate Broker Model?

 

100% Commission Model
 

How?

New real estate agents and clients often ask, “What is the 100% commission real estate broker model?”  

When explaining this business model there may be words or phrases you may not understand so many of them are highlighted so you can click on them to read their definitions.

Traditional real estate brokerages pay their agents a percentage of the total commissions where in some cases the majority goes to the real estate office.  However, the national average commission percentage “splits” are evenly divided (50/50) between the real estate broker (office) and the agent.  

But there is another option.

 

Explore 100% Commission Model
 

The 100% commission model has become very popular in the last decade.

In this model, the agent gets 100% of the entire commission.  What’s the catch?  

There is none at Big Block Realty.

When you join Big Block Realty, you pay a monthly fee of $300, or up-front annual fee of $3,000.  In return, the agent has access to 100% free training, open work areas in 1 of four office locations, and 100% support.

Plus, we offer a referral program that allows you to refer new agents to Big Block Realty that not only includes the 5 and it’s free benefit (refer 5 new agents that sign up with us and your monthly/annual fee is waived), but you are entered into an annual drawing for a new Mercedes-Benz. 

All 100% commission models are not created equally.

For example, other 100% commission brokerages may charge the agent $1,000 a month or more for a desk space and monthly amenities, without any training and support, nor do they have a referral program as an added incentive.  

How does 100% commissions compare to traditional commissions?

Since the national average is 50/50, let’s compare the 50% commission with a 100% commission model.  

Assume that the total sales commission is $20,000.  With a 50/50 split the broker gets $10,000 and the agent receives $10,000.  However, with a 100% commission model, the agent gets the entire $20,000 commission.

Assuming the agent pays $12,000 a year for the office fees; the agent profits $8,000 for the year.  The more earned commissions during the same year, the greater income for the 100% commission agent.

 

100 commission model

 

There are different types of 100% commission models  

Some real estate companies don’t provide support services or office amenities.  However, they do charge their 100% commission agents discounts with lower monthly fees or a flat “per transaction” fee for each sale.  For instance, with no desk and no office privileges, the agent may be charged a monthly $100 fee.  

As an alternative to a monthly fee, a flat fee (like $750) is charged for each sale generating a commission.  

Using the example above, a $20,000 commission goes to the 100% commission agent who merely pays a small monthly fee ($1,200 annually) resulting in a profit of $18,800.  Or, the $750 flat fee is paid to the broker resulting in the agent receiving $19,250.

Conclusion

The 100% commission real estate broker model has become popular with successful agents.

New agents may be better off under traditional commission structures until earning a steady flow of commissions.  Then, the 100% commission model makes sense because after paying annual fees to a broker (or, “per transaction” fees) all earned commissions above those costs creates higher income for the agent.

 

Want to get 100% support AND 100% commission?

Have questions about how you can join our 100% brokerage?

Fill out the form here: 100 Commission California Real Estate Brokerage 

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