Successful

Types of Compensation Models

• 100% commissions programs
• Splits that change to 100%
• Splits with caps
• Salary
• Salary with percentage of commission
• Referral fees

Income from office perspective

No matter what programs a company is offering, as a broker with that company keep in mind the company needs to make money to provide the services the company provides for you. The question becomes how does the company make the money to provide the services? As a newly licensed broker the company is taking a risk that they money they spend on providing you services will be returned plus a profit. No profit no company. Since less than 30% of the people who start in real estate make enough money to sustain a career, the risk for the company is very high.

What is the typical cost to you from the different compensation models?

100% commission programs make money on additional fees that are charged. Typical cost for agents with a 100% program include monthly associate fee any where from a couple hundred to up to a thousand dollars a month; transaction fee for each listing and sale weather they close or not; technical support fee on top of the monthly associate fee; and fees for using services such as copies, marketing materials, customer relationship program.

Splits that change to 100% upon reaching a certain amount of compensation to the company. While these programs usually have a less costly monthly service fee, they usually have the transaction fee for listings and sales including Errors and Omission Insurance, and monthly fee can increase when you reach 100%.

Splits with Caps are typical compensation programs in majority of real estate companies. Many have a small monthly fee that covers technical assistance, and some will have transaction fees for certain cost like the errors and omission insurance. Companies may or may not pay some of your marketing costs but normally anything with your name on it they will not provide. Use of addition programs such as customer relationship management and transaction management are an additional cost to you.

Salary for specific parts of the real estate transaction while still only used by a very few are becoming more available to some real estate associates. Companies that have “teams” may hire licensed brokers to preform actions like showing homes, holding open houses, calling expired listings or cold calling target homeowners or home buyers. Income is limited to hours worked.

Salary with percentage of commission is used by a few national companies that control the process of buying and selling real estate by splitting up activities into very small segmented activities and rate the licensee by response from the clients. Exceptionally high response from clients leads to bonus from the overall commission, low response from clients leads to termination of working for that company. Again, income is limited but so is hours worked.

Referral fees are rarely talked about with new licensees but can be an attractive income source of income. When a company markets a home for sale, they can find leads for buyers looking outside of the company’s market area. A well-organized company will refer these leads to agents located in the market area the buyer is looking to buy for a percentage of the commission. This also happens when marketing for seller leads. Some 100% companies will sell the leads from marketing the listings of their own licensed agents to brokers from other offices. Many offices set up referral only agents as part of their overall company program. These agents do not list or sell but only refer friends and people they know to the company that then gives the referral to a broker in their company for a fee.

What services do I as a newly licensed agent need from my Brokers?

As you can tell from above every commission program has many options for real estate Brokers. Frankly the 100% commission program for a new agent is the least likely to have the support and services you need. While salary is the easiest to make money immediately and will usually have training, that training will be very narrow, and the income is limited.

There are three things every new agent needs to become successful:

• Training: you start out your training learning basics of the multiple listing service and basics of the paperwork and completing a transaction. At the same time, you will need to be part of a proven training program that teaches you real estate sales. You also need a mix of training programs because no one training program has everything you need.
• Organization: you need to set up your personal real estate marketing program that will generate buyers and sellers leads for you. It is not as simple as putting a couple of ads in Facebook, or sitting an open house and waiting for buyers to walk in. You need help with organizing your business.
• Customer Relationship Management System: the bread and butter of every successful real estate broker is their follow up with leads, friends, family, and designated marketing groups. Having a working system with the technical help needed to make it work correctly is critical.