If you have been a real estate agent for a while and have worked with a brokerage, you are probably so used to receiving the standard percentage of commissions. However, seeing various ads for this new 100% commission model through a few brokers or organizations can make you a bit unsettling.
How are these businesses able to provide the agent with 100% of the earnings from a sale? What are the disadvantages of this new real estate business-broker model? Are there any drawbacks to a real estate company’s commission structure?
Here is a closer look at the specifics and why, if you are a real estate agent, you should really be concerned about 100% commission real estate.
100% commission real estate also means fees, but they are low
There are still fees associated with every sale for the 100% commission real estate brokers who have switched to the company that provides this seemingly unheard-of deal, but those fees are astronomically cheap.
For instance, if you and your broker had typically divided commissions 70/30, a $9k commission would have meant $3k to your broker. When dealing with a full commission firm, you might only be required to pay a transaction charge of $499 or even $195 with each house sale, as well as a potentially modest monthly cost.
What is the trade-off?
After all, the brokerage must also turn a profit. You would immediately notice a few significant differences if you switched from a standard agency to a 100% agency, including:
- The brokerage won’t provide you with an office. You may decide whether you have your own office space.
- You won’t have access to the broker’s extensive training programs or business gatherings.
- You will be in charge of things like purchasing signage, placing ads, and scheduling home showings.
However, this is not all that dissimilar from conventional commission-based real estate brokerages.
What are the advantages?
Of course, the money you keep from every property sale is the main benefit. Every time you do sell a property, you don’t have to give away a portion of your commission instead, you get to retain the proceeds after deducting transaction costs.
Now you gave the opportunity to be self-employed and start having your own independent company, which is the second great benefit. Even if you had previously been employed by a brokerage as a self-contractor, there would have been requirements and restrictions to take into account.
A few other factors to think about are as follows:
- Full disclosure of the services you pay the brokerage to provide
- No need of using internal brokerage services
- When you need it, get the industry and sales training, not on the brokerage’s terms
- There are no sales quotas to meet in order to complete a contract.
- The freedom to create your own brand while working as a real estate agent
When it comes down to it, 100% commission real estate offers agents clear benefits, particularly for those who want to get away from the conventional system and launch their own company.
To decide if making the switch would be a wise career move on your behalf, it is worth learning more about the 100 percent commission industry model.