A guest column published Friday, which suggested that a hybrid salary model could improve the quality of real estate professionals agents, has stirred up a firestorm of commentary from our readers.
Many readers expressed adamant opposition to ending the commission-based compensation model, and the feverish dialog on the issue is an obvious indicator of intense friction — and possibly a sign of seismic shift?
Buz Hurley, a Georgia real estate agent, suggested in his Feb. 6 guest article (see Inman News), "To make real estate a true profession and not just a catchall for anyone who can pass the exam, I believe the sales force has to be salaried by brokerage companies."
He further suggested a compensation model featuring a base salary plus commission, which he said "would force brokers to hire only quality people and retain only those who are productive and ethical."
One commenter, Vickie Flowe of Gibson Flowe Properties in Charlotte, N.C., offered up a quote from a colleague: "the fish stinks from the head" — the root of the industry’s quality problem lies with management, she suggested.
"Until executives, owners, brokers and managers everywhere start treating agents like professionals (with professional expectations, training, accountability, etc.) the downward spiral will continue," Flowe commented.
Michael Russer of Russer Communications also said in a comment that brokers must take a top-down approach in improving quality.
"In the 15 years I’ve spent speaking to real estate sales associates and brokers all over the world, one thing has become crystal clear — failure of the current model to enforce standards and professionalism comes from the top down," he commented.
"Despite protests to the contrary, most brokerages are just body shops with little or no accountability and behavioral standards, especially when it comes to business practices. We attract who we are — it is really that simple."
Teresa Boardman, an agent and Inman News columnist, said that converting agents from independent contractors to employees would stamp out the allure of the occupation for her. "I am very well-educated and professional. I seek freedom and Independence. It is more important to me than money could ever be," Boardman commented.
Another commenter, Adrian Sherwood, agreed that the independence of a real estate career is a strong lure: "This industry is an intellectual aphrodisiac for me in that it is so wide open. The possibilities are the selling points that attract someone like me."
Maureen Francis, an agent in Michigan, said employee status could have its benefits — namely group health insurance, and the current system does seem to benefit brokers, though "I cannot even imagine at this point how we could switch" from the independent contractor model.
Another reader suggested that he would be willing to make concessions on commission income in order to realize some of the benefits that salaried workers can enjoy, such as unemployment insurance, workers’ compensation, health insurance, paid holidays and vacation time. "So make my commission split a bit less — I would trade less commission for the above."
In another comment, a reader suggested that the market will dictate which agents will survive, allowing "the cream to rise to the top. (There’s) nothing wrong with paying percentage-based commissions to people who can prove their worth."
Jeff Bergstrom of Wynd Realty in Atlanta, said that the salary-independent contractor discussion was mired in "the old-fashioned structure of the franchise system" and he suggested that agents will make brokers obsolete by banding together to share workloads and expenses.
"The broker function ill be replaced by a business model that focuses on ‘services’ only," he said.
State regulators ultimately will be the deciders in the quality of real estate professionals, commented Ken Lampton, a Dallas Realtor. "It is too easy to obtain a real estate license. That is the reason we have too many agents. The paradigm-shifting changes in this article might or might not improve things. But any reform of this industry must begin in the state legislatures. An individual should not be licensed to practice real estate just because he says, ‘What the heck, I’ll give this a try.’ "
The entire conversation about changing industry compensation practices is misguided, commented David Curry, a real estate agent in Williams Bay, Wis. "Why is the industry in such a hurry to abandon the classic business model of a traditional brokerage?" he commented.
"It’s already been shown that buyers won’t pay for a fee based service, and sellers, too, would rather only pay if they’re first rewarded with a closing. Now we’re supposed to be employees? If brokers hired agents as employees, you’d take all of the motivation out of the agent."
Editor’s note: Inman News will continue this conversation through coverage of compensation-related issues and we invite your insights and ideas in addressing successful practices, problem areas and possible solutions. What changes, if any, are needed in the industry’s compensation practices? And what will it take to realize these changes? Continue the discussion here, or send us a letter to the editor.
What’s your opinion? Leave your comments below or send a letter to the editor.