Market sets compensation practices
Letter to the Editor
By Inman News, Monday, February 23, 2009.Re: 'The truth about real estate compensation' (Feb. 10)
Dear Editor:
Why try to determine what "the compensation practices" should be in the industry?
We have a very dynamic industry in which the success or failure of a real estate practice is dependent on the "compensation practice" that agency creates or uses.
Each area has unique needs that the broker can adapt to as he or she sees fit. If the broker chooses wrong, the broker fails. End result: a stronger base for the remaining agents in that location. If the broker chooses right, more agents will seek to emulate or join that successful brokerage.
In our area, the metro Denver market, there is no single method of compensation, trend of splits, or commission rate charged. These factors vary depending on the expertise and emphasis a particular broker decides to focus on.
The brokerages with a poor choice of these factors generally disappear unless they evolve their technology, commission and compensation packages to be more realistic as the market forces change.
Hank Clark
Broker
CEC REALTY Corp.
Denver, Colo.
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Submitted by Rob Aubrey on February 23, 2009 - 5:40am.
I am surprised Inman published your letter, it is 10 times more relevant to real estate thean any of their writers have produced about compensation.
You should get this month's membership fees.
Submitted by Larry Whited Sr. on February 23, 2009 - 5:41am.
What you say would be right if it were not for some MLS & Board rules that are designed to block alternative biz models i.e.
Columbia South Carolina MLS; Passed a rule that new brokers pay a $5,000 membership app fee and must be located in a Business Zoned area with a physical office. FTC has sued them for restraint of trade etc.
As soon as FTC filed suit they reduced the app fee to $2,500 still out of line with most systems in the country. My guess is they will settle the case with FTC with a major change to their regs and fees.
Kentucky Real Estate Commission: enacted a “No Rebate” regulation blocking a company such as Red Fin giving part of their commission back to a buyer.
While I don’t agree with the Red Fin model I (and the consumers of the state I’m sure) passionately defend their right to rebate. FTC sued Kentucky and they canceled the regulation a few years ago.
Florida Real Estate Commission: Has a regulation that a broker can not collect an upfront listing commission unless it is placed in an escrow account.
Every dollar of the fee must be accounted for as an actual expenditure for that property. If all of the fee is not used for that property the balance must be returned to the home owner with full account statement. A burden to the broker designed to prevent the practice.
This regulation was clearly enacted to block completion from alternative brokers. The FTC is investigating the regulation and hopefully will take corrective action.
These are just a few of the restraint of trades rules and regs designed to keep last century biz model alive at the expense of all property owners. I think they hope the internet is a passing fad that will go away.
It is a serious conflict of interest when the state regulatory agencies have Realtor members. The consumers of those states pay higher commissions as a result.
Larry A. Whited, Sr., CRB, CRS, GRI
President & Founder
www.WebMLS.net & www.maxUnet.com
P.O. Box 757
West Chester Ohio 45071
Cell - (513) 543-2727 Fax - (513) 297-7497