Restore 'economic sense' to real estate
Letter to the Editor
By Inman News, Wednesday, May 27, 2009.Re: ' "Junk fee" or necessity?' (May 27)
Dear Editor:
Thirty years ago brokers worked on commission splits that made sense and allowed the owner of a firm to make a profit. The days of 35 percent to 40 percent company dollar have long passed by, and the ability to manage the middle line for the potential of a return that justifies owning a business requires that the cost of doing business be absorbed somewhere in the transaction.
If there has ever been a time to return to a compensation model that makes economic sense, we are living it! Take back control of your business, and reward performance but adjust the splits with sales agents so ownership has value.
Brokers can't continue to give away the top line. When they do, these added fees become necessary and justified. That's the logic. Time to "man up!"
Doug Stranahan
Owner
Recruiting, Selection & Retention Inc.
Michigan
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Submitted by Ruthmarie Hicks on May 28, 2009 - 12:01am.
I think a lot of this misses the point. We no longer need large offices and big conference rooms and large computer stations. Its the brick and mortar and long-time agents who demand a great deal and contribute nothing that are bringing large brokerages to their knees. The days of that type of brokerage are nearly over.
Brokerages need to get leaner and meaner. They are top-heavy with staff and mortar and many don't even stay on top of the technology.
A small office with no assigned desks unless the agent pays for them are the wave of the future. I meet my buyer clients in coffee shops like Starbucks near to where they are searching and for my sellers, I go to their home. My OFFICE is IN my home - making for a very easy commute. Need someone to schedule showings? I use Centralized Showings - $25/listing and they are very effective.
Newer agents like myself are no longer willing to cough up nearly 60% between franchise fees and office splits only to get nothing - literally NOTHING in return. In my first brokerage I was nickled and dimed to death. After forking up nearly 6o% of my gross commissions - I had token training, minimal support, no leads and found myself supporting a pyramid scheme where top agents demanded a lot and gave little but scarfed up all the leads that I helped to pay for. And just to make SURE I felt abused, more fees were tacked on at the beginning of each year.
Brokerages like that deserve to die.
I moved to Keller because I wanted a better split. The big box brokerages kept telling me that they were offering "more." But they weren't offering ANYTHING of real value. The claimed to offer leads - but they didn't. They claimed to support listings - but only did so minimally - so I forked up the lions share. Keller didn't claim to do things they couldn't do - but they did offer decent training and a decent split. A much better deal for me and they are thriving.
I'm doing better as well. I've taken the extra money and put it BACK into my business with some badly needed marketing. That gets the phone to ring. I needed a bigger split to pull that off financially.
I'm not saying that Keller is the be-all and end-all. I don't drink Kool-Aid. I'm just sayint that it can be done....but you have to let go of that "big-box brokerage" mentality.
Submitted by Gary Frimann on May 28, 2009 - 4:48am.
I couldn't agree more with Ruthmarie. Nickled and dimed to death I left a big brokerage after realizing it ws doing me no good, noir was I doing it any good, quite frankly.
I think most people entering the business are under a false fallacy that the paternalism (or maternalism) of a large brokerage is the way to go, then after getting discouraged, the quit the business. Another casualty, yet the brokerage lives on, in a multi-level sort of way. All of you working for a big brokerage, I have only one question-When is the last time somebody walked into your office seeking to buy or sell a home? It is really simple- you will not sell a home to anybody in your office, so why go there. People shop on the internet, without a pesky agent to "bother" them, but they will BUY using an agent.
Big box offices in my opinion will go the way of the record store. There is still music being made, recordings being done, but the way we acquire our music is different now. Besides, if we purchase a song (or album) it is no great loss, as we have not spent a lot of money to do so. With a shaky real estate market, it is a huge decision for most people, and a huge amount of money being spent on an item that is not simple to "return". People are really doing their homework these days, making it a lot easier for the agent in a transaction.
How people find their agent these days does not measure up the who has the most square footage of an office.
The top agents will always get the best leads, nd the majority of them. Will they tell you about how they got their leads? No. That is one of the best kept secrets of big brokerages...
Gary Frimann
Broker / Owner
EAGLE RIDGE REALTY /
SIGNATURE HOMES & ESTATES
http://www.EagleRidgeRealty.net
http://www.SignatureHomesAndEstates.com
Submitted by John Rakoci on May 28, 2009 - 6:58am.
I spent my time in the big franchises and spent my money there too. My current agency gives me some perks but MY business is part of a larger business. They do not talk about the walk ins and leads that are nearly non-existant, they permit me to run my business at minimal cost.