Industry News

Discount firms put squeeze on real estate brokers’ profits

Poll finds commission splits high on list as well

The biggest source of pressure on real estate broker profits comes from competition from discount firms, according to a recent Inman News poll. Fifty percent of those responding said that was the top source of pressure on profits. That was followed by top-producer commission splits, which about 28 percent said was the biggest pressure. About 3 percent cited technology/Web expenses, with another 3 percent citing franchise fees. Fifteen percent opted for the "other" category, with some of the responses including "non-professional activity by incompetent agents," fixed cost overheads such as office space, insurance and staffing and competition from non-discount firms that cut their commissions by as much as half. "When agents keep getting better and better commission splits (e.g. Keller Williams), traditional two-tiered brokerage models (the salesperson tier and the broker tier) have a hard time keeping agents... The two-tier broker/salesperson system will break under the weight of comp...