Industry News

Discount firms put squeeze on real estate brokers’ profits

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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...