Are commissions the problem or is the "independent contractor" brokerage system the problem?

The predominant brokerage system in place has an attractive allure: Be in business for yourself. Earn big commissions with nominal expenses and effort.

Real estate careers are touted as part-time, full-time, anytime opportunities: "Educated or moronic — it doesn’t matter.

Editor’s note: This month, Inman News is focusing coverage on the issue of percentage-based real estate commissions and other industry compensation practices. The following guest perspective is written by Buz Hurley, a real estate agent in Georgia. Please join in the discussion: Click here to share your views and insight with Inman News readers.

By BUZ HURLEY

Are commissions the problem or is the "independent contractor" brokerage system the problem?

The predominant brokerage system in place has an attractive allure: Be in business for yourself. Earn big commissions with nominal expenses and effort.

Real estate careers are touted as part-time, full-time, anytime opportunities: "Educated or moronic — it doesn’t matter. If you know someone who will buy or sell a home in your circle of friends or family, you should be in the real estate business so you can cash in on those relationships."

Almost everyone has a friend or family member who is a real estate agent. Some are highly competent and ethical; others are incompetent; and many are unethical.

How can an occupation be professionalized when its very nature will not allow it?

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.

All agents would be employees, thus eliminating the independent contractor and the need to revamp a compensation system that is designed to lure the "treasure-seekers" and not to identify and develop the treasure (good-quality agents).

A base-salary-plus-commission system would force brokers to hire only quality people and retain only those who are productive and ethical.

The "we’ll-accept-anyone-with-a-license-and-see-who-will-stick" mentality of today would automatically be eliminated, as would part-time, unethical and incompetent agents.

I estimate the current crop of 3 million agents would be reduced by at least two-thirds, leaving a sales force of professional men and women who are dependent and accountable to their employer, the broker, for their livelihood.

This would also force brokers to actually train and coach their agents, and invest their time and talents into helping these men and women develop into competent professionals.

In summary, if we don’t change the system itself, revamping the commission plans won’t solve any of the industry’s chronic problems and challenges — it will just cover them with a different wrapper.

Buz Hurley is a real estate agent for Solid Source Realty in Georgia.

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