Coldwell Banker Coastal Alliance (CBCA) is acquiring the Long Beach, California-based Main Street Realtors and changing its business model to a 100 percent commission plan in Southern California, the company announced on Wednesday.
With the acquisition of Main Street Realtors and the recent acquisition of Coldwell Banker Star Realty, CBCA, also based in Long Beach, now has 340 sales associates. CBCA was ranked as the 121st most productive Coldwell Banker franchise, according to the Real Trends 500, with 671 transaction sides closed in 2017.
“We have been a traditional brokerage model since our inception in 2000, but we feel the time is right for this change,” said Kris Conrad, broker with CBCA, of the shift to the 100 percent commission plan.
“We are responding to demographic shifts in our industry and we feel strongly that this makes us a very appealing option for real estate agents in our marketplace,” added Conrad. “It fits ideally into our plans to grow our company substantially going forward.”
The move comes amid increased consolidation in the real estate brokerage space, with Compass, Berkshire Hathaway HomeServices and others acquiring more brokerages. At the same time, several franchises are shedding some franchisees, offices, and teams who are in-turn, going indie.
To implement the 100 percent commission plan, CBCA has partnered with Coldwell Banker Danforth, the only Coldwell Banker franchise that currently operates with a 100 percent commission model, according to the release.
Coldwell Banker Danforth has operated the 100 percent commission plan since 1999.
“We are one of the top 15 brokerages in the Coldwell Banker network and close over one billion dollars in sales volume annually with this model,” said Dave Danforth, the owner of Coldwell Banker Danforth. “Why are we having this success? We are bringing maximum value to our agents, team management support, full service operations, and a trusted global brand.”
At Coldwell Banker Danforth, realtors take home 100 percent of their commission, but pay a monthly fee of $325 and a fee of $250 per transaction, according to Sam DeBord, the vice president of strategic growth at Coldwell Banker Danforth and an Inman contributor.
“The traditional model of most brokerages is taking a commission split from the commissions,” said DeBord. “Usually that will be anywhere from 10-50 percent on a rolling basis annually.”
“As everybody in the business knows, there’s a lot of companies advertising 100 percent commission but there’s always fees somewhere,” added DeBord, noting that agents at Coldwell Banker Danforth that come from traditional brokerages usually take home 10-30 percent more per transaction.
At CBCA, the transaction fee will be determined by market factors, but the monthly fee will $295, according to DeBord.
“The transaction fee will be dependent on the cost of the local market – dependent on overhead cost and administrative cost,” said DeBord. “It will be slightly different depending on the market cost but it will start under $500.”
Agents traditionally had to pay big splits to be part of the most trusted and well-respected brands in real estate, according to DeBord. At Coldwell Banker Danforth, the 100 percent commission has been a big driver of growth, something he expects will happen quickly in Southern California as well.
“We’ve been able, through technology, efficiency and basically economy to scale, to offer them a much better compensation package and still get them the top tier branding, the technology tools, the full service brokerage support and a much superior total value package with the pricing,” said DeBord.