Most of us are raised not to openly discuss how much money a person makes for a living. If the subject comes up, we avoid disclosing any details about our salaries. When I started selling real estate, my first broker offered me a split on the commission. I agreed, having no idea what the other new agents made, assuming it was equal for the same experience and production. That would be the fair thing to do, right?
I quickly learned that commission splits between agents and brokers were not consistent, and even though they were tied to the level of sales, that wasn’t always the case. The truth is, in most traditional brokerages, there is very little consistency or even logic to the numerous compensation agreements made with the agents.
As a broker-owner and manager, I dreaded the “we need to talk about my split” conversation. But unfortunately, it happened often, and my job was to find the balance between maximizing the company’s bottom line and retaining the agent. Not an easy balance to find.
Transparency. In the age of information, we all want complete transparency. The need for a transparent compensation structure has been a significant driver behind the rapid growth of the 100% commission, transaction fee business model over the last 20 years. It provides clarity and a level playing field for everyone in the brokerage.
As a new agent, medium producer, top producer, or team leader — we all earn 100% of our commission. As a result, the yearly negotiation with our office manager or broker for a higher split is eliminated, and the anxiety that someone else got a better deal is gone.
With that friction eliminated, the choice of the brokerage to partner with is focused on culture, tools, services, and training. You can approach your business like a true entrepreneur and be both strategic and tactical in how you’ll spend money to achieve your goals. Complete transparency can exist.
Today, I estimate that ten percent of the nearly 1.7 million members of the National Association of REALTORS® hold their license with a brokerage that offers a 100% commission plan, which is probably a conservative estimate. However, I believe at least half of the licensees will work with a 100% company a decade from now.
Most traditional brokers can not offer a fair value exchange for the commission split they take. I believe their intentions are good, most of them try hard, but the reality is the world has changed. The engine an agent needs to plug into to run their business is very different today. Technology, operational efficiency, agent services, and ancillary services can all be bundled together and offered seamlessly to position the agent at the center of the transaction and as the hero for their client. Furthermore, this bundle is available to agents for a small transaction fee of a few hundred dollars versus a large percentage of the gross commission of a transaction. As an agent, that is appealing and a good business decision.
Transparency. It is changing our world and our industry. Learn more at FathomCareers.com.
Wendy is the Chief Strategy Officer for Fathom Holdings Inc. (Nasdaq: FTHM) a national, technology-driven, real estate services platform integrating residential brokerage, mortgage, title, insurance, and SaaS offerings to brokerages and agents by leveraging its proprietary cloud-based software, intelliAgent. Wendy has spent her career helping top brands, brokerages, and agents build their businesses. She has become a branding and growth leader by combining operational excellence with an agent-first philosophy. You can reach Wendy at [email protected].