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Looking For the Magic Pill Brokerage

Magic Pill real estate brokerage Have you noticed how many real estate agents are looking for the "magic pill" brokerage? I have to admit that I did the same thing myself just a few months ago. I landed at a new company in town that promised to be the next great thing for agents. This company offers to do everything for the agent except the selling. They do all your paperwork, put your signs and lockboxes out, do all your marketing, your transaction management and your database management. They even answer your sign calls and set appointments for you as long as it is from a listing you got yourself.

Suffering from industry fatigue, I thought this sounded great. It's not that I'm disorganized... but the idea of having someone else manage all the details without me having to manage the employees to do it was just what the doctor ordered for my battle-weary soul. I joined the company and went straight into their training program.

I only lasted two weeks.

It was the most boring two weeks of my life. I didn't learn anything that I didn't already know. There was no magic pill. In fact, the magic pill had some bitter edges. The commission split with the broker was 50-50. Now, I knew this BEFORE joining. What I didn't know is that all the company leads cost you an additional 20%. Apparently, this fledging company was still working out the details of these kinds of referral fees, and the system changed right as I started there. Handling your sign calls is an additional fee, too. And, you don't have a choice on these fees. They take all the calls, make your appointments and charge you for making the appointments.

Uh oh. This was starting to sound like the first real estate company I ever worked for... where you leave the office owing more money than when you came in! You know the ones... there's a "small" charge for everything. Phone fee, desk fee, ad fee, copy fee, etc.

Attention broker/managers: I do know why they call us brokers! Something about being broke. I firmly believe that agents must pay their fair share in order for an office to function profitably. Let me get back to my real point!

crystal ball of real estate I was looking for the magic pill of real estate ease. Back to that training class that bored me so much... this was an excellent training class. In fact, some newer agents in the class just loved it and were clearly learning all kinds of useful information about how to sell real estate. But, I've been in the business for 10 years. I've sold hundreds of homes. I already know these scripts and dialogues and prospecting techniques. I just need to USE them. Hmmmm. I'm paying more than 50% of my commission for accountability and secretarial help? You don't have to be in business for 10 years to realize that these numbers just don't add up!

I have found that almost ALL brokerages overpromise during the interview and leave the agent thinking that by moving to their company the agent will get that magic pill to cure their real estate business (or lack of business) woes. And yet I fell for the magic pill promise.

After two very long weeks of "waking up" to reality, I went back to the basics. I quickly moved to an established company with a reasonable & fair commission structure, big name recogntion, plenty of agent support and an enormous variety of quality training. I left behind my magic pill search and remembered that when I want business, it's up to me to seek it out. I solved the "paperwork" issue by paying a nominal fee to a transaction coordinator who contracts her services to agents in the office. Accountability is cheap, too. You can get a coach or take a sales class. I opted for the sales class since the excitement of competition helps me stay focused on prospecting. The cost? Thousands less than 50% of my commission! No more looking for the magic pill brokerage for me.

Dianne Bartlett, Broker Associate
Keller Williams Realty
512-796-4068

http://www.TXmaxvalue.com

Posted by Dianne Bartlett on 10/16/2009 02:31 PM

Comments (63)

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63 Comments on Looking For the Magic Pill Brokerage

OCT

Good for you, I have been with the same company since I got my lisc. I wouldn't change for anything. When the others offer things to good to be true they usually are. I get offers all the time and my answer is always the same, NO THANK YOU- I/m good - cw

Dianne - great post! So many are looking for that instant magic and it is available but not where most people look first. The magic is within! Congrats on discovering it so quickly.

Dianne, there are many companies out there. Went on a few interviews recently. One company had a contract fee that the buyer is supposed to pay, but in reality, if the buyer did not want to pay who do you think was charged. There are some interesting offices out there.

Dianne - great points. As an agent I know all about the companies that 'draw' you in and then the fees pop up, one after the other. It's kind of crazy to me. As the broker/owner I see absolutley no value in playing games like this. What is the point. Either it's a good fit - as a few interviews together will tell - or it's not. There is the culture of the office and the people - this has always meant something to me along the way and still does. I care about our agents - and we see them through whatever is going on for them - and kick their butt too!

I'm going to frame this blog and put it in my office.

I have a small group of Top Producers I've groomed from the very beginning of their careers. They've been with me for years. Once in a while one of them will have an extraordinary offer from a competitor. The ones who came and talked to me about it are still with me and thriving. The ones who left keep floating from one agency to another. As a rule I never take anyone back. Once gone, that's it. It's like a marriage: you're either in, or you're out. None of this: I marry and divorce you and marry you all over again...

One of the worst things agents can do is move from one agency to another. It's a recipe for disaster in this business. I may not entice you with promises in the interview, but I always deliver more than expected once you work on my team. A good Broker in Charge can make careers. People don't realize just how much a good Broker can do. A good Broker has a good team. There is motivation. There is impetus. There is support. There are Leads. There is Training. There is a good mission statement and the right Agenda.

I am amazed at how, in our business, it is acceptable to solicit other Broker's agents. It's incredible to me; I find it incredibly unprofessional and repugnant, akin only to used car salesmen modus operandi.

Thank you for a post I will use just in case any of my people decide to explore and see if the grass is greener on the other side...

Excellent post, Dianne. I went to KW after one month at a small company. I needed training and mentoring that I felt I was not getting there. KW do provide excellent training, but after I felt I could stand on my own I made a gut-wrenching move to a small company that charges me 3.5% on each deal, plus a minimal amount per month, E&O, etc. I never go in the office, I have no idea who the other agents are, and have little or no contact. But they are paperless, the manager is there to answer any oddball questions, and did I mention, they take 3.5%.

Giving any of these brokerages the amount of money they require, whether it be 30% or 20% (different if they are taking 10% because you are one of their top producers) is ridiculous. We are bringing in the deals, and doing the work. I miss the cameraderie, but I refuse to pay for it.

There definitely is no magic pill, but also not every broker is for every person. You chose your broker probably for the same reasons I didn't choose your broker. We're all looking for something different. Glad you found your fit.

Thanks for such a good post. I only have one other agent on my team right now because I just had to let some of them go. I want people who are serious about their business and have the same morals and ethics that I do and that is hard to find. I support my agents and pay for alot of things that many of the other brokerages don't pay for and try to be really fair with my team. I really believe that we reap what we sow. Best wishes to you!

Dianne,

I'm glad you got out in two weeks...and hopefully, w/o too much of a penalty!! We have a lot of people that come and go in our office...but I LOVE our broker. In fact, I am meeting with her this coming Tues for an hour so she can give advice on how to "up my game".

Good to hear Mirela's response as it gives the broker's point of view! :)

There are many choices for all to choose from. What works for one agent, just doesn't for another. I could never imagine paying 50% these days. Wow! I can see for new agents in training but not for experienced agents. I'm glad you found your spot!

Better to sleep with the devil you know then the one you don't know....thats the saying in our office

After playing cat and mouse with my first check at my new brokerage I am reconsidering things. Maybe paying a little more for organization is worth it :)

Diane, Great post. In 17 years in the mortgage business, I have worked for basically three companies. The longest was 10 years at the same place. Great place, great people. I have found the grass in never greener on the other side of the fence, it just looks better maintained. But once over the fence the weeds start to show. Smart, hard work and attention to serving my clients and professional partners has helped alot. When the fog of work appears, I will call on a partner and chat over lunch and things are back into perspective. We have a great opportunity to help others make smart financial decisions.

Jeff Thomas - http://www.lending-solutions.net Old site: http://www.lendingsolutions.net

Dianne - This is a great and well-written post on this topic. I agree that there is no magic pill when it comes to choosing brokerages. Having run my own for five years, I have seen how many different items are important to each agent, and I still get surprised at which things resonate.

There's definitely no "one size fits all" brokerage. I've found that there are some brokerages that are great for the "newbie", but that comes at a pretty steep price in the form of a less-than-favorable commission split. Some agents need a physical office where they can leave their personal life behind to focus on business, while others work best at a home "virtual" office and need little direction. It's best to work on knowing what type of person you are first, then figuring out how much of your commission check you are willing to pay to a brokerage to get what you are lacking.

Since I provide leads but not much in-house training, my small firm works best for those that are experienced, self-motivated, and autonomous yet may not have the huge sphere of influence or network needed to thrive. It's great for many, but not for everyone; and that's the way I want it.

OCT

Hi Dianne~ Having had my own company for years, I can definitely see both sides.

There is no magic pill. I wish there was, I wish there was. Choose what you like and where you think you will fit in. Write down what you are looking for in a brokerage and then compare those key points to what is out there. Too many agents jump ship with no plan in place.

I'm always amazed at how easy it is to suck people in with the promise of leads. Last time I checked, my real estate license said "salesperson", which implies that I am the one responsible for lead generating.

WOW -- that company you went to and left wasn't a magic pill at all. With my own brokerage there's still the need for pills, but GEEZ at least I can afford them now!

Dianne -

That's a mighty big pink pill you show there on your post. I wouldn't have wanted to take that one either.

Dianne,

Early in my career, I chose a good broker noted for her mentoring. It made all the difference in the world. She was there to cheer me on and point me to the right CE and company training. It gave me such a good grounding and I am happy I did not shop around for a "good deal"! Now after 14 years, I am with a local broker with 600 agents. Most of us long time agents...and one hundred per cent commission. I love the money, honey. I think our careers go through stages, based on what our goals and objectives are. Do I get leads? Not from my broker...but then I am working hard to build them through my own efforts. AR is awesome for that. Good post!

Great post Dianne, once you find your fit then it is up to you to succeed. I have been with my compay for ten years and love it. While others think I am crazy to pay the fees, different stroke as they say. Good Luck.

After being with 2 no split companies I could never go to a split company. I have to be somewhere that I can run my own business, track expenses and tweak as necessary. I rather like paying as I go...

I was at a 50% split, large franchise for my first 4.5 years in this area. The split increased as your income increased, so the potential was there to get to higher splits during the year. However, when the birthdays rolled around, the split would go back to 50%, and the monthly fees, quarterly fees, franchise fees, etc. just kept on coming...

This year, I decided to jump ship and go to a company with no fanchise fees, a high split that remains constant, and very low, minimal fees. I have never looked back. Whatever floats your boat is the path to choose, and there are as many paths as there are personality types. Glad you found the right place for you.

Thanks for all the comments everyone! I've been on both sides of the fence: broker/owner and agent. So, personally, I think it's irresponsible for agents to think they are the ones who should be profitable while the broker/owner struggles. Agents sometimes don't realize how many costs an owner takes on and how much liability. So, in a way, a 50-50 split almost makes sense! I think the most important questions for an agent to ask their company's owner: Are you profitable? What if the agent count goes down, are you still profitable? What if production goes down, are you still profitable? What is your business plan to maintain profitability?

Because here's the deal. You may be happy as an agent, but what happens to your company when...

A lawsuit is filed... The landlord of the office gets unreasonable... A competitor opens down the road... The broker/owner goes to the hospital... The office manager mishandles the money & commission checks bounce... And, the list goes on.

I can tell you from experiencing all of the above throughout my career that it usually means the office shuts down... abruptly! Then, agents are forced to make a move in a hurry.

I know, I know. Some of you really like small, local offices - or the no split companies. For the majority of my real estate career, I loved working at a national 100% company... until my commission checks started bouncing. And, a friend of mine at a very well-known small boutique office in town is now hunting for a new home because the founding broker/owner is slipping away due to Alsheimers.

The bottom line, in my opinion, for choosing a brokerage: Is the company profitable? Does it have a plan for growth & contingencies? Can agents be profitable, too? Is it fair for both?

Profitability + growth plan + contingency plan + fair for agents = Magic Pill Brokerage!

I have never felt the 50/50 split worked for me. I did the higher splits for a few year and now have my own brokerage. I have never looked back at any of my moves and really love the business.

I do strongly agree there is no magic pill and enjoyed your well written post.

Dianne,

I agree you made a wise choice with Keller Williams - I cut my real estate teeth with them and have nothing but good things to say. I left because I was working a neighboring higher end market than where I live. Due to health issues in the family, I decided to come closer to home, I too listened to the 'magic pill' pitches and proceeded to wast a year before I stepped out with Allison James Estates and Homes. I just renewed for my 2nd year and love it - I pay a flat fee of under $3000 a year (including E&O) and I earn 100% commission. Now, I am on my own and don't have the support structure of a big office - but with the extra money I earn, I was able to buy all of the equipment I need (high end copier/printer, phone system, etc) and sign a lease for a small retail space for both of my assistants to work. Now, I may not be making more at the end of the day, with my expanses...but I definitely have much more control over where those expense dollars are spent and how they will best benefit me.

Thanks again for the post,

John

Very interesting post and one that I have put forward many times to newbies becuase I too learned that it is you and you alone that will secure business. I am an indepenent office and we pay our agents 100% for a small monthly fee. Why because I only hire experienced agents who quite frankly do not need me, and therefore I don't need to invest in training them. We are a virtual office with no walls to pay for. i also respect that every agent finds the company that works the best for them and there a lot of choices out there, different models and styles. I have noticed in the last year or so many RE/MAX agents going back to the more traditional style models. One ame to work with me.

Great thought-provoking post. And to Don #15 who said, "It's best to work on knowing what type of person you are first...", all I can say is, "Brilliant!" Thanks for starting the conversation Dianne.

Tanya in Montreal

You are all awesome! Thanks for giving me a forum for my thoughts. I appreciate every word that every one of you has contributed. Isn't it a blessing to live in a country where you can have the freedom to choose what you want, say what you want and write all about it?

My first brokerage offered the 50/50 split to new agents, but they also provided excellent training and support systems. But they also hit you with $1500/year E&O and "technology" fees of about $250 a year (so you could connect to their website for online training and email).

I was actually very happy with the company, but they decided to close the office after I had been there over a year. So I got with a different company, with great national branding, that gives me a better split, a low E&O fee per transaction and excellent support from the managers. And, they also have advanced training for all agents for free. I am very happy with my brokerage.

I have gone to smaller companies, but then I am not a high structure type person and like the freedom to run it my way; which may not always be the best way (but sometime it is), but I function better.

Diane as the owner of a brokerage I have found the key to my agents having a sucessful business is when they take ownership. That means either doing the work themselves or hiring someone to do it. By keeping services down I can keep costs down thereby allowing my agents to keep more money in Their business.

Companies like you went to are for part time or new agents. You have made it 10 years and that says something about you. As you found out the reason the grass looked greener on the other side was because Your business was helping to maintain it. Good luck in your new choice.

Dianne...

I think we've found our magic pill. Our company has gone virtual. To top that off our Son has come to work for us. He's newly licensed and has taken on the mundane so that we can pursue our own bigger picture. To top that off my Daughter in law runs all my errands and my oldest Grand Daughter and Grand Son help me around the house. It's hard to fathom that life could ever be this simple. I've been looking for simple for more years than I care to count. It appears the only time I really need to leave my home is to fun shop and go to church :)

P.S. I firmly believe we have to create our OWN magic pill. Taking pills from strangers is a bad idea :)

TLW...ROAR!

Hi Diane~

I remember you from back when I did marketing for a builder in Lake Travis. I remember you as a strong agent then, and I'm sure you'll do fantastic at Keller Williams! Onward and upward! Great post!

Diane,

You are a very wise woman! After only 2 weeks you KNEW that you needed to be with a different company and you moved! I know agents who have stayed with companies like that for YEARS ,because they FEAR being incharge of their own lives/business!!!

Good choice!

Kathy Opatka

Diane,

I did a similar thing a few years ago. I'm a broker. I took a short break from real estate to do some traveling and focus on my family. When I went back to the business a friend encouraged me to join a firm that I knew had been in the business a long time and which I believed to have a good reputation. Their commission structure was really difficult to figure out but they assured me that I was at the top tier based on my past sales as a I had been a top producer for many years and had my own small brokerage several years ago. After I received my first check and saw that they took over 1/3rd of my check and still charged a huge amount for E & O Insurance on top of that, I was shocked. There was no way that I could support my family, especially in these trying times, on that split. After much encouragement from my friends and fellow agents, I started my own firm again. I have a few good agents working with me. Its a small company and we help each other out. The split is reasonable and I make it simple, the same split for everyone - no games and an "open door" policy. You have a question or a problem - - let's get it taken care of now. We all get along and are making money. I believe that when things are not going right - - you got to go back to the basics. I believe in keeping it simple.

In my 33 years I've never looke for a magic pill

First firm for 5 years
RE/MAX for 28 years as soon as they opened in Virginia
Third firm almost one year - it is the largest independently owned brokerage in the US - over 16,000 agents

Karen

For me, I decided to leave a franchise this week after 16 years. I talked to KW but it was another case of a franchise that said it knew how to use my money better than I did. Bot h my old one and KW are fine organizations, but Web 2.0 gives us the freedom and ability to be our own boss, and to brand ourselves, not a sign.

Interesting article. I am in my first year of Real Estate and have seen agents leave our office because they think that the grass is greener on the other side of the hill. When they come back to our office, they all same the same thing - if it sounds too good to be true - it usually is! They are glad to be back and our company welcomes their return.

There is a model out there for everyone. Some people do very well at independent brokerages, others at mega brokerages, others on their own and others at mom and pop shops. I love the diversity that our industry offers. Just like every agent is different, so are brokerages and each agent needs to find there special place where they can bloom. I have worked for three names before opening my own office and there were positives and negatives with each one. But I will say...I never left over money...most agents don't...they use that excuse, but it is not true. The number one reason that agents leave brokerage firms is lack of appreciation, recognition and support. I actually took a pay cut on one move just to get into a more positive work environment and ended up making the most money I ever made in my career. Agents biggest mistakes in getting into real estate and choosing brokers is the same...they fail to remember they own and operate a business not work at a job. When agents start making business decisions and stop making knee jerk decisions about the biggest splits, they will be much better off. Good post!

really nice blog. I am with a new company for about a year. its seems to be a very nice company. I agree, there is no magic pill.

There is no magic pill. You must know your strengths and weaknesses and find a company and broker that will address both. Ultimately our success rests with the business we generate ourselves. Good post.

Hi Dianne. Some models do not appeal to some people. I like variety and diversity though I have never looked for the magic pill. I wanted a stable company and I got it. I have been with the same company ever since. Everyone is different though :-) ~ Lana

Dianne, I don't think there are ANY magic pills, and a 50/50 split is very hefty.

WHy would the commission checks bounce when they are cut directly from the title company and not the broker?

Dianne, great post I think everyone appreciates your honesty and the fact you are sharing we all learn so much when we get to read these posts.

I like the idea of a "Magic Pill Brokerage". I think that's a great way to explain it.

Fortunately for me, I don't have to worry about a magic pill brokerage as I have my own.

OCT

Hi Dianne,

Excellent post! Just went through that in our brokerage....some agents left looking for the "magic pill"! The "magic pill" is shifting the way you look at all the things you don't feel like doing. and taking responsibility. It's alwasy about our point of view, not the circumstances! :) Thank-you!

"I am amazed at how, in our business, it is acceptable to solicit other Broker's agents. It's incredible to me; I find it incredibly unprofessional and repugnant, akin only to used car salesmen modus operandi. " via mirela

@mirela that is ridicoulous statement. Show me any other industry were a business does not try to get the best people to work for their company. Hell, even Facebook recruited away the Chef of Google and many of his team.

@Jason Crouch You make a good point, thus the reason for so many different types of business models out there.

@Jeanni Agree

I poised this question on twitter.com/darinpersinger this morning "today i'm wondering about real estate franchises. do we need them anymore? is that biz model dying?"

This post makes me continue to wonder...What does the real estate brokerage model of 2020 look like?

Donna: Yes, I've had commission checks bounce that came straight from the title company, too. (Think of all the title companies that have gone under) But, this particular commission check was from the broker. Not every broker does DA's. DA's make commissions incredibly hard to track in the bookkeeping for the broker - it means extra bookkeeping for the broker when they allow agents to receive checks at the closing table.

Darin: Until you've walked in a broker/owner's shoes, you just can't realize the incredible responsibility and liability they carry. The real estate brokerage model of the future must be PROFITABLE despite many agents discomfort with this fact. If agents can't support this model - then I see the banks taking over and agents being stuck working for them. Chase Real Estate and Bank of America Properties - Gee, I wonder how big your commission check will be then?

I appreciate everyone's difference of opinion! And, I am grateful that you allow me to share mine.

In my new company, the owners make a reasonable profit because the books are open and the agents have an enormous amount of input into how the money is spent & commission splits calculated. Agents have an incentive because they get a share of the profit and yet they are able to see that the owners who put up the capital and pay the bills must make money, too. This makes it a win-win for the owners and the agents. I like being a part of that.

A 50-50 split with a bunch of extra fees and inconsistent support is not fair for the agent. A 100% company is not fair for the broker/owner - it leads to bounced commission checks or a closed office. I think a successful model is somewhere in between - it provides value to both the agent and the owner.

Thanks everyone!

Diane:

So true - thank you for explaining in the fashion that you did. There is no magic pill in real estate but we can also apply to all areas of life. We need a brokerage that wants to help us succeed while alll parties benefit. We all need a win win situation.

Thank you

Susan Gaddis

No magic pills for Real Estate.

In this business, we are the magic pill that the agency is looking for.

The grass is always greener at the other agency - I have been with the same company for 15 years, and before I would go to another I would approach my broker and see if we could work out whatever it is that I felt I would get from them. My clients like hearing that I have stayed at the same company. It symbolizes loyalty and I believe its better credibility for me.

Dianne,

Very educational post for new and veteran real estate agents. Now, this also applies to our side of the street because we have similar issues to deal with and decide on. Looking for the magic pill is fruitless.

OCT

I think we all get lured in to this at least once, but now thank goodness for 100% companies.

No magic pill but sometimes you just have to do it. Recently left an office of a major francise. 50% split plus other fees, no training, plus the broker was taking all the walk-in leads even when we were doing floor-time made it very difficult. When I started there there were 8 agents. It is now down to two full-time and one part-time. Hope the broker figures it out soon. Myself and another agent left the same day and we tried to discuss with her why we were leaving but she did not want to talk about it and walked out on us. We both wrote letters explaining why we were leaving but whether she paid any attention or not is not known. Another agent left shortly after we did so don't think the broker got the message.

OCT

Hi Diane....Great post!.....An agent needs to do research and evaluate....companies. Seek recommendations from other agents. Thrust is important.

Jerry Gray CRB,CRS,GRI / Prudential Carolinas Realty / Winston Salem, NC

Gaye: I wish all agents took that approach. Wouldn't it be nice if all sellers and buyers took that approach, too, before cancelling a contract with us!

Carolyn: You did the right thing but the broker obviously isn't interested in growing and learning. I'm glad you found a new home.

OCT

Wow Dianne. 50-50, that is a STEEP price to pay for convenience.

Dianne, great article wish this came out when I left my first company after the owner died & new management was clueless on how to run a real estate brokerage (5 yrs as agent; 4 yrs as office manager); My 2ND company changed their business model & released all but 1 agent (2 yrs) to sell company owned properties only; 3rd company was a franchise and after paying monthly fees(desk, signage, postal, advertisement) on top of commission franchise fees I left (6 months); now at another franchise but only pay commission franchise fees & brokerage fee and all other expenses are on me to decide what & how much to pay.

Donna (#46): Here in NC all commissions have to go to the brokerage you are affiliated with & the Broker In Charge then issues your check, so it is possible for the check to bounce if company is operating in the red.

OCT

Very good and interesting article the comments were interesting.

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Dianne Bartlett

Lakeway, TX

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Keller Williams

Address: 1921 Lohman's Crossing, Ste. 100, Austin, TX, 78734

Office Phone: (512) 266-2606

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