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Splits Are Changing! So Are Loyalties.

Recently, in all of my interviewing efforts, I have found that the process of split negotiation has changed a lot from the time I graduated real estate school. I found a place that I wanted to work, asked how much they would give me...it seemed fair, so I signed on.

I stayed there until I was confident that my production justified a raise and my broker wouldn't give me one. I interviewed with a Broker who faithfully sent me post cards offering fair compensation. I interviewed with him and found him to be a man of integrity and the office a comfortable place, so I went there and made lots more money and split raises as my production increased.

Then a giant franchise bought out the little comfy company and wanted me to reduce my split to lower than I started fresh out of school with, so I went with an independent for several years until he decided to franchise and now I'm a Broker/Owner.

The agents I've been interviewing are savvy. They are looking for the highest splits, the lowest fees and the best perks. Some of them go to the flat fee franchises where they pay a monthly fee to keep 100% of their commission, but overwhelmingly, the greatest feedback I get when asking a prospective agent why they are moving is: "I want to develop my own niche and I don't like the feeling I'm 'bothering' someone when I need an answer to a question'. " so far, the money aspect of the moving is secondary.

I'm wondering, if any of you found that for some reason you had to leave your brokerage tomorrow...say it got bought out by the Wicked Witch of the West or something...WHAT TYPE BROKERAGE WOULD YOU MOVE TO? Would you go flat fee? Independent? Franchise for big fees? Discount? Open your own? I thought it would be interesting to find out!

Posted by Lania DeMers, Broker Rocky Mountain Realty Co. on 06/27/2007 06:28 AM

Comments (45)

split, broker, move, recruit, interview, agent, franchise, fee, independent, discount, change, transfer, shop, recruitment, poll, perks, benefit

45 Comments on Splits Are Changing! So Are Loyalties.

JUN

2007

I am actually with a company not because of the split, it is because they were willing to let me do very unusually things in my real estate career and investing that sometimes upset other Realtors. My present company is a small opperation and she lets me do what ever I need to do within the law.

Lania-

I really believe that agents change companies because of some dissatisfaction with their present arrangement, not just money.

And while they may state that splits are the issue, usually it's something deeper. I know one local franchise operation discharged a well liked manager and replaced him with someone from out of the area. Quite a few very productive agents left with three weeks.

Lania- all programs work. I think you need to look at your market area and decide what the need is and what your comfort level is. Sounds to me like you should create the brokerage you just left :)

Amazing, you asked a direct questions and no one noticed.

4 comments and not one answer to your question.

Me, I'd open my own. In fact I did!

BUT

if I was in CO, as you are, I would have opened my own under the Metro Brokers umberella.

I currently work for a large company. If I had to change, I think I would go to a well-known, local independent company in the areas I service.

I currently work for the largest brokerage (franchise) in the area. The split schedule is good as it increases in my favour as I sell more. However, I do wish that there was a littlemore hands-on management on the part of the broker.

I currently am affiliated with a Realty Executives franchise; we pay a monthly desk fee in exchange for keeping 100% of our commissions; that's a pretty attractive split. ;-)

If I left my current firm Tennessee allows a single broker to run their own shop out of their home; I would consider that.

Failing that I would probably affiliate with a local, independent firm.

I would now look to a more specialized or niche company. Rate splits are important but I must admit that ownership is more important

I thought about all the questions you asked last year when I was ready to make a change. I had finished my brokers license so I could open my own shop if I wanted. I intereviewed with dozens of companies, made spreadsheets of all the financials, finished a series of SBA classes, incorporated and then in the end went with a large franchise. I have the independence to work my own business plan and still don't have to worry about accounting and major legal expenses. I still keep my business plan up to date and I continue to research business models to make adjustments as the market changes. Hope that answers the question.

I currently don't care for my broker and office manager and I'm still here because the office atmosphere means nothing to me. I work from home and get my work done and turn in my paperwork to them. If it was bought out by someone worse, I don't see how things would change, because I'm not there to see the everyday stuff like the people who rent the offices at the office. I like the name of the big company, and I like being able to do whatever I want to run my business... the money doesn't hurt either since I came from a 50/50 brokerage over 5 years ago.

Commission splits certainly shouldn't be the only factor in deciding where to go, but let's face it, it's a BIG one. When I started my career I was with a big franchise that offered a 60/40 split and as my production increases so did my split. One year I calculated that the company made $94,000 from me. This blew me away! NOT ONE of my clients used me because of the company name. So I left and went somewhere more suitable. The broker is supposed to be there for the agents and I don't believe they should get a penny more than what they are worth. It's been proven time and time again that the consumer doesn't care which company we are at. If that was the case then the local independants wouldn't survive and in reality many of them thrive. Go with a company that's going to put more money in your pocket and a broker who stays out of your way unless you need help.

Like the first post, I am not at the agency that offers the highest commission split. I wanted a lot of freedom to do things my own way in marketing, advertising and promoting myself. My current broker has given me a lot of latitude that the franchise systems won't. We'll see how it works out.

I hope to start my own brokerage in a few years and will only work in a specific niche. I want to keep it small and will eventually interview agents if they want to work with me, and will keep the commission split very high in favor of the agent. Since paperless is the way to go, I don't plan on having huge overhead, so my agents will benefit because they won't have to pay for a big fancy building.

There are two huge companies here in the Twin Cities and they have a big fancy building literally on every major intersection. They take quite a large chunk of their agents money, most likely to fund the print advertising they do and pay for the huge overhead. Most agents go there for the company name, but I cannot justify giving my income to them, so I went with a small franchise that just came to town two years ago.

To answer your question, if I had to leave, I would most likely go with a 100% brokerage as most of them are online and that is primarily how I run my business.

This is something that we all face at one point of another in our careers. The responses have be wide and offer unique insights. I myself started with the largest brokerage initially because of name recognition. I didn't have any so I felt I would ride the company name. The splits were not acceptable and I left in six months, left 6 listings behind and moved on. I learned a lot and since my former career was business owner, selling and retiring very young most brokers had no concept nor did they ask about my background.

I have reviewed nearly every brokerage business model from franchise, local independents, flat fee, discount you name it. The key ingredient is proper commissions for value received, attentiveness by the broker "as needed" not being mother and not being absent or unapproachable. Adding the systems, features and options to your brokerage to aid in the success of your agents and clients. Making sure your staff and agents support each other to their success and the success of the brokerage. Sounds so simple but in fact it takes work from everyone, but it is well worth the effort. Nice post, your received some great answers.

My first office supplied me with a BOSS and a SPLIT and not much room to make my own decisions. I felt like an employee...I stayed a year because I committed to a year. THEN...I moved to an office where I pay a reasonable office fee monthly, a flat rate on closings (with a yearly max paid in), and the freedom to do WHATEVER I WANTED as far as marketing, what I charge my buyers/sellers for fees, etc... I was told to make as much money as I could and not break any laws or be unethical. Those were the best rules!! I don't have to attend any office meetings, the company offers training, I have my brokers' cell phone numbers so if I have a question (important enough to ask) at 9pm on a Sunday---they call me back and happily answer. It's amazing!! I'm happy!! My sister even works there!! It's not a franchise...it's privately owned. :-)

I recently had to make that decision. I was at a large well known national franchised broker. I wanted management opportunities that they were unwilling to provide. I went with a smalller growth oriented company that I am now running. We created high splits, low caps and a high tech low cost environmnent for the agents to work in. I hold training sessions weekly, instead of boring unproductive meetings. I am also trying to create a level of accountability for each agent that they can work comfortably in yet become more productive in as well. From a manager perspective not having to attend meetings is fine, but what are you really getting out of you career if you blow everything off? I try to have a business meeting once per month and put in relevant topics that will help and agent grow their business or stay out of court! I don't take it personally when people don't show up, I just feel sorry for them that they are missing good information. My rule is: You reap what you sow! If you aren't putting in the time to learn and become more productive, don't cry to me when you are not doing well.

We are seeing some of the same things in lending.

I had my commission cut because the broker said costs were up. As the #1 loan officer at that shop.... I wasn't the one costing them more money. So I left.

I want it all: High split, freedom and market presence. Freedom to do the things I want to do is most important.

Wow! Thanks for all the feedback. EVERYONE!!!

Susie: I think it was the greatest thing you could have done to leave a place that wouldn't allow you to deveop and make your own decisions. You can't dictate sales style and niche to people!

Louis...thanks for seeing the question and re-directing the board. I can see you must have great management skills! :-)

One thing is for sure. New agents need to be under the supervision of a broker that offers good training and is accessible. It takes a lot of transactions to learn this business and until the agent is well experienced, they need a good broker even if they have to pay a higher split to get it.

It comes down to how many dollars stay in my pocket. Right now I have a straight monthly fee and I keep 100%. I look at every opportunity that comes along and nothing ever beats it. I also like a good national brand because it gives you instant credibility.

All these fees will drive you nuts...

Hi Lania,

Interesting question, thank you for asking. I've enjoyed reading each and every comment as a tutorial myself as an independent broker-owner. I've been impressed with many of the responses. The newest agent is my office is about 3 years, the longest term is 20 years. We offer a graduated split based on production. And in many ways, we are like a family, I like to think they work with me and not for me.

Lania, good question. I'll come back later to review the comments, but I decided to get the education and my broker's license in case I decided to make a move. I actually have decided to, but am waiting on a couple of things. I've interviewed all of the ones you mention, and bottom line? I like working for me! I've been with the same company for seven years and like them very much. They are very fair, etc., but soon I will be out there on my own. I am pretty much anyway as I see it.

Lania, I came to NY really excited about getting my license here and jumping back in (did real estate in Colorado for 23 years). The difficulty was in philosophy, splits, autonomy, and independence. As a result of being horrified at the 50-50 thing, along with the general control exercised over their agents, I was ecstatic when ReMax finally arrived in town. HOWEVER, with two of us in the industry, we calculated recurring monthly fees at Remax, and came to the conclusion that with our experience, it made more sense to open our own company. So, we did! It's hard, but well worth the vision.

I recently moved to Realty Executives from Century 21. The 100% commission was important to me but I also was very impressed by the quality of the agents in the office.

My next move will be to open my own office, after I complete my last class and take the broker's exam. I have been with some of the big nationals, as well as a well respected local company. The first few (3 - 5?) years, I think it is most important to get training and support from your office, regardless of the splits.

A large office can be a good place to network, trade marketing ideas, and discuss problems that come up, but I found that the time I was spending in my last office, was purely social and I was not being productive when I went in. I recently joined up with a good friend who is now my broker. She has a total of 7 agents, and we all work out of our homes. My split is very good, I do all my own marketing, and I have complete freedom to set my own commissions. I do my agent brainstorming and networking via email, ActiveRain, and committees at our Board of Realtors. It works for me!

Can there really be a one-size-fits-all answer? All the great comments reveal individual goals and desires are a deciding factor in selecting the best environment. As a newer agent, I opted for an established firm with name recognition, mentoring, and an excellent training program, which I feel will give me the tools needed to succeed in the industry. After my business has reached a certain level, then other options may make sense.

I was attracted to the big name and recognition when I joined the business, so I'd stay with a company like that. I also like the desk fee in exchange for 100% commission arrangement. I just like being able to run my business the way I want it run without having to be responsible to someone for everything.

I like everyone here want as much money to stay in my pocket! Education is key, and I think it's great to have your brokers license. For me personally, I see a huge value in being with a large intity, training, education, support, and motivation is worth every penny that I pay them. But, of course that is what I need to help me and my team continually grow. I am an independent contractor, own my own business and control every aspect.

If a client asks for me to cut my commission, they have already lost value what I am offering... same goes with me. In return for the money I pay, I get value....

I have been in that situation both as a Realtor and a Mortgage Broker.

I care about the commission split but not as much as I care about affiliating with someone with integrity that I can count on when I've got a problem to deal with.

On the mortgage side, the compliance is a beast so going on your own takes a nerves of steel and deep pockets... not like in Real Estate where anyone can do it - whether they should or not is another issue.

I tell all my young wannabe agents to forget the fancy advertising and find someone to take care of them - to teach them how to do things RIGHT. Real Estate School must not put the fear of failure into people's heads the way it should.

It definitely doesn't offer the framework of how to be a GOOD agent - just how to pass a test.

I get postcards everyday for flat fee mortgage companies....100% commissions... but it is too good to be true. I'm happy where I am, not that I wouldn't find some grass greener elsewhere... but the big thing is that I have the ability and authority to personally market so I do. If I leave, I won't lose momentum

You've received a wide variety of answers. Great post! I would probably affiliate with an established company. I am currently with a company that takes a 50/50 split but the more you produce, the more you will get to keep. I would like to be able to move from the company I am currently at. Much of my reasoning is because I do not feel I am being supported and encouraged and guided to become a better agent. Only the ones that some how become successful on their own seem to recieve the support needed to grow in this market in my office. Very sad! I would like to be somewhere flexible, open-minded and willing to work with their agents and help them to become successful.

Great post I have also been with companies that were sold to franchies and then I moved to a new area and had to figure it all out again in a new area. I switched four years ago to RE/MAX the reasons were: the split, the ability to brand myself, the avoidance of what I consider corporate bull that has nothing to do with real estate, bad managers, protected farms, and floor time that was really free secretarial time to the company. RE/MAX i have none of the above plus corporate advertising, arms length oversight, education and relocation.

I spent my first year with a very small company with a flat rate fee and small monthly fee. What I found is when I started kicking butt, that small flat rate fee per closing didn't come out as good once you started closing 10+ deals a month. I actually came out better paying remax monthly fees.

My level of production jumped once I signed on with a brand. I no longer needed to sell the no name company, now I just need to sell myself.

I doubt I would ever head back to the small mom and pop co's, but if I had to leave I may try a med sized firm

Next time I change I think I go independant. I don't think company name matters it is more about connecting with the client.

I opened my own company in January. The reasons were both for money and flexibility. I tried to negotiate working with a franchise as well as a local independent. In both situations, we did not come to terms with what was fair compensation. In the end, I decided to hang my own hat. I'm in complete control, can keep my overhead low and end up having a larger piece of the pie at the end of the day. It made sense for me.

I moved cities three years ago. Moving from Tulsa to Kansas City meant starting completely over. I interviewed with 5 different companies, three of which recruited me pretty hard. One made me feel like I would be an employee. Lots of meeting to attend on a mandatory basis and people to report to. One was more to my liking but I didn't get all my answers and they didn't get my services. The one I chose I've been extremely happy with.

Put the time up front to find the right broker. Money should play a big part. So should culture and compatibility.

Never my own. I would move to a fee style company without a doubt. I would go with a brand name. I rarely need questions answered and do not bother the Broker.

I am amazed at how many other members went through or are going through a situation I did not that long ago. I wasted an entire year at a brokerage with pretty much no training and the atmosphere was horrible! I didn't care about any split - what mattered to me was learning this craft I chose and being successful in it.

I switched on June 1 (this year) so I'm almost at the end of my 4th week and I've done things, accomplished so much and thank god for the direction he took me.

I could have selected a local independent but I went with a well known, national company with a set monthly fee and handsome commission split. When I'm ready I can upgrade to the top level (which at the rate I'm going I will be able to do by spring) and for me at least - it's fulfilled every dream I could have wished for. The training is incredible and because our office is a new franchise out in this area I am the only full time agent and so I have my broker right there --- which I desperately needed.

We have already discussed a partnership a few years down the road (that is how much confidence she has in me) and the action plan is: I'm going to do a full year as an agent then go for my brokers' license and work a full year as a broker. At that point we will discuss a partnership. In 3 1/2 weeks I have accumulated close to $600,000 in listings, participated in 3 open houses, and have roughly 8 clients.

So Lania - based on everything I went through during my first year and where I am now --- I can say that commission is important but a new agent needs to learn the craft; if they don't know what they're doing they won't make any money anyways. They need to know they can call the broker and they need to be taught in chunks but also included in the everyday things that happen. Simple things like open houses!! And I cannot stress the importance of making them read and read and re-read purchase offers and listing agreements (and having a broker sit DOWN with them and go over it word for word).

For new agents - being able to sit in an open house won't bring them a sale but it WILL help build their buyer base. It's known that only 1% of open houses result in a sale. MY BROKER --- had me sit in on 2 of her properties the 3rd day I was with the company and I walked out of it with 5 buyers; one of which turned into my first LISTING!

Sorry so long :)!

Cynthia -- MOVE TO SANTA CLAUS :)!!!!
We'd grab you up in a heart beat!

To Others: take my advice - don't air gripes about your brokerage here! AR is growing and you never know who is reading (and they may take it to your broker). It happened to me and while it turned out to be a blessing in disguise, I would hate to see you go through it too.

I have had my own and now am with a large franchise company. If I had to leave, I really can't say where I would go....probably back to my own. The large franchise pay for desk ones seem to be people competing against each other in my neck of the woods....

All I want is a company where I am truly an independent contractor. No mandatory meetings or such. I love working from home. I take classes online and if I need help, I ask!

Wow! You just never know what post will hit the button, right? I thought this would be a fairly benign subject, but you have all given me so much to think about. I am building a great team and just trying to take things I loved about my old brokerages and duplicate those. The things that were not so great...I try to keep away from making those mistakes.

Thanks for all the honest thoughts and feedback. SELL LOTS OF REAL ESTATE!!!

JUN

2007

All programs work -- they work for different people for different reasons. Each agent needs to scope out the market they are in and check about and decide what feels the best for them and serves their needs and will support their business in whatever way they need to be supported. It's different for each person.

I would go for the highest split and the lowest per transaction fee's. I find no real advantage with the big franchises and recently my broker switched from a franchise to independent which subsequently gave me and automatic raise. The big names are nice and give you recognition but the name never closed a deal for me I do that on my own. New agents have a lot of questions and sometimes the office manager or broker does get bothered with their questions. Rightly so because I have heard some ridiculous questions. The broker is their to help not to babysit and agents need to invest in education instead of relying on others. Support and training is very important for me when I started out. I never missed a class and asked a lot of questions. Each agent has their own needs mine personally are a high split, low fees, and a little kick in the behind every once in a while.

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