We are a Residential brokerage firm getting back into the business after many years of being in the commercial world. We are currently trying to find a fee structure which serves both the agents and the company – it seems in the time we’ve been away the market has changed so much that many broker owners are not making a profit even in a good market.
Right now we are starting all new agents at the rate they were at in their previous company, with rising scales based on pay up to 75%. We are exploring models of either five to seven tranches. (tiers) Whatever someone ends up with is pushed into the following year.
We do not want to explore the 100% Keller Williams model but we would consider a profit sharing model.
Our challenge right now is that desk costs for each agent are $26,000 to $30,000 annually. We also do not want a sweatshop like some firms. We want a small boutique office.
However, even at this model, we wonder how realistic it is for our brokers to both make a profit and make our desk costs back. Obviously we want our agent to succeed – however, we need to make a profit as well.
Could any other Broker owners help shed some light on this for us, and perhaps share their stories? What commission rates work the best for both you and your agents?