So one of my favorite hobbies is watching all of the people who don't really know or understand what the problem is or if there even is one. Just a moment ago I read a headline on Inman that seemed to suggest that mortgage brokers need to find a new way to be compensated; Time to change how loan brokers are compensated, and of course 60 Minutes will air a report this Sunday night on how real estate agents are compensated and I'm certain they will focus on all the negative and bad things that are found when paying someone a commission. How are attorneys paid again?
But then I do what I do, which is wonder, why all the fuss? Who cares if someone gets paid by percentage or llama? What is the difference to me if you charge a retainer equal to one year of chicken feed costs? And how come flat fees aren't working the way they maybe should be?
See, I come from Colorado where every type of real estate and mortgage lending business model exists and has at some level succeeded. Fee for service, retainers, minimum service......all possible here in Colorado. I've even charged a retainer (once). But the commission by percentage is still attacked, even by my clients and customers, and I don't understand it. Let me tell you why.....
If I were the customer and the salesman told me they wouldn't work with me unless I paid a retainer, I'd find someone else to work with. If I felt that a flat fee would be to my benefit, I would find a person working on a flat fee schedule and work with them. This just doesn't seem so complicated to me.
I know it is much more complicated than just not working with someone, and that individual state laws against rebates and for minimum service are what may really be at the focus right now, but at the core of the industry I believe there is a growing dislike of compensation by percentage of sale. I believe that the government thinks we all get paid the same amount per sale (we don't) and that we all charge the same (we don't) and that we all provide the same services (we don't) to our clients and that it is non-competitive and hurts the consumer and may very well be a huge anti-trust case.
It seems what they want is another business model to jump up, such as on-line brokerage, fee for service or single entry listing.........ooops. Already have those. What else can we come up with?