Popular myth #1 about 100% commission brokerages: They nail their agents with hidden fees to make money
There’s a few misconceptions that have swirled about the real estate industry ever since 100%commission brokerages came on the scene. To those who are firmly entrenched in the traditional model, the 100% model doesn’t make sense.
As such, they come up with all kinds of strange explanations about how 100% commission brokerages can survive. But the fact is that these brokerages do survive, and they offer a lot that the big box brokerages can’t.
So let’s clear up what is probably the biggest myth about the 100% commission model:
They nickel and dime their agents with hidden and/or exorbitant fees to actually turn a profit
This is just untrue, as you can see in the BPE offer to real estate agents (see below).The fact is that we’re committed to not nickel and diming our agents with trivial fees for every conceivable “service”.
So how do we make money, then? For one, we’re in the field ourselves as agents. The brokerage is only part of our income. The income that does come through the brokerage is the 10% percent we get from commissions up to $8,500. Yes, that means that each agents shares 10% of commission up to$8,500 in a calendar year, and then they’re off the hook.
So every agent can only offer the firm as much as $8,500 each year. To make money, we rely on 1)having a lot of agents, and 2) supporting them so they do max out and we can collect the maximum for the brokerage. And, of course, our agents are highly motivated to get there, because once they do, they’re on 100% commission.
So there are no fees?
There is a $185 processing fee and a $25 franchise fee for each deal you close. This is the extent of the fees our agents deal with, and we’re open and upfront about it. Its neither “hidden” or “exorbitant”.
Some of these myths come from older, established real estate people that simply don’t understand the business model because it's so different. They’re stuck thinking about real estate the way they always have. Consequently, 100% commission sounds...well, not very profitable.
Then, some of these myths are perpetuated by people who do understand the 100% model, and feel threatened by it. They’re worried they’re going to lose their best agents. And this is is a realistic fear, because there’s more money to be made, and other perks besides.
You have to think about the motives behind what somebody’s saying about the 100% model. Obviously, we have a motive to make it sound good. Luckily, that’s easy to do. Here’s our offer:
- No Monthly Fee
- No Desk Fee
- No Phone/Fax Fee
- No Copier/Scanner Fee
- No Mandatory Office Meetings
- No Mandatory Floor Time
When a transaction closes, brokers will receive 90% of the listed commission.
- We allow brokers to reduce rates to compete and match cut-rate commissions companies, such as Redfin, who offer lower percentages.
- After a broker has paid $8,500 (or $12,000 per two-person team, per calendar year) to the office, the broker will move to 100% commission.
- At 100% commission, the agent will pay a $185 processing fee and a $25 franchise fee for each closing.
And that means exactly what it says. There’s no fine print and there are no nasty surprises. To discuss coming on board at Better Properties Eastside, you can contact us here