Let me state first and categorically that I am not leaving my brokerage. I actually have been having a protracted dicussion with a colleague about choosing a brokerage. He’s new to town (Arizona) and is looking for a brokerage. Now, I have a different perspective than a new agent might have, and certainly different than a “mega-agent” might have.
For a new agent, I would assume that a person would want a brokerage that has excellent training to help launch a career. If I were new, I would want lots of help. I might like lots of classes, great mentors, lots of broker contact and communication, and possibly lots of “added stuff” like free printing, brochures, business cards, and the like. Of course, I would assume that a brokerage that has all of these extras will charge a higher commission split. I would expect to give them 20 – 30% of my money for these “helps.”
However, if I were an experienced agent, I might like to have a brokerage where I have low fees, very little interference, and a broker that I like/respect. As an experienced agent, I don’t need training, free stuff, and lots of oversight. I just need a place to hang my license so I can get to producing.
Here’s a specific scenario that my friend and I discussed the other day. He was talking to a well known firm that is very large and growing. They have a tremendous “company culture,” lots of education/support, and “profit sharing.” (You can probably guess. . .) Now, for all of these perks, the brokerage will take 30% of the agent’s earnings until a certain dollar amount is collected, then the agent will go to 100%. What is the dollar amount? $18,000 per year. So, after he makes the company 18k, the rest of the money is his, with low monthly/transaction fees.
So, my question is, “Will all of these perks raise your productivity?” Will you earn enough “extra” to justify the expense of belonging to said firm?
What say you all?
David Patterson, Broker CRS ABR says:
Allen:
Ironically, I am having the same thoughts about my future and making the jump to that “You can probably guess. .” brokerage.
When I was a new agent, I went with a company that offered a brand name and some additional training. This was enough to get me through my first six months and I do not regret the decision.
Then, I was exposed to ABR and CRS training. It made me realize the insufficiency of that company’s training program and the desire to be with a company that offered national (versus local) recognition.
Based upon my 2007 split with my current company, the numbers are very similar. Of course, my company doesn’t offer the 100%, profit sharing and other perks of the “You can probably guess. .” brokerage.
Without going into details, there are some perks with my current company that would not be available to me if I leave for that other brokerage. Furthermore, my current organization possesses quality people that have earned my admiration.
That aforementioned brokerage has GREAT PEOPLE IN GREAT PLACES as well! However, those types of people have not trickled to my area. Hence, I’m on hold until I find people in the new brokerage that are really going to help me achieve the next level of my business.
Remember…..changing brokerages is not always about THE MONEY! If you can’t trust the people, then stay with the devil that you know.
Great Post Allen! I apologize for the length of my comments.
February 7, 2008 — 11:41 am
Jay Thompson says:
“100%” is often not 100%. There may be desk fees and other expenses (E&O, faxes, suppliers, signs, etc) that some brokerages will take out of your “100%”.
I looked at one office of the “you can probably guess” brokerage. Some of the fees included: $1.00 per page to send AND receive faxes (count up how many pages you fax in one transaction), $250 per transaction E&O (which is WAY more than what E&O costs the broker), some fee for copies, and more. A page full of more.
So this brokerage caps the 70/30 split after $18K. That means Joe NewAgent has to sell $2,000,000 worth of real estate to reach that level. (assuming “typical” commissions). That’s not easy to do.
It is difficult to put a price on training and mentoring. It is *really* important in the beginning.
But there are some very small brokerages that offer very good training, and some large “name” brokerages that offer lousy training.
I’ve been with a “name” since Day 1 (soon to change). In the beginning, I thought is was important to have that brand backing. Now, not-so-much (and maybe it never was).
Find a good broker who will teach you and guide you, and who is ACCESSIBLE. Work with good, quality people. Understand all the fees if you go “100%” (or a split for that matter). David’s right, it’s not just about the money.
February 7, 2008 — 12:06 pm
Allen Butler says:
Thanks for the comments, guys. To David: are you stating that the presence of other top producing agents within a company will help you make a decision? Is this because you expect that high level of competition do drive you harder? Or do you expect perhaps to get help/mentoring form said agents?
To Jay: You comments reflect mine exactly to the person considering said brokerage. However, surely you don’t need to get copies and faxes from the office? I agree completely that the average new agent will possibly never reach 100% status at said company.
So if you’re an agent who doesn’t need the extras, desk, copies, faxes, training, etc., what does guide your decision?
February 7, 2008 — 12:22 pm
Mike Farmer says:
I don’t think the perks would entice me. I’d just want as much of what I bring in, someone to listen every now and then, but mainly stay out of the way.
February 7, 2008 — 12:28 pm
Jay Thompson says:
“So if you’re an agent who doesn’t need the extras, desk, copies, faxes, training, etc., what does guide your decision?”
Good question. I never really found the answer which is why I’m about to open up my own shop, working for my own self. I have no plans to have a bunch of agents. I will take on a select few who don’t need the desk, training, copies etc. but have progressive ideas on how we can work together and smarter.
“However, surely you don’t need to get copies and faxes from the office?”
No, you don’t. But to a wide-eyed brand new agent, they may not 1) stop to realize they don’t own a fax machine; or 2) be under the assumption that a transaction results in a couple of pages via fax.
The thing that torques me is the absurdly excessive per-transaction E&O charges at some of these places. Our E&O will be about $25/month, unlimited transactions. I have no intent to fleece any agents working for me for E&O.
*NO* brokerage is truly “100%”. If they were, how does the broker make money?
February 7, 2008 — 12:41 pm
Ken in Chicago says:
Everyone needs to remember that every office is different in how they set up their fees including within the same franchise. The KW (sorry I will just say it) office that I was with didn’t charge for incoming or outgoing faxes. We had a small office bill (which included a flat E&O fee).
Do your homework before choosing any office. What they take from your split isn’t everything.
February 7, 2008 — 2:19 pm
Will says:
I left a name brokerage because it was a) costing me a lot of money and not really delivering on that cost, b) the branch I was at was playing a numbers game with the agents it hired and some were just shockingly poor quality, and c) had a lot of issues with support in the office. Now for point “a” I can finger the national headquarters for their trickle down costs and poor results. For “b” and “c” I finger the local franchise owner. I do, however, give kudos to the terrific training I received from the office which made me a better agent initially. Too bad that didn’t continue into other areas which would have made me (and the office) a great success.
I checked into other national brands and were not impressed. They were often as much or more expensive to me than my first company and really didn’t offer any more to me. Finally I settled on a firm which was smaller, local only, young, progressive, and understood that in todays market the agent comes first and is responsible for the success of themselves and the firm as a whole. I have terrific, successful (and still practicing) owner/manager/brokers and an office that is selective in who they invite to join them (new agents are welcome, inflated egos are not).
I couldn’t be happier. Oh yeah, and my fees are very low (no national brand to pay, no silly tech fees). Since we’re 100% we can pour more money into building ourselves (and thus the company) or go get that new tech that will help us close more deals, or market a property in a way that would have been otherwise “too expensive”. No regrets with my move.
February 7, 2008 — 4:42 pm
David Patterson, Broker CRS ABR says:
Allen:
I really don’t care about having top producers and competition in my office. My motivation comes from my self-imposed high standards.
One of my biggest weaknesses is having a great mentor.
Please don’t take this the wrong way. I’m only 1/3 of the way to my desired goals.
However, in my humble opinion, 91-99% of the agents and Brokers-in-Charge in my area do not have the knowledge and/or skill set to help me achieve my goals.
Have you ever felt like you were on an island by yourself? That’s how I feel and it is a real issue for me. A great mentor would be a blessing to my business and career.
Unfortunately, that individual has not appeared in my area.
I’m happy to see a new branch of the “You can probably guess. .” brokerage in my area. However, that does not translate into having a mentor in that office that gels with you on a personal, professional and ethical level.
Am I crazy, deranged or just expecting too much?
Any input from anyone would be appreciated!
February 7, 2008 — 4:57 pm
Allen Butler says:
Hello David.
I really appreciate your candor on these issues. It’s also interesting that you related this last one specifically, because that was one of my friend’s greatest needs: a strong mentor.
I’ll tell you what I told him. If you need a great mentor, find one. That mentor doesn’t have to be a person at your company. I can personally vouch for the fact that almost all great performers are very “generative,” in that they love to share ideas, and help other people. Usually, if you take one out to lunch, they’ll be tickled pink to let you pick their brain. Furthermore, if your broker is not a jerk, or impeding your productivity in some way, and if you are getting to keep most of the money you make, why would you leave?
I think that one of two things would go a LONG way in helping your needs specifically. First, a mastermind group/mentor group. I am the leader of a local mentor group of about 6 agents who meet every two weeks to hold each other acountable, encourage each other, and share ideas. Absolutely priceless in my opinion.
If you want to take it to the next level, hire a coach. There may be some strong opinions around here on this issue (and I’m not exactly sure what those are, yet. . .), but I think a coach would be a great thing to help someone in your position. They can be expensive, but by many accounts, very helpful.
Hope this helps.
February 7, 2008 — 6:55 pm
Tara Jacobsen says:
As an agent with that culture company, I can say one thing for sure – having access to numerous successful agents has allowed me to progress quickly from a new agent to a successful agent who worked half of my second year at 100 percent.
All of the agents in the office are more than happy to share their personal expertise with anyone who asks and frequently teach classes in their specialty. That “culture thing” has been invaluable to me and more than worth the split that I have paid.
February 7, 2008 — 8:03 pm
Thomas Johnson says:
That “culture thing” has been invaluable to me and more than worth the split that I have paid.
Culture/Split/Karma/Flavor of the coffee. It all comes down to the agent haveing enough self knowledge to correctly identify what it is in a brokerage that will provide benefit in excess of expenses. That benefit/expense calculation is tabulated in very different ways for most agents. When the equation lines up in this business, magic happens. It’s what gives us all the joy of our daily travails.
February 7, 2008 — 9:31 pm
Tracey Thomas says:
I love the culture too, and have been able to cap early in the year so I’m at 100% now.
A comment for Allen, if you can’t find someone to mentor you in your office, try hiring a coach. I did this for several years and it was the best investment that I ever made.
February 8, 2008 — 12:43 am
Bob in San Diego says:
Yep, the dude can write. My thoughts exactly.
February 8, 2008 — 2:20 pm
KC Investments says:
I’m with said “guess” brokerage in Olathe. I pay in about $23,000 a year. The rest is mine. But, I do very much in excess of $2,000,000 a year. So yes, I find the trade very beneficial.
I’ve looked at other brokerages. And a couple I might make a couple thousand a year more with. But whether it’s with my same company or another, culture is important. It’s very important an agent find a brokerage that meets his/her work style, moral fiber, basic business philosophies and so forth.
February 8, 2008 — 4:00 pm
KC Investments says:
FYI – My $23,000 a year is for everything…desk, franchise fee, office fee, signs, etc
February 8, 2008 — 4:03 pm
Benjamin Bach says:
I started out at a traditional brokerage. My broker, on day 1, handed me a David Knox VHS training tape and a street directory, and told me to start calling. Incidentally, that was a office of the largest independant Canadian franchise – and it’s pretty indicative of their training in this particular office.
After about 10 months I moved my business over to Keller Williams, and for me, the switch has been night and day. I have a better split than at my previous company (and capped after a certain amount, as others have mentioned), and I’m receiving the best training in the industry. Even if the money wasn’t better, there is no other real estate brokerage in Kitchener Waterloo, Ontario that I’d bring my business to.
My business more than tripled my first year at KW; is it because all my hard work started to pay off? Was it due to the increased training I was receiving? Was it due to the environment – one of sharing, collaboration, and learning – I was now in ? Who knows. My business defiantely would have increased had I stayed at my other firm, but I don’t think as dramatically.
I understand that offices of the same firm in different areas can vary widely, so I don’t warrant that you’ll have similar experiences at your Keller Williams; clearly others haven’t. For me, the training and culture , not to mention profit share (our office gave out over 150K in profit in 2007 to our associates), makes this the only brokerage for me to have my licence at.
BenjaminBach.com
February 13, 2008 — 4:17 am