{"id":1019,"date":"2007-02-08T21:14:28","date_gmt":"2007-02-09T04:14:28","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=1019"},"modified":"2007-02-08T21:14:28","modified_gmt":"2007-02-09T04:14:28","slug":"is-your-broker-profitable-traditional-brokerage","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1019\/is-your-broker-profitable-traditional-brokerage\/","title":{"rendered":"Is Your Broker Profitable?- Traditional Brokerage"},"content":{"rendered":"

Have you ever analyzed the business model your broker has? Try to run the numbers sometime and see just how much profit the owners(s) of your real estate brokerage really earn. I learned a lot about running a mortgage brokerage and real estate brokerage from 1999-2002. I’ve owned both and was successful with the former and a walking disaster with the latter.<\/p>\n

Here is the deep, dark truth about traditional real estate brokerage as a business; it’s just not that profitable in its purest sense of practice<\/strong> unless (a) the broker produces (which brings up a whole host of issues) or (b) the brokerage is really HUGE. Let’s analyze the typical medium-sized brokerage (25 producers) in a typical American city ($250,000 median value).<\/p>\n

There are A, B, and C agents. There will be five “A” agents who close 20 transactions per year or $5,000,000. Assume they average a fee of $7,500 per transaction. Each producer closes $150,000 in gross commission income (GCI). These producers generally command a commission split of 90%. This means that their gross contribution to the brokerage is $750 per transaction or $15,000 per agent annually. This translates to an aggregate GCI for “A” agents of $75,000.<\/p>\n

There will be five “B” agents who close 10 transactions per year or $2,500,000. The average GCI per producer is $75,000. Now, they might command as little as a 80% commission split so the aggregate GCI translates to $75,500. We’re up to $150,000.<\/p>\n

The rest are “C” agents who close an average of just 3 transactions per year. They will receive a commission split of 50%. So the aggregate GCI to the company is $168,750. Now we have total revenues to the brokerage of $318,750.<\/p>\n

Let’s analyze the annual expenses. Receptionist, operations assistant, and sales manager salaries will total $130,000. We gross that number up 115% to include payroll taxes and benefits for a total of $149,500. This is a traditional model so you should figure on $12,000 for advertising. Throw in the rent and facilities charges of $75,000 for a 2000 sq. ft. office, $12,000 for supplies and $12,000 for Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Have you ever analyzed the business model your broker has? Try to run the numbers sometime and see just how much profit the owners(s) of your real estate brokerage really earn. I learned a lot about running a mortgage brokerage and real estate brokerage from 1999-2002. I’ve owned both and was successful with the former […]<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-1019","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-real-estate","8":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":1041,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1041\/is-your-broker-profitable-rent-a-broker-shops\/","url_meta":{"origin":1019,"position":0},"title":"Is Your Broker Profitable? – “Rent-A-Broker” Shops","author":"Brian Brady","date":"February 13, 2007","format":false,"excerpt":"The 100%, desk fee model was made popular some 25 years ago by one HUGE national franchisor. There have been several companies that have adopted that model and had equal success. Essentially, the business model is along the lines of \"rent-a-broker\" for a flat fee per month. The term \"rent-a-broker\",\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":15573,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/15573\/real-estate-brokerage-models-jeff-browns-dad-and-dead-cats\/","url_meta":{"origin":1019,"position":1},"title":"Real Estate Brokerage models, Jeff Brown’s Dad, and Dead cats.","author":"Eric Blackwell","date":"January 23, 2012","format":false,"excerpt":"If you have never read what Jeff Brown writes, STOP. Go read it. Seriously. Go to the right sidebar, scroll down to the Bawld Guy and click the archive link. 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Surely I'm not the best person to ask about this, since we are doing everything\u2026","rel":"","context":"In "Group Therapy"","block_context":{"text":"Group Therapy","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/group-therapy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":541,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/541\/why-the-traditional-real-estate-commission-model-is-broken-and-needs-to-be-replaced\/","url_meta":{"origin":1019,"position":3},"title":"Why the traditional real estate commission model is broken and needs to be replaced . . .","author":"Greg Swann","date":"October 15, 2006","format":false,"excerpt":"These are the concluding paragraphs of Mark Nadel's white paper on real estate commissions. The executive summary has been quoted all over, but I think this text is more compelling. For what it's worth, I think Nadel has hit a home run. There are things he doesn't know about, which\u2026","rel":"","context":"In "Disintermediation"","block_context":{"text":"Disintermediation","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/disintermediation\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1199,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1199\/realtybots-will-make-sellers-happy\/","url_meta":{"origin":1019,"position":4},"title":"Realty.bots will make sellers happy","author":"Greg Swann","date":"March 23, 2007","format":false,"excerpt":"This is me in today's Arizona Republic (permanent link): \u00a0Realty.bots will make sellers happy We talked last week about the move by Realogy Inc. to supply millions of real estate listings from its national brokerage chains to upstart Realty.bots Google Base and Trulia.com. This puts the Realty.bots on the map.\u2026","rel":"","context":"In "Disintermediation"","block_context":{"text":"Disintermediation","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/disintermediation\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":18567,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/18567\/overnight-news-in-the-easiest-real-estate-market-ever-zillow-discovers-that-real-estate-brokerage-is-hard-work-and-decides-to-take-a-breather\/","url_meta":{"origin":1019,"position":5},"title":"Overnight News: In the easiest real estate market ever, Zillow discovers that real estate brokerage is hard work and decides to take a\u00a0breather.","author":"Greg Swann","date":"October 19, 2021","format":false,"excerpt":"Here's an interesting question: Given that we know that the iBuyers gouge buyer's agents, could it be that they also gouge all their other vendors? This could explain why Zillow has discovered that it is unfit for the house-flipping business: It can't get rehab contractors, and, for bizarre reasons unknown,\u2026","rel":"","context":"In "Group Therapy"","block_context":{"text":"Group Therapy","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/group-therapy\/"},"img":{"alt_text":"Ya think it's easy?","src":"https:\/\/i0.wp.com\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-content\/uploads\/2020\/08\/BHBNewTopImage-300x225.jpg?resize=350%2C200","width":350,"height":200},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/1019","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=1019"}],"version-history":[{"count":0,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/1019\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=1019"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=1019"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=1019"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}