{"id":1077,"date":"2007-02-26T11:04:28","date_gmt":"2007-02-26T18:04:28","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=1077"},"modified":"2007-02-26T11:04:30","modified_gmt":"2007-02-26T18:04:30","slug":"why-the-traditional-real-estate-model-is-fading-away","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1077\/why-the-traditional-real-estate-model-is-fading-away\/","title":{"rendered":"Why The Traditional Real Estate Model Is Fading Away"},"content":{"rendered":"

Kris Berg<\/a> and Brian Brady<\/a> inspired me to add my eye witness experience to the subject of the traditional real estate company business model. Their recent posts on the subject were excellent as usual.<\/p>\n

I’ve seen real estate from the inside since 1967. I was able to follow the owner of the most successful agency in San Diego at will. He answered any question I ever asked as fully and candidly as he could. It was an amazing learning experience for a teenager. Four straight years this guy closed more than 1,000 sides a year.<\/strong> And he did it with a maximum of 28 full timers and usually less than a dozen part timers.<\/p>\n

If he did that now, he’d be making over $15Mil a year in gross commissions before paying his team. Oh yeah, his team. This broker never made less than 40% on any transaction.<\/strong> If you as one of his agents listed a home exclusively you were paid 20% of the listing side of the deal. If you sold the property you made 40% of the selling side. Back in those days a large minority of the listings weren’t exclusive right. Many were either open listings or what we called ‘agency’ listings back then. Opens only received 10% of the listing side, exclusive agency listings got 15%.<\/em><\/p>\n

This meant that much of the time this broker made 45-50% of the gross commission. Today an average agent at a ‘commission split’ office makes 70-80% of the office’s commission. And the so called top producers are paid 90%. Is it a mystery that the desk rental model came into being? At least if they could hire enough bodies the broker\/owners could, by sheer numbers, turn a profit. In some cities I’ve seen operations using this ‘desk rental’ model that employed literally hundreds of agents.<\/p>\n

Just how the large firms clinging to the traditional model stay in business is a mystery to me. They’re operating with even higher expenses per square foot than brokers did 30 years ago, and getting a much smaller slice of the pie to boot. For awhile they stalled Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Kris Berg and Brian Brady inspired me to add my eye witness experience to the subject of the traditional real estate company business model. Their recent posts on the subject were excellent as usual. I’ve seen real estate from the inside since 1967. I was able to follow the owner of the most successful agency […]<\/p>\n","protected":false},"author":8,"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":[7,10],"tags":[],"class_list":{"0":"post-1077","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-enduring-interest","7":"category-realty-reality","9":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":475,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/475\/blogoff-post-98-first-timers-search-gives-good-lesson-for-buyerssellers\/","url_meta":{"origin":1077,"position":0},"title":"Blogoff Post #98: First-timers’ search gives good lesson for buyers\/sellers . . .","author":"Greg Swann","date":"September 26, 2006","format":false,"excerpt":"This is one of my all-time favorites from my Arizona Republic column:I was out showing with first-time home buyers Saturday. This is my favorite job as a Realtor. Buying a home is never easy, but it gets easier with experience. We looked at 14 houses, all in the same area.\u2026","rel":"","context":"In "Marketing"","block_context":{"text":"Marketing","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/marketing\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":3617,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/3617\/the-new-real-estate-model-part-3\/","url_meta":{"origin":1077,"position":1},"title":"The New Real Estate Model – Part 3.1: The Solution","author":"Sean Purcell","date":"August 4, 2008","format":false,"excerpt":"This final post (Part 3) grew rather lengthy.\u00a0 Considering the fact this has already stretched into a three-part series, I chose to extend the series to five rather than attempt a conclusion of\u00a0 somnolent proportions.\u00a0 If brevity is the soul of wit, creating a new model for real estate is\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":65,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/65\/ten-trillion-times-a-tiny-loss-is%c2%a0a-huge-loss\/","url_meta":{"origin":1077,"position":2},"title":"Ten trillion times a tiny loss is a huge loss . . .","author":"Greg Swann","date":"June 29, 2006","format":false,"excerpt":"I have been devoting a lot of my time to some ascendant ideas in Real Estate loosely based on the Web 2.0 model of internet commerce. The ideas are ascendant, but they're not necessarily good. I weigh in on the skeptical side for now, but I'm watching all this with\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":12050,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/12050\/is-this-normal\/","url_meta":{"origin":1077,"position":3},"title":"Is This Normal? (What Seattle Real Estate Agents Earn)","author":"Glenn Kelman","date":"May 24, 2010","format":false,"excerpt":"We've spent plenty of time trying to figure out what's fair to pay Redfin agents. As part of that exercise, we analyzed the gross commissions for all Seattle-area (King County, to be precise) agents who closed at least one transaction over the past year (May 12, 2009 to May 11,\u2026","rel":"","context":"In "Ask the Broker"","block_context":{"text":"Ask the Broker","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/ask-the-broker\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-content\/uploads\/2010\/05\/Gross-Commissions-King-Cou.png?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":2162,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2162\/tv-writers-shoot-selves-in-foot-rassafrassin-swearing-unconvincing\/","url_meta":{"origin":1077,"position":4},"title":"TV writers shoot selves in foot: Rassafrassin’ swearing unconvincing","author":"Greg Swann","date":"November 5, 2007","format":false,"excerpt":"TechCrunch:The strike poses an interesting challenge for television at a time where internet usage has surpassed TV viewing time in most homes. 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Even so, this could be the golden moment for investors in Phoenix.","author":"Greg Swann","date":"January 5, 2010","format":false,"excerpt":"I've known for six months or more that there was a sweet spot on the horizon for investors and other highly-solvent buyers. That event was delayed by the first-time home-buyer's tax credit. Today's news about declines in the number of pending purchase contracts is a symptom of the market returning\u2026","rel":"","context":"In "Flourishing"","block_context":{"text":"Flourishing","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/flourishing\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/1077","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\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=1077"}],"version-history":[{"count":0,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/1077\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=1077"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=1077"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=1077"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}