Making more money on every real estate transaction is possible. So what is the 100% Commission Real Estate Broker Model?
New real estate agents and clients often ask, “What is the 100% commission real estate broker model?”
When explaining this business model there may be words or phrases you may not understand so many of them are highlighted so you can click on them to read their definitions.
Traditional real estate brokerages pay their agents a percentage of the total commissions where in some cases the majority goes to the real estate office. However, the national average commission percentage “splits” are evenly divided (50/50) between the real estate broker (office) and the agent.
But there is another option.
The 100% commission model has become very popular in the last decade.
In this model, the agent gets 100% of the entire commission. What’s the catch?
There is none at Big Block Realty.
When you join Big Block Realty, you pay a monthly fee of $300, or an up-front annual fee of $3,000. In return, the agent has access to 100% free training, open work areas in 1 of four office locations, and 100% support.
Plus, we offer a referral program that allows you to refer new agents to Big Block Realty that not only includes the 5 and it’s free benefit (refer 5 new agents that sign up with us, and your monthly/annual fee is waived), but you are entered into an annual drawing for a new Mercedes-Benz.
All 100% commission models are not created equally.
For example, other 100% commission brokerages may charge the agent $1,000 a month or more for desk space and monthly amenities, without any training and support, nor do they have a referral program as an added incentive.
How does 100% commissions compare to traditional commissions?
Since the national average is 50/50, let’s compare the 50% commission with a 100% commission model.
Assume that the total sales commission is $20,000. With a 50/50 split, the broker gets $10,000 and the agent receives $10,000. However, with a 100% commission model, the agent gets the entire $20,000 commission.
Assuming the agent pays $12,000 a year for the office fees; the agent profits $8,000 for the year. The more earned commissions during the same year, the greater income for the 100% commission agent.
There are different types of 100% commission models
Some real estate companies don’t provide support services or office amenities. However, they do charge their 100% commission agents discounts with lower monthly fees or a flat “per transaction” fee for each sale. For instance, with no desk and no office privileges, the agent may be charged a monthly $100 fee.
As an alternative to a monthly fee, a flat fee (like $750) is charged for each sale generating a commission.
Using the example above, a $20,000 commission goes to the 100% commission agent who merely pays a small monthly fee ($1,200 annually) resulting in a profit of $18,800. Or, the $750 flat fee is paid to the broker resulting in the agent receiving $19,250.
The 100% commission real estate broker model has become popular with successful agents.
New agents may be better off under traditional commission structures until earning a steady flow of commissions. Then, the 100% commission model makes sense because after paying annual fees to a broker (or, “per transaction” fees) all earned commissions above those costs create higher income for the agent.
Steven Rich, MBA – Guest Blogger
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