5 min read · November 7, 2023
How much money are you really leaving on the table with your current commission model? It’s high time to explore the pros and cons of real estate agent commission models and understand which could suit your entrepreneurial spirit.
While many realtors are stuck in outdated commission models that eat into their earnings, a 100% commission model from a subscription-based broker can help you keep more of what you make. Why settle for a piece of the pie when you could have it all? Stick around, as this guide dives deep into the financial mechanics of your career, debunking myths and shedding light on overlooked options.
When you’re considering becoming a real estate agent, one of the first things you’ll need to understand is how your commission model will affect your earnings. So, let’s break down the main types.
The traditional commission split is what most people think of when working as a real estate agent. Usually, you’ll split the commission with your brokerage.
For example, a 70-30 split means you take home 70% of the commission, while the brokerage gets the remaining 30%. The problem? It caps your income potential and keeps you bound to your brokerage for support and resources.
Then comes the 100% commission model. In this setup, agents get to keep all the commissions they earn.
It sounds great, right? But hold on. While you get the whole pie, there’s often a monthly or annual fee involved. You’ll also need to take into account any other operational costs that the brokerage usually covers.
Flat fee models are another avenue, where an agent pays a set fee to the brokerage per transaction. This model offers predictability but can be cost-prohibitive for agents who aren’t doing a high volume of deals.
Hybrid models are a mix of the above and offer both a commission split and a flat fee. These models are complex and demand that you be on top of your numbers to know if they’re actually profitable for you.
In the real estate sector, the saying “you’ve got to spend money to make money” rings true, especially when it comes to choosing your commission model. Let’s dig deeper into the actual pros and cons of different commission models that impact real estate careers.
Starting with the traditional commission split model, one major benefit is the support you get from your brokerage. They handle marketing, provide office space, and even offer training programs.
On the flip side, they also take a good chunk of your earnings. So, while you gain in support, you lose in income. You’re sharing your hard-earned cash with someone else, and that could be a big disadvantage if you’re making numerous sales.
In contrast, the 100% commission model means you keep all the cash you earn from a sale. Sounds perfect for those wanting to maximize earnings.
However, this model often comes with monthly or yearly fees that can pile up. Plus, you’re generally on your own for marketing and other operational costs. Yet, the freedom this model offers can be incredibly rewarding, especially for entrepreneurial types who see real estate as more than just a part-time job.
Flat-fee models can be quite appealing because they offer certainty. You know exactly how much you owe the brokerage for each transaction. This predictability can be comforting, but the downside is that the fees can become burdensome if you aren’t closing many deals.
Lastly, hybrid models try to offer the best of both worlds. They usually include a commission split and a flat fee. This flexibility may look enticing, but it requires you to be extra vigilant about your costs and income.
There’s no doubt that the traditional commission split model offers a lot of support for those becoming real estate agents. But what if you’re an agent who values independence, full control over your brand, and more money in your pocket? That’s where the 100% commission model from a subscription-based broker truly shines.
You get to keep every dollar you earn from each sale. For those who see real estate as more than a part-time job, that’s a massive benefit.
But this model doesn’t leave you completely on your own. With the subscription-based approach, you pay a fixed monthly or yearly fee and gain access to essential services like contract management, marketing tools, and customer support. It’s the perfect setup for entrepreneurial spirits seeking more control.
Because the model comes with a subscription fee, it encourages you to be proactive in working as a real estate agent. There’s a sense of urgency to make sales because there’s a running cost, but that could be just the motivation you need.
Also, this model comes with full access to services you and your clients need, all on one platform. That’s transparency and convenience rolled into one. For agents building entire real estate teams and businesses, this model’s support and service align perfectly with their ambitions.
Consider your career goals. Are you looking for a hands-off approach where the broker does most of the heavy lifting? Then a traditional commission model might be the way to go.
Or do you value your independence and wish to build your brand? Then you might lean toward a 100% commission model.
Also, think about your workload and what kind of support you’ll need. If you’re an agent juggling multiple responsibilities and wanting flexibility, then models that give you the freedom to operate at your pace might suit you best.
You’ve just gotten into the pros and cons of real estate agent commission models, covering everything from traditional models to the highly advantageous 100% commission models. No doubt, it’s crucial to pick the right commission structure that aligns with your career goals and work-life balance.
Want to switch gears and embrace a model that gives you total brand control, backed by full-service support? Consider reaching out to Pinnacle Realty Advisors, a firm that not only believes in transparent pricing but also empowers agents to maximize their earnings and work on their own terms. Contact us today to propel your real estate business forward.
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