What You Need to Know About the 100% Commission Brokerage
Logan Paton | December 21, 2017
The 100-percent commission brokerage sounds like a pipe dream, but the model has been around for decades. Re/Max first pioneered the 100-percent model in its launch decades ago, although now they offer a 95/5 split). If anything, the 100-percent brokerage is increasing in popularity. Real Trends’ President Steve Murray told Inman, “They are a huge part of the industry; it wouldn’t surprise me if they were getting to be 15 to 25 percent of the industry. They are all over and they are multiplying.”
However, is this model really 100-percent? Most of us have heard the cliché, “nothing in life is truly free.” Brokerages have to make their monies somewhere. After all, brokerages support agents with services like office space, marketing, back office, and deal support. Brokers oversee compliance and ensure the contract closes in accordance with local legislation.
Breaking Apart a 100-Percent Brokerage
So how do 100-percent brokerages cover the costs of providing agents with the necessary physical and technological tools to successfully run a real estate business?
Think about the full commission model like a “á la carte” brokerage. How the different brokerages make up the difference varies, but common methods include one or combinations of:
- A flat, fixed monthly fee
- An annual fixed fee
- A per-transaction fee
- Handling fees
- Desk fees
The various fees provide the agents access to the various brokerage services, systems, and office access. Some 100-percent models offered tiered pricing plans. Naturally different amenities are available at each level. Others charge a flat fee for basic services and leave the agent to foot the bill for their marketing costs.
When considering working for a full commission brokerage, compare what services come with the fees. Some brokerages under this model might lack the technological tools necessary to adequately be competitive in today’s market. In other cases, adding together the total fees may reveal working for that particular brokerage will cost more than working for a traditional, split-fee brokerage.
Regardless of the financial terms a brokerage offers its agents, all brokerages need to provide value beyond any commission spilt number. These could be training opportunities, in-house software, included integrations with leading data providers, or access to a winning back office team. A competitive compensation package is only part of what attracts and retains real estate agents.