eXp sneak peak>>>RealtyeXplained
The race to technological efficiency, a Sisyphean battle for talent, and a highly informed consumer marketplace are merely a few of the factors that have industry leaders — and outside industrialists — pushing innovation like never before.
So how do you, the new freshly licensed real estate agent, determine which brand, business model, tech, and commission split is best? It used to be so simple. Where you choose to launch your career can make a tremendous difference in your ability to buck the stigma of “most agents leaving the business after two years.”
Yes, the decision is important, but it doesn’t mean your first brokerage will make or break your ability to succeed. The truth is that you’ll learn a lot in those first few months, likely enough to know if your first choice was the best one. If not, you’ll know enough to know where to go next.
What follows is a breakdown of what you should look for when deciding what logo will be printed on your first business card.
I will weave in details on my compensation plan as well. I want you to see and eXplore ALL models, plans, and opportunities! As a coach, I will be transparent. I am with eXp Realty. This is one of the best articles I've seen in the high-level model understanding. Enjoy! Randy
How much of the deal you take home varies widely throughout the industry, and you should always push to base it on the value you’re going to bring to the brokerage.
Even before you get into the weeds on splits and payout structure, know what that potential brokerage typically charges for a listing (understanding that it’s never a hard cost) and how often they’ve been on the wrong end of a renegotiation of that fee. Commission disputes and challenges are common, and you want an office leader with a track record of going to bat for their agents.
Those new to the business have less room to negotiate on pay structure, but if you possess unique professional skills or expertise (built and sold a business, strong history in sales, etc.) see where it can take you.
New agents need to grasp quickly that your pay is not going to be consistent, and that you’ll be quite surprised at the final outcome printed on your check. That’s the nature of the industry and why alternative pay models exist.
To reiterate, 100 percent-commission brokerages and salaried positions are designed to attract new agents. You should still benchmark the comfort they provide with the longer-term earning potential of a traditional pay model.
Some brokerages offer mentorship plans specifically for new agents, and these will deal with how to manage money and best understand the financial ups and downs of being a real estate agent.
If you’ve succeeded in another industry before making the switch and have an economic cushion to sustain your first year or two, that will put you at an advantage, reducing the strain of having to chase every possible lead to get by.
Use your position to focus on creating work systems and learning the market. Advocate for yourself, and don’t move until you are 100 percent certain of your earning potential.
Know that independent brokerages are typically more flexible with easier-to-understand pay models because they don’t have corporate-established standards to abide by or esoteric financial goals to reach. (Obviously, they’ll have annual revenue goals and standard business obligations.)
However, not every big name sets its pay structures at the national level, either. In those cases, know that the local broker knows what it takes for his or her office to make money, so expect to be met with some pushback if you ask for a break on desk fees, better split, or something your new colleagues didn’t receive when they started.
Earnings can get downright confusing under some franchises, especially if they employ annual caps (the maximum level of money that goes to your broker) that move over time, tenure-based tiers, and other nonstatic factors that influence what you take home.
Salaries and 100 percent commission arrangements tend to sound great in pitches, but make sure you demand a penny-by-penny comparison with more traditional pay models. You may not make more money in a 100 percent agreement.
New agents will almost never be offered a significant signing bonus and likely none at all. The tactic is gaining steam for career agents looking to move. Know that signing bonuses are not always looked upon as ethical because they can create an unfair and erratic recruiting environment. But, like all things in real estate, if it’s disclosed in writing and agreed to by all licensed parties, it’s (usually) good to go.
Instead, look for passive income opportunities, such as profit (money after expenses) and revenue (money before expenses) sharing. A number of brands offer them, but the totals vary. Ask to see recent payout figures. Find out how a broker handles seller-paid bonuses. Some may split it; others let you keep the total.
If you’re being actively recruited out of your licensing class, use that to your advantage, and demand a clear picture of what you’ll earn on a median sale for your market. Don’t be distracted from the pay discussion by red herrings concerning websites, business cards, or provided leads — those things should be a given.
Inman Ambassador, prop-tech entrepreneur, and industry coach Jeff Lobb assembled a comprehensive, evergreen breakdown of what’s offered by the industry’s major franchises, titled “The Guide to Finding the Best Brokerage for You.” We highly recommend reviewing it alongside this handbook.
Terms to know:
100 percent commission: A pay structure in which the broker takes no split from the agent’s transaction commission.
Cap: The limit in total fees and splits an agent has to pay to their broker; usually based on annual sales, resetting each year.
Seller-paid bonus: An additional, disclosed fee a seller is willing to pay to incentivize a quick or clean sale.
Split: The percentage of the total commission received by a broker to their agent as part of a listing fee or as representative of the buyer.
Leads and new business
New agents will likely depend on their broker for leads and resources to find them. But, if your previous career left you with a healthy database of contacts and an active LinkedIn account, know those assets will make great starting points.
Sources of new business come in countless forms, but may include paid portal advertising, print marketing, and postcards, email marketing, Google PPC, designated floor hours, community event sponsorships, Facebook (social media) advertising, a led-gen focused custom website, and through various combinations of all of the above.
New agents may find value, providing your budget makes it plausible to pay for leads outright. Zillow, CoStar (Homesnap), Realtor.com, and other portals provide paid-lead resources. Know that they can be very expensive and that, typically, lead quantity increases with dollar quantity. However, the same can’t always be said for quality.
Vet all paid-lead sources thoroughly — this can’t be emphasized enough.
It’s important for the agent to know what percentage of that new business ends up in your database and how viable it is when it gets there. Not all leads are created equal, meaning there is no industry standard for what defines a qualified lead. Some may believe a “saved search” indicates a ready buyer or a newsletter sign-up means a person wants to list.
There’s a great deal of subjectivity underlying lead generation, so try to arrive at some sort of discernible baseline with your broker, such as you’re looking for leads who can prove buying power or have clearly stated interest in needing an agent.
Agents should be quick to equate a brokerage’s local brand with its ability to land business and let that factor into their decision to join.
If it’s an upstart indie looking to make waves, what evidence do you have that shows it can? If it’s a major franchise, will you be shadowed by its visibility and entrenched top producers? Do you risk becoming a small name under a big yard sign?
Brand marketing needs to matter to you when looking to choose or switch brokerages; it’s what knocks on the door, makes the introduction, and gets you invited inside. The broker relies on you for the closing. In short, hold the broker accountable for their provided lead sources, but be sure they overlap with how you have historically done business.
Questioning brokers on how they source revenue is going to lead to granular topics like the company website, ad creative, public partnerships, and the like. Is there an in-house marketing team handling it? Is the company blog outsourced to someone’s nephew?
It can be hard for the new agent to believe they are in a position to question the lead quality or distribution hierarchy. In terms of quality, use your best judgment. If you’re following your instinct and the sales tactics your broker encourages, then you’ll have a good reason to ask about lead quality. Remember, lead quality is by no means a given. This industry is rife with weak leads sources and providers who look to push them on brokers. Be optimistic, but wary when necessary. If you’re not closing, your broker will know soon enough. Thus, if you let them know as soon as possible that securing new clients is more challenging than you expected, the sooner you’ll be able to work together to remedy the situation.
Brokers want new agents because of the business they generate. If you’re entering a workplace that in any way stifles your proven sales and marketing systems, you become less valuable to everyone — most importantly, to yourself.
Brand new licensees should pay careful attention to the lead service’s competing brokers offer, as they’re likely going to be the primary source of your business early on in your tenure.
Know which leads you to own and which ones are “rented.” Brokerage-paid leads don’t always belong to the agent who worked them and, therefore, aren’t yours to take should the new relationship not work out, and you have to look elsewhere.
Upon coming aboard, let your broker or team leader know what or who you’re bringing to the table. Your sphere of influence is of value to the people whose pockets you’re going to fatten, so be clear with colleagues when someone in your circle (or within its orbit) becomes a client. If you’re plugged into a local network of high net-worth individuals, share that, and use it.
You may also want to consider leveraging your contacts in your split negotiation, asking for a better cut in transactions you bring to the brokerage on the basis of your database’s buying power.
Know that the industry is littered with the expired real estate licenses of people who were confident they could succeed with the business generated by “friends and family” they bring with them into the industry. Sadly, it takes only a few months to learn that the people in your book club or your fellow hockey parents “totally forgot you started in real estate” or “already have an agent.”
Look for those brokers who can show how and where leads are originating, but remember too that you’re not likely to earn leads in the higher ends of the market. Leads are an investment, and brokers want returns on them. You’ll learn by working with leads that aren’t as far down the path. They’ll annoy you, abandon you and, thankfully, often surprise you.
The better you handle that rollercoaster, the sooner you’ll earn the better-quality prospects, and the deeper and more valuable your own database will become.
Kari Chalstrom is an agent in Truckee, California, which became a very popular pandemic relocation destination for San Francisco-area homebuyers. After almost three years at her old brokerage, Chalstrom recently switched to Compass to join its Squaw Valley office with team leader Kristina Bergstrand.
“I was attracted to the tech initially,” she told me in a text message. But then it became more than that, such as working with people she knew and the lifestyle, ski-resort focus, which has long been part of Chalstrom’s personal brand.
“It’s one of those things, you don’t know what you’re missing, lacking, until you start exploring what else is out there,” she added. “I thought I was fine where I was until I learned more.”
In the same way, that commission splits shouldn’t alone be why you change brokerages, nor should the technology they offer, as Chalstrom indicated. But it sure is important.
For decades, websites and a local multiple listing service defined the typical brokerage tech stack. Maybe you were given a branded template to customize, with no support for professional copywriting, image editing, or even a blog. Databases thrived in Excel, desktop Rolodexes, and maybe Salesforce and earlier iterations of Act.
Then brokerages started to change things. Gary Keller went so far as to say his eponymous brand is a “technology company.” Compass rose to prominence on its promise to offer best-of-breed technologies. Coldwell Banker, eXp, and Redfin all followed suit, finding ways to leverage web-based efficiencies to better in-house productivity and how they met the challenges of consumers.
As of 2021, there’s little debate that today’s tech, ranging from multi-lens smartphone cameras and digital tours to remote online notarization and street-specific, map-based list-building, has fundamentally changed how the real estate industry finds and conducts business, a fact made even more evident by a tragic, economy-altering virus.
Agents are working in a period of rapid technological advancement, making their brokerage decisions all the more challenging. Overlapping with our previous chapter, technology plays a big role in a brokerage’s lead generation strategies, as well as its day-to-day operations.
Recent licensees should know that most brokerages have partnered with nationally reputable tech vendors to offer agents the latest in lead generation and nurture, listing marketing, customer oversight, transaction management, and virtually every other aspect of running your business.
However, the trend of proprietary, brokerage-developed enterprise software is not slowing down. Major franchises are often leading off recruiting pitches with their very own software products, many of which are as technically sophisticated and business-comprehensive as what’s found in the open market.
Expect to be offered the use of a CRM solution, which will likely include lead generation tools, email marketing, listing promotion, and long-term lead nurture campaigns. Added value will come in the form of online advertising capabilities, individual listing and agent profile pages, and maybe virtual home tour tools.
Make sure that contacts you bring from your previous career are able to be moved cleanly into the CRM your broker provides. On that front, it’s likely best that you choose to work with the CRM your broker offers because it comes to support, reduced cost, and colleague input and feedback.
Know that today’s software-driven efficiencies are powerful ways to empower your business. Honing your sales and prospecting skills should be paramount, but know that the faster you embrace the technology you’re offered, the faster you’ll reach self-sufficiency.
Remember, brokers, invest a great deal of time and internal energy to determine what products will work best for their business. It stands to reason that your broker sees their technology investment as a reflection of their culture and would expect new agents to embrace it with that in mind. In terms of brokerage-provided tech, look for the following basics in your due diligence:
A flagship CRM or contact management solution.
Social and other forms of digital brand and listing advertising.
A comprehensive, modern, and consumer-focused website experience.
Web-based print marketing solutions.
Digital transaction management.
Email marketing accounts (often part of your CRM as well).
Test your potential brokers for their commitment to technology. Are they offering (i.e. reselling) you all kinds of CRM and marketing options, or are they dedicated to one — maybe two — CRM solutions? This matters a great deal, as does how they integrate their agents into technology decisions.
In the same way, some offices perpetuate the antiquated but nonetheless successful “butts-in-seats” profitability model, it’s not unheard of for brokers to leverage wholesale pricing for software and sell it to their agents at retail, essentially using the software as another profit center.
This is good for only one person — the broker. Not only is it myopic leadership, but it also demonstrates a lack of dedication to technology, results in widely varying levels of user success, and encourages agents to always consider what’s next.
Tech-savvy brokers seek partnerships that support their culture and the way they want their business to run. They involve agents in needs determination, talk to buyers and sellers, and understand that innovation is always happening.
There’s no reason a modern broker should not have a clean, strategically driven website. Much of this starts with a tight, marketable URL, easy-to-find agent pages, smart search functionality, CRM-connected calls to action, and complete mobile functionality.
Don’t let your presence on the company website lag. Once hired, do all you can to expedite your bio and contact information to be published. Advocate for yourself. Brokers are notorious for their outdated websites. Heck, if you have to, volunteer to take the lead on cleaning it up.
If you find at least a single, contemporary CRM and appealing web presence within your brokerage, know that your next brokerage is at least aware of what it takes to compete. If you find some of the following value-adds, even better: