User871_12_t Bryant Tutas Broker/REALTOR(R) Tutas Towne Realty, Inc
Find real estate listings in your city:
Members: 120,713 - 1,557 Online Now  Login
 

While reading through this month's Florida REALTOR magazine, I noticed quite a few ads for 100% commission split offices. We've all seen them. They go something like this:

  • NO office fees
  • NO franchise fees
  • NO transaction fees
  • No waiting on commission checks
  • NO quotas to meet
  • NO sales meetings to attend
  • NO "junk charges" of any kind
  • ***Only $395 per closing!***

Now, the one thing that stands out to me, in these ads, is the fact that they don't say "experience required" or "only full time professional Realtors need apply" or how about this one "not for the faint of heart". I'm sure they don't mention these things because experience is NOT required. I'm sure they don't care if you fail or if you succeed. The deal is, hire as many REALTORS as you can, from all over the State, and if they close some deals we'll get our $395, if not, so what. Now, from a strictly monetary point of view, I guess this is a pretty good strategy. The fee is very enticing and you could probably get 100s of REALTORS to hang their license with you. Hey, if they can close 100 deals a month, the broker would "magically" make $40,000 a month, just for making their license available. Pretty good plan.

But of course, the one that suffers is the consumer. All these NOs, they advertise, also mean NO training and NO supervision. You are on your own. It's strictly a numbers game and its very scary. I have a Florida's Broker's license and could very well do this. But you know I take my job as a REALTOR very serious and couldn't even imagine sending untrained and unsupervised REALTORS out on the public. Plus, my license is very valuable to me. If I want to make $40,000 a month, personally, I prefer to work for it.

The State of Florida placed this little law into effect on July 1, 2006.

475.25 Discipline.--

(1) The commission may deny an application for licensure, registration, or permit, or renewal thereof; may place a licensee, registrant, or permittee on probation; may suspend a license, registration, or permit for a period not exceeding 10 years; may revoke a license, registration, or permit; may impose an administrative fine not to exceed $5,000 for each count or separate offense; and may issue a reprimand, and any or all of the foregoing, if it finds that the licensee, registrant, permittee, or applicant:

u) Has failed, if a broker, to direct, control, or manage a broker associate or sales associate employed by such broker. A rebuttable presumption exists that a broker associate or sales associate is employed by a broker if the records of the department establish that the broker associate or sales associate is registered with that broker. A record of licensure which is certified or authenticated in such form as to be admissible in evidence under the laws of the state is admissible as prima facie evidence of such registration.

So, with that in mind, I think I'll keep working for my money. This is definitely a case where a short term reward could cause you to be put out of business, permanently. If I'm doing my math correctly, I can hire a handful of associates and train them properly, hoping they close about 10 deals a month between them and make quite a bit more than hiring a massive quantity of untrained REALTORS and hope they close 100 deals. Much less risk and the possibility of a higher reward. Oh that's right, I forgot, my plan would require work. Wouldn't want to have to do that, now would we? What say you?

DISCLAIMER: These are not ads for major franchises. These are ads for mom and pop "rent a broker" agencies.

 

72 Comments on NO, NO, NO, NO, NO, NO.....................Consumer beware!!!!

Reserved Parking For #1 "The Lovely Wife"...TLW...ROAR!

Hubba! Bubba! Wink. Wink. Very Nice. :)

You impressed me with this one. Ahhhh.

Let me say this: "A Rent-A-Broker is not for the faint of heart". SVW.

I am glad you don't want to rent out your Broker's license. That would piss me off. :)

TLW "The Lovely Wife"...I Will Say...NEXT...For You. LOL. ROAR!

01/01/2007 04:43 PM by "The Lovely Wife"...Broker Bryant's Wife... (Co-Owner Tutas Towne Realty, Inc.)

No training and supervision wouldn't happen under MY BROKERS LICENSE!

If my name and company are going to be apart of a deal, it's going to be dealt with properly or not at all..

Happy New Year :)

Scott

01/01/2007 04:55 PM by Oak Valley Mortgage-California Home Loans and Refinancing

Bryant:

There are some very good brokerages that emply that business model and do an excellent job supervising the agents.  Two I can think of that started in Phoenix are:

Realty Executives (been at it since 1965)

West USA Realty (been at it since 1986)

Some very good Realtors practice there. 

01/01/2007 05:14 PM by America's #1 Mortgage Broker

Brian, Notice the disclaimer I placed at the bottom of my post. Realty Executives is a national franchise and I agree they have SOME good agents. They also have a whole lot that are clueless. But mostly the ones I referring to are strictly rent a brokers. You get nothing but a place to "hang" your license. They are all over Florida. They solicit Realtors right out of licensing class and offer ZERO training and supervision. I deal with them all the time and they can't even fill in the blanks on a purchase contract.

01/01/2007 05:20 PM by Bryant Tutas-Tutas Towne Realty, Inc

Brian:  Realty Execs soaks you with fees and both West and Realty Execs charge monthly fees.  I think this is very different from the model BB is talking about.  There are some 100% offices that only charge a nominal transaction fee with a nominal or no monthly charge.  You get junk fee'd to death like a $5 per page fax charge, they are looking for warm bodies to join, very little offices with very little support.

I interviewed with both West USA, Realty Execs and the type of Brokerage BB is talking about.  West and RE both provide great offices and services and broker support.  The little fee office is a nightmare waiting to happen and if I am investing money in their brand (cards, branding templates, etc) I don't want to wake up one morning and have the doors shut because of little broker supervision like BB mentions.  I wasn't quite ready for the West and RE models as they do come with a price and you have to do decent volume to make it worth it.  I am not quite there  yet ;)

 

01/01/2007 05:24 PM by Renee Burrows - Las Vegas NV Real Estate (Nevada Realty Solutions)

This model of "net branch" or "affiliate branch" has been part of the mortgage industry for some time.
Many believe it has contributed to the proliferation of participants and some of its greatest challenges.

It allows inividuals with little or no experience and qualifications to "piggyback" off the corporate license.
The participants often operate without any oversight other than an after the fact quality control audit.

Obviously this model also attracts very qualified and competent individual originators and employers.
Many small Brokerages move to this model to reduce their liabilty and increase the States they lend in.

One way to better regulate the real estate industry is increase the individual entrance and continuing education requirements for all participants - mortgage and agents alike.

   

 

01/01/2007 05:29 PM by Brian Brass - Guaranteed Rate

Actually, they both started out as "rent-a-broker by the transaction" models and evolved into rent-a-broker by the month models.

In the beginning, there was no support for West USA although they kep a tight rein on the calls coming in (agents only advertised the central phone number) .

Realty Executives became a franchisor in 1987.  Until them, it was just a Phoenix-based rent-a-broker shop.

I hear your criticism but I've seen the brokerages that everyone said would fail (the aforementioned ones) flourish.  Your criticism is valid but until the standards to become a licensee are elevated (or abolished) the public should assume that a licensee is a licensee is a licensee.  They should further assume that a Realtor is a licensee that can afford the fees.

(Unless some smart guy or gal elect to advertise the difference)

01/01/2007 05:32 PM by America's #1 Mortgage Broker

Liability is the caution word here. The broker is responsible for the actions of the agent. 

01/01/2007 05:46 PM by Rich Kruse (Gryphon USA, Ltd.)

Hey guys, the question is not whether or not these models succeed, they definitely do. The problem is the lack of training and supervision and the fact that these unprepared agents are set loose on the unsuspecting public. I believe firmly, that the consumer when hiring a Realtor, should be able to assume, that that Realtor, has the basic knowledge and expertise required, to handle their transaction, and that is just not the case. Brokers need to be held accountable and minimum training needs to be required and enforced. But then again, I live in a dream world. There are no qualifications to becoming a Realtor, write a check and your in. But the consumer is also part of the problem, it goes back to the issue of shopping rates not experience.

01/01/2007 05:47 PM by Bryant Tutas-Tutas Towne Realty, Inc

Bryant,

Thank you for highlighting this issue for us.  The lack of professionalism in the real estate industry is a big problem, I believe.  Regulation of the real estate industry is almost non-existent, at least in the State of Michigan, and I am sure in many other states as well.  How many brokers do you think will be disciplined by the State of Florida for failure to supervise? 

01/01/2007 06:04 PM by Buyer's Broker of Northern Michigan, LLC

Bryant:

I agree with you.  It transcends compensation models and is quite prevalent in all compensation splits. 

Why have licensing of salespeople?  Just license brokers and put their license on the line for EVERY single transaction; take away the sharing of liability (with the licensed salespeople) and REALLY put the broker's license on the hook.

Contrary to popular belief, a real estate license does not make you an expert (as you so poignantly point out in this post, BB) 

01/01/2007 07:27 PM by America's #1 Mortgage Broker

Bryant -

I hang my license at one of these places you refer to.  I do agree it would be nice if such brokerages catered more to experienced agents.  Without a doubt.  I will also agree that it is very possible that a higher percentage of agents at such brokerages may be less experienced than at larger, traditional, brokerages.  But the fact remains (in a majority of cases) that clients will use the agents that are most knowledgeable and experienced irregardless of their brokerage or commission structure.  I've run across lots of agents from traditional brokerages who have trouble filling out contracts as well :)

01/01/2007 07:34 PM by Kaushik Sirkar (Call Realty, Inc.)

Bryant, one of the biggest problems that I see around here is with part time Realtors who only do a couple of deals per year.  I had a Borrower involved with one such Realtor about three months ago, and the whole thing was an experience that I would rather forget.  The Realtor was a friend of the Borrower, and the Borrower didn't want to break things off because of that.  This Realtor barely had a clue of what she was doing, and just kept on turning bad into worst.  Hopefully this Borrower will go with someone else when he finds another house to buy.

01/01/2007 08:07 PM by George Souto (McCue Mortgage Co.)

Bryant- I agree with you whole heartedly. We chose a broker who offers trainng, support and a cap on what we split with them (and no "fees" afterward) which we usually meet within the fist few months of the year. That is one of the selling points to our clients - we HAVE the training and support backing us to provide the client everything they need. :)

01/01/2007 08:14 PM by Mariana Wagner

Mariana, I've heard KW has a very intense training program available. Is it required of all newbies?

George, I'm not sure if part time or full time has too much to do with as I have done deals with some very good part time Realtors. I almost think it's more of a mindset. It just seems some people no matter what they do take things serious and are willing to do what it takes to learn whether it's being offered by their Broker or not. And some folks will always do the bare minimum. When TLW and I got into the business we worked for a rent a broker, in fact we opened our company under his license for the first year. The difference was that we sought out the pros to help us and we attended every training class we could that was being offered at our Board of Realtors. We were very proactive about getting the knowledge we needed to be successful. 

Kaushik, you wrote this: But the fact remains (in a majority of cases) that clients will use the agents that are most knowledgeable and experienced irregardless of their brokerage or commission structure. Do you believe this? I actually don't find this to be true in my market at all. I think buyers work with whoever happens to be on floor duty that day, or whoever answers the phone when calling on a listing and sellers shop rates.  I wish what you stated was true, but I just don't see it.

Stefan, you asked this question: How many brokers do you think will be disciplined by the State of Florida for failure to supervise?  My answer, sadly, is very few if any. Unless they are sued by the consumer. And that's a very rare thing.

Brian, interesting proposal about the licensing. I'm not sure that would help matters. At least with licensing requirements they get some useful information albeit very little. In Florida brokers are already responsible for the actions of their associates. Enforcing this law is a whole different ball game.

01/01/2007 08:38 PM by Bryant Tutas-Tutas Towne Realty, Inc

So...should there be a mandatory maximum split for new real estate salespeople?  Say...nothing over 50/50 so the broker can be compensated for training?  (Kind of like an apprenticeship program)

01/01/2007 08:40 PM by America's #1 Mortgage Broker

Brain, I think something like that would be very difficult to implement with Sherman and all. Also it would be next to impossible to get all States to agree. But what could happen, very easily, in my opinion. would be for NAR to make training and apprenticeship a part of becoming a Realtor. Or whatever kind of plan they could come up with.  All it takes now is a check and 1 hour of ethics. It's all about the bucks, they have no desire to make it difficult to become a Realtor. But I do think NAR is the answer, some how.

01/01/2007 08:47 PM by Bryant Tutas-Tutas Towne Realty, Inc

...just so that i am not lurking, I read, listened to both sides, and learned. Several such converations are always going on at agentsonline.net . I question that a small office would necessarily be an inferior office.

01/01/2007 08:52 PM by Suzi Gravenstuk, MS Broker License # 17787 (MGC Realty, LLC)

Bryant... I need to come back to this.... but I read Brian's comment and you both going back and forth. I will say this, becoming a loan officer is much easier than a realtor. And in NJ, as a realtor, they have to keep taking continued education classes to keep their license. A loan officer?  Just one check, once a year. And the company usually pays for this.

I'll be back.... 

01/01/2007 09:12 PM by Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages -- Mortgages (Infinity Home Mortgage Company, Inc)

BB-

Enforcement would get the job done .  Good thought provoking post.

I think that apprenticeship is the real solution...but then again, someone will offer apprenticeships for $395 a transaction and we'll be blogging all over again. 

01/01/2007 09:31 PM by America's #1 Mortgage Broker

I agree that this model is not for everyone - but there are those who work well alone and really don't need the broker. 

I am one of these agents who hang my license in a 'rent-a-broker' office and I pay less than you refer to in your article - $99 a side and $99 for E&O, per side of a transaction.

I've got to telol you that I am very happy.  If ever I find myself in anything that resembles a problem, I call my broker and seek his counsel.  Same exaxt thing when I worked in either of the 2 mega-brokers I started my career with. 

 In the mega-brokers, I was a very small fish in the pond - and the only attention I got, was when I made some noise - otherwise I was strictly under the radar.  I can honestly say I have a closer relationship with my broker (who I have not seen since July) then I did when I worked from a large office and saw the broker at least once or twice a week.

I believe Real Estate is all about the professional you do business with - it does not matter where you hang your license - unless you make a bad choice.  In todays market, we are a commodity, just like the houses we sell.

For me, I'll continue to rent my broker, thank you very much!

Have a Blessed Day,

John Occhi, Hemet REALTOR
http://www.johnocchi.com/

01/01/2007 09:47 PM by John Occhi Hemet CA Real Estate (Allison James Estate and Homes)

Bryant - There is a trend in the business to create a business model that does not depend on your agents selling houses. That would be the companies that set out to "cater to the bottom 10%" where if the agent never sells a house but pays them a small fee per month... the brokers life is actually better. One such office opened here recently, I think it is called Charley Rutabega... or something. They have 450 agents doing less business than any "normal office" with 50 agents.

Moo

01/01/2007 09:55 PM by Angus in Naperville IL (RE/MAX Affiliates)

Bryant- I believe that the KW training program is only mandatory for "newbies" if they want to get "floor time" - however, the program is great- especially if you incorporate other trainings (like the ones I offer...) along with it.

There IS a business model out there for everyone. Not saying that any one is better or worse, although some may look great at first but wind up being not-so-good once you are committed. It is just a matter of choosing which works best for your situation - kind of like a loan...?

01/01/2007 10:06 PM by Mariana Wagner ~ Colorado Springs REALTOR® (Wagner iTeam -Keller Williams Clients' Choice)

In regards to Keller Williams and training. It's one of the assets mentioned most by agents. I wrote a post in Nov. on my Wordpress blog Educated Agents are Great Agents

01/01/2007 10:15 PM by HarperMees & Associates (Keller Williams)

Hey Bryant, thanks for pointing this out.  As real estate professionals, we always need to be reminded that our livelihoods are always at risk.

01/01/2007 10:27 PM by Doug Lindstrom (ReMax Alliance)

Great post BB - I agree that the consumer is the one to suffer in the end with agents who are not skilled and have been through enough training. I think new agents who truly want to succeed will seek out companies that will provide them with the support and guidance they need, even if it means they wont get the biggest split right away. Many agents will go the route of the rent-a-broker, thinking it's the best deal (instant gratification) and then find themselves either switching to a broker who could support them better, or looking for a part-time job.

01/01/2007 10:31 PM by Carl Guild - Central Connecticut Real Estate (Prudential Connecticut Realty)

Bryant and others,

The rent-a-broker concept crosses many state lines.  Every now and then I come across a fellow Realtor who IS competent and knowledgeable within this type of enviroment.  However, with that said, I feel this is an exception to the rule. Those of you who are doing well, (in this of brokerage) are probaly heads and shoulders above most others within your company. 

I do mediations and arbitrations with Realtors and members of the public for my Association of Realtors, and I've seen the worst  "failure to supervise" (in all types and sizes of offices)  has to offer.  And Bryant you are absolutely correct, the consumer is always the biggest loser.  Yet at the same time, we all loose.  A gross lack of professionalism, knowledge and competence is a reflection on all of us...all too often the average consumer see us as all the same.

Lynda, 30+Year Broker-Owner

01/01/2007 10:31 PM by Orange Co. Real Estate~Lynda Eisenmann, Broker-Owner, CRS,CRB,GRI,SRES, Brea, CA (Preferred Home Brokers)

Sometimes changing business models are hard to digest.  I have respect for the big guys with big offices and high overhead just as I do for those who choose to work from their home and -perhaps- have a small, yet effective and functional transaction type office. Often there are many routes to the same destination. Because you "rent a broker" doesn't mean an agent has to be less educated. Because an agent is with a "big name" doesn't necessarily guarantee a smooth transaction. New Agent doesn't necessarily mean stupid, inefficient, or ignorant agent. (I apologize if I sound cranky)

01/01/2007 10:39 PM by Suzi Gravenstuk, MS Broker License # 17787 (MGC Realty, LLC)

Renee,

Each Realty Executives offices is independently owned like most major franchises; each broker/owner sets his or her own charges.

The concept is that in exchange for paying a pro rata share of the office operating expenses, each licensee then gets to keep 100% of the commission they earn.

I've been a very happy camper at my Realty Executives office for over 15 years and while I do pay a fairly modest monthly fee I've never felt 'soaked' by paying my share of the office operating expenses.

You do need to be generating a minimum of around $75,000 annually in gross commissions before 100% makes sense for most but after you get to and pass that level it's the way to go in my hardly ever humble opinion.

01/01/2007 10:42 PM by Jim Lee, Knoxville Tennessee Realtor® (Realty Executives Associates)

Broker Bryant:  Excellent blog.  Had my attention throughout the whole blog, from start to finish.  I have to agree with Jeff B, it is easier to become a mortgage professional than a realtor.  Both need 2-3 years of good experience to become good at what you do.  The more experience and the more years under your belt, the better.  Happy New Year!  Happy Oh Seven!

01/01/2007 10:57 PM by Nima Rezvan (Mortgage Broker)

Good post as usual! This has really make me even more conscious on how to become a better broker in the future. If I cannot provide the knowledge transfer, it serves "my clients" - the consumers ultimately suffers. It hurts to know that in the end, the consumers suffer and this is what gives us a bad name.

01/01/2007 11:12 PM by Loreena Yeo - Realtor(R)/Broker proudly serving Frisco TX Real Estate (3:16 team REALTY)

Jim:  I thought they were decent but with pen to paper I would have to make close to $200K GCI annually to make it worth it.  They did have a bunch of BS starter fees and their transaction fees (highest in all my interviews) were a little off the charts but their training and coaching programs they offer it was definitely worth it.  I decided I was not ready for a 100% model yet. 

01/01/2007 11:14 PM by Renee Burrows - Las Vegas NV Real Estate (Nevada Realty Solutions)

I am also one of those that works well alone. My main office is 50 miles away and I've only been to the office 4 times in the last 3 years.  A fee structure like you describe would be very appealing to me.  As it is, I have the best fee structure available so I'm not complaining.

01/02/2007 12:06 AM by Carol Williams Wenatchee Real Estate (Willinger Real Estate)

Let me do the math.  $40,000 a month gross, $20,000 in legal fees.  Can you operate a company with a 100 agents on $20,000 a month?

I can sell three or four homes and make that.  I think it is easier to just sell homes and not deal with the hastle.  That will also keep me from putting my brokers license at risk.

PS.  I dread lawyers.  Just another reason for me not to have interest in that business model.

01/02/2007 02:07 AM by Randy L. Prothero - Hawaii REALTOR® (Century 21 Liberty Homes)

The broker has a resposibility to the customer too. If an agent is untrained and messing up he is just as resonsible. When the word gets out his company will fail

01/02/2007 05:21 AM by John Rogers (Century 21 APD)

BB,

As a somewhat related scenario.  I have a very close relationship with one of the more prominent local Real Estate Offices.  The broker/mananger recently lost a couple of agents to a 100% company. He really made no effort to retain them but did an exit interview with them. Why the change was his only question to which the response was it's 100% commission. One parting comment to them as he wished them best of luck...you still have to close deals....100% of nothing is still nothing! This broker runs a tight shop and is second to few, if any, in training and support.  My thought is that these Realtors lost in their move even if they close a few deals at 100%.

01/02/2007 06:13 AM by Ron Withers - Mortgage Professional (Sr. Loan Officer, LMB) (Town & Country Mortgage Services, Inc.)

Wow great comments everyone.

I think it really boils down to the individual Realtor. Some will thrive no matter what situation they are in and some will fail regardless. I'm an independent and always have been. Education and knowledge was something I sought out when first got into the business because I knew it was a business not a job that I was undertaking. That's the mindset that it takes. Some get into the biz thinking it's a job and will do nothing but what is required from their Broker. Training may or may not help these people anyway.

I do agree that inexperience and lack of knowledge has no boundaries when it come to fulltime, part time, big office, small office, 100% split or not. Maybe if this was addressed by NAR it would make a difference. How about a minimum amount of transactions under your belt before you can become a Realtor? Prior to that you are allowed to apprentice under another Realtor.

01/02/2007 07:00 AM by Bryant Tutas-Tutas Towne Realty, Inc

Bryant,

I think you are right that the answer lies with the NAR or something similar.  They need to make the REALTOR(R) designation stand for something.  They need to have their advertising claims match up with realty.  It's almost like deceptive advertising right now.

Why can't another group come up with and market a designation that really means something?  There are a bunch of designations out there but I don't think the public understands what they mean.  How about a BS or MS or Phd of real estate agency?

It would be so easy to market against a REALTOR(R) by just pointing out how little it takes to get the REALTOR(R) designation.  One hour of training plus a $300 check.  Let's tell the public the truth so they can maybe look a little further than just the REALTOR(R) label. 

As you mention, Bryant, that would require a little more work all the way around.  Now we wouldn't want that now when we can just send in a check and have them create fancy advertisements for us that tell the public how wonderful we all are.  That's just so much easier.

01/02/2007 07:23 AM by Tim Maitski "Secret Agent Guy" (HomeAtlanta.com)

If only seller would ask all the agents they consider: how many transactions have you closed? how many went to contract and didn't close? what education have you had since you got your license? what education have you had in the last 12 months? what have you learned in the last 12 months? how available are you every day for communications?

01/02/2007 07:25 AM by Sharon Simms St Pete Florida CRS CIPS CLHMS (RE/MAX Metro)

Apparantly this isn't just a hook for Realtors.  I've a friend who is a retired automobile dealer.  He ran into a fast talking rep from a company similar to this.  He thought it over and was about to sign until he spoke to me.  After reading over the material and askng him questions reguarding his conversations with the rep his job  would have been the following:  1.) Collect $395 from each ignorant fool who would play along. 2.) Hand them a package of signs, a canned ad for the local news paper and a couple of blank sales contracts. Lastly a disclaimer which stated "he was not a Realtor, could offer no advise or support and the fee paid by the consumer was for marketing materials only.

My firend then asked me if he got invovled would I be willing to kick back the fee to the customer if I sold them a piece after he referred them to me.  The answer was obviously NO but the point is this entire deal was and is a scam.  I convinced my retired car dealer friend that this was not a deal for him, so he passed on it. 

I guess this is another example of man trying to get something for nothing or next to nothing and being rewarded accordingly for his own greed.

01/02/2007 07:55 AM by Michael Roberts (Real Estate Professionals of Glynn)

This model sounds like a recipe for disaster, with lack of training the agents would certainly break some ethical standards.  In New York a heavily regulated state this could result in some hefty fines and possible lost of license.

01/02/2007 08:08 AM by Jennifer Fivelsdal, Rhinebeck NY (Keller Williams Realty)

BB - AWESOME post!!!  If only ALL brokers and/or managers of offices would read and actually pay heed to what the law says.  I think there are plenty of brokers who completely forget that they are liable for every single licensee affiliated with them.  If that was actually done, I think we'd see some attrition happening because I can't believe there's any way they'd want to be liable for some of the actions we all know takes place. 

Ann

01/02/2007 09:01 AM by Portsmouth NH Homes Condos - Ann Cummings New Hampshire REALTOR® (RE/MAX Coast to Coast - Portsmouth New Hampshire)

The training program offered by KW was one of the key factors in deciding to move our team there last year.  While KW doesn't require the training - our Buyer Associates agree to complete a training curriculum - which includes KW core training and some team specific classes.

01/02/2007 09:36 AM by Suzanne Marriott, Associate Broker, CLHMS, e-PRO (Keller Williams Realty Professional Partners)

Very eye-opening, and debate inspiring.

I'm sure this model works for some agents and "rent a brokers" alike.  As with any business model the proof is indeed not in the gross income but the net including contingency for liability. 

Now, with the advent of all these web-based information portals, I wonder if we'll see zillow or homevalues do a "rent a broker" deal for $150 instead?  Commoditization will drive this "cheap agency" down lower and lower.    Millions of Americans dream of having the freedom of being a real estate agent (mind you I didn't say professional) and may well use their credit card to pay the $150 a month to give it a go.

Bad for business?  Capitalism and Freedom of markets is never bad for business. 

Bad for consumer?  In some cases yes.

Good for opportunistic professionals?  I think yes.

 

01/02/2007 10:11 AM by Steve Dalton - Northwest Indiana (First Financial Trust Mortgage )

LOL, sounds like a "discount broker" for the Realtor...You get what you pay for, or in this case DONT..

01/02/2007 10:35 AM by Shari George (Coldwell Banker)

Bryant we live in a free enterprise country good or bad for any industry.  It is unfortunate that there isn't more mandatory training like for Drs and Dentists but then there are a few rotten apples there too so once again it comes down to personal responsibility, to do the best job we can.  Even when dealing with those we have to help with contracts..

01/02/2007 10:48 AM by Teri Isner GRI, CRS, CIPS (Keller Williams Celebration)

Touche! The same thing happens in the lending world, or better said world lending group. Watchful eyes, Bryant, watchful eyes!

01/02/2007 11:00 AM by Dominate Your Market! Free Consultation 678-946-0101

...Touche Teri. Regarding "Discount" REALTOR, in a recent class the Instructor said that according to NAR the average commission was less than 6% and more than 4%. She interpreted this to mean that discounts are occurring at the kitchen table on the negotiating end. The difference between these types of negotiations and a "DISCOUNT" Brokerage is the advertising. I wonder how many regular contributers here are "Discount" Brokers. I also wonder when we say "Discount" exactly from what are we discounting?

01/02/2007 11:01 AM by Suzi Gravenstuk, MS Broker License # 17787 (MGC Realty, LLC)

The KW model of providing on-going training was the major reason I joined a KW office over Long and Foster, Weichert or several others. Now I've taught the CAMP 4:4:3 classes for my office several times last year and am due to teach a single class in the current session later this month. In fact I feature in the current CAMP 4:4:3 manuals. It certainly teaches you how to both get and manage your business.  Personally I teach as a way to give back for all the training I received early on my career.

The 100% commission model in quite popular in Northern Virginia, in fact I received several calls a week during November form these types of brokerage. I find that many of the less experienced agents head for one of  these companies as soon as they find out truely how much it costs to be a real estate agent. The mass movement to these brokerages seems to have happened once the market started moving to a buyers market here. I'm also guessing that many of those agents found that they had reached the 18 -24 month mark where their friends and family have bought/sold property and now they need to find new clients. The cost of generating new leads plus the monthly fees was sufficient to cause them to reconsider their brokerage

A significant proportion of these agents are linguistically challenged and seem to mostly deal with their fellow countrymen. Often they are unable to maintain their commission for cultural reasons and the lessened income has put pressure on their ability to pay brokerage fees as well as a split with their broker.

Sometimes I think it would behoove NAR to tell possible new agents the true facts about real estate agents and the costs associated with being in the business. I'm sure that if the average newbie was told that it would cost them about $2500 in fees to get into the business plus they'd better have about 6-8 months of reserves to cover mortgage and other household expenses they might think twice about adding themselves to the 75% or more that drop out within a couple of years. of being licensed.

Nigel Clarke

www.NigelSellsHomes.com

01/02/2007 11:08 AM by Nigel Clarke, GRI - Homes in Northern VA (Keller Williams Realty)

This is a clear case for MINIMUM LEVEL OF SERVICES AND BROKER SUPERVISION.

But, that is just exactly is what the FTC and DOJ is saying we can't do. 

Lenn

01/02/2007 12:01 PM by Lenn Harley Homefinders.com MD & VA Real Estate

Thanks everyone for all the great comments!

Tim, I agree NAR needs to make it more difficult to become a Realtor. I like the idea of another competitive designation. That would sure shake things up!!!

Sharon, If we could get the sellers and buyers to ask the right questions, some of us could be making some serious money:)

Michael, definitely not restricted to Realtors. The thing in our area now is for Realtors to share the MLS and keys to avoid the Realtor dues all together.

Ann, It would be nice if we could even get them to enforce the rules. But in reality the odds of getting sued and having this come to light is very small.

Suzanne, Any idea of the percentage of Realtors with KW that do go through the training? I guess they can't make them because of the independent contractor thing. 

Steve, rent a broker through zillow, now that would be quite the mess. Interesting thought.

Shari, thanks for visiting. I'm sure with you being newer Realtor you can appreciate the value in training and learning.

Teri, I'm hoping that with this more difficult market a lot of the less professional Realtors will fall to the wayside.

Ken, this problem definitely exist in the lending world. I deal with some real "brainiacs" that are attempting to do loans. Very scary 

Nigel , that goes back to people thinking being a Realtor is a job instead of a business where we need to invest time and money to get up and running.

Lenn, the DOJ is definitely not looking out for the consumer. They should be making things more difficult for these companies instead of wanting to open up the flood gates for any and all biz plans. Doesn't make any sense at all.  

01/02/2007 04:18 PM by Bryant Tutas-Tutas Towne Realty, Inc

Great Blog. These companies give everyone a bad name.

01/02/2007 07:18 PM by Colorado Springs Real Estate (Prudential Professional Realtors)

Bryant, do these offices have websites?  I would like to see how they are advertising 100% commission services on their websites.

01/02/2007 08:10 PM by Anthony Longo (CondoDomain.com)

Bryant, 

I wrote and you responded...."But the fact remains (in a majority of cases) that clients will use the agents that are most knowledgeable and experienced irregardless of their brokerage or commission structure. Do you believe this?"

I do believe this - reason being the agents who are successful long term are the ones who garner repeat business (typically).  These are the knowledgeable and experienced agents (whether with a 100% structure brokerage or a larger, traditional brokerage).  The folks that quit real estate in years 1 and 2 do not get the repeat business and often find it difficult to stay in business!?

Now you mention..."I think buyers work with whoever happens to be on floor duty that day, or whoever answers the phone when calling on a listing and sellers shop rates." - I would love to see a statistic as to just what percentage of clients find their agents in this manner.  I can't comment on that because I have never had to serve floor duty.....

Finally - I go back to one of my earlier statements.  Clients really need to interview their agents thoroughly irregardless of what type of brokerage they work for.  There are studs and duds under both hats!

01/02/2007 08:17 PM by Kaushik Sirkar (Call Realty, Inc.)

Bryant,

One other comment real quick!  Jeff Belonger had a recent post...

 http://activerain.com/blogsview/30526/Marketing-YOURSELF-or-your

I just don't like the idea of 'blacklisting' an entire class of brokerage when I am of the belief that its much more about the person than the company!  Thanks,

01/02/2007 08:34 PM by Kaushik Sirkar (Call Realty, Inc.)

Kaushik, I too have never worked floor duty, in fact, I haven't worked in an office for years. I'm an independent Broker and work from my home. I agree successful Realtors get the majority of our business from repeats and referrals. In my market we seem to have way to many new agents. My local board has grown from around 600 members to, I believe, around 3000 members in the last 4 to 5 years. 

I think if the consumer did more homework and asked the tough questions, before hiring a Realtor, a lot of these issues would go away. But I must say, when I do have sellers calling me, that are not referred and just calling off on ad or out of the phone book, it seems the first thing they always ask is, how much do you charge? If I were selling my home, I don't think that would be my biggest concern. Thanks for coming back and responding. I think we got a good conversation going here and that's always a good thing. It's good to hear opinions from all over the country.

Nick, do a Google search for 100% commission splits and you will find a whole bunch of them.

Dan, I appreciate you stopping by and reading.

01/02/2007 08:35 PM by Bryant Tutas-Tutas Towne Realty, Inc

Hey Kaushik, You slipped that one in on me. I couldn't agree more. It is 100% about the individual. When I write posts it is to start a thought process and to get opinions. I truly enjoy the discussions and try to hit on hot topics. It's how we learn and get to hear different perspectives about our business. Every Realtor needs to choose the biz plan that works for them. This post was mainly about out of area rent a brokers, not 100% commission splits. We have many Brokers in Florida that put their licenses up for rent. They don't even have offices. It's a totally different set up from a Keller Williams or Re-Max. That why I placed the disclaimer at the bottom of my post. 

For example: On one of the Florida Realtor forums that I participate on, a new Realtor posted a question. He was going on his first listing appointment and wanted to know what forms he needed to take in addition to the PURCHASE contract! Where is his Broker? Well he doesn't really have one he just sends a rent a broker a check if for some reasons he closes a deal. That's what I am referring to.

01/02/2007 08:44 PM by Bryant Tutas-Tutas Towne Realty, Inc

For Nick: Some offices may be participating in this online group and advertising their websites.

Agents Online Real Estate Idea Center » Real Estate » Agents and Brokers » Looking For A New Office/Broker (Page 1

Agents Online Real Estate Idea Center » Real Estate » Agents and Brokers » 100%

 

01/02/2007 09:03 PM by Suzi Gravenstuk, MS Broker License # 17787 (MGC Realty, LLC)

to suzi - great source. thx ns

01/02/2007 09:23 PM by Anthony Longo (CondoDomain.com)

As a new agent I wouldn't dare try one of those places. I think you would have to be crazy. I have a lot to learn and have a great team that works with me. I also learn a lot from the forums here. I know there is so much more to learn and you are right the consumer is the victim.  

01/02/2007 11:38 PM by David McCamment (Tarbell Realtors)

As a franchisee for a major franchise, RE/MAX, I constantly struggle against companies that offer financial plans such as you describe. Consumers should definitely be aware that agents from those companies are bottom fishers. What kind of a job are they likely to do for the consumer?

01/03/2007 10:02 AM by Ryan Taylor Homes

I am not one of "those" brokers but I am exiting from this thread because I think conversation has ceased being about learning to being derogatory, and unhealthy.

01/03/2007 10:19 AM by Suzi Gravenstuk, MS Broker License # 17787 (MGC Realty, LLC)

Suzi, Don't leave!!! I do agree though it's not the company it's the individual. There are companies that "offer" great training for their agents and still many agents choose not to take advantage of it. I had mentioned earlier that it really is all about a mind set. Some folks will always seek out knowledge and some will always do the bare minimum to survive. 

01/03/2007 10:59 AM by Bryant Tutas-Tutas Towne Realty, Inc