Exactly how? Many new real estate agents and clients wonder, “What exactly is the 100 percent commission real estate broker?”.”””
Many of the words and phrases used in this business model may be confusing to you, so we’ve highlighted several of them so that you can click on them to find out what they mean.
Traditionally, real estate brokerages pay their agents a percentage of total commissions, although the majority of commissions can go to the real estate offices. Commission percentage “splits” are evenly divided (50/50) between real estate brokers (offices) and agents.
Another option exists, however.
It has become extremely popular in the past decade to work on a 100% commission basis.
A 100% commission is paid to the agent in this model. How can that be?
At Big Block Realty, there is none.
You pay $300 per month or $3,000 up-front if you join Big Block Realty. Agents receive 100% free training, open work areas at one of four offices, and 100% support in return.
We offer a referral program through which you can refer new agents to Big Block Realty, and we will waive your monthly/annual fee if you refer 5 new agents. In addition, you are entered for a chance to win a brand-new Mercedes-Benz.
Not every 100% commission model is the same.
Other 100% commission brokers, for instance, charge their agents $1000 a month or more for office space and monthly amenities, without providing the agents with any training and support, and without offering a referral program.
What are the advantages and disadvantages of 100% commissions?
In light of the 50/50 national average, let’s compare the 50/50 commission with the 100% commission model.
For the purpose of this example, let’s assume the total sales commission is $20,000. A 50/50 split means that the broker will get $10,000 and the agent will get $10,000. In contrast, the agent receives the entire $20,000 commission with a 100% commission model.
If the agent pays $12,000 in office fees for the year, then the agent will make $8,000 in profits. During the same year, the more commissions the 100% commission agent earned, the greater his or her income.
The 100% commission model comes in various forms
Support services and office amenities are not always provided by real estate companies. The company does give its 100% commission agents discounts by charging them lower monthly fees or a flat “per transaction” fee for each sale. If the agent has no desk and no office privileges, a monthly fee of $100 might apply.
You may also charge a flat fee (like $750) for each sale that generates a commission as an alternative to a monthly fee.
The 100% commission agent in the example above, who pays only a small monthly fee ($1,200 annually), makes a profit of $18,800 on the $20,000 commission. It is also possible to pay the $750 flat fee to the broker, which results in $19,250 for the agent.
As a conclusion
Real estate brokers who charge 100% commissions have become popular with successful agents.
Until they earn a steady flow of commissions, new agents may be better off under traditional commission structures. In other words, the 100% commission model would make sense because after paying annual commissions to a broker (or, “per transaction” commissions), any additional commission earned above those costs will create higher incomes for the agent. Also read kpop albums.