What other profession in the world can insist that giving someone a name and number entitles you to 25-30% of anything the receiving person makes because of their diligent work, follow-up, and perseverance? Generally, when you as the referrer have done little or nothing to further the cause! Yet, when a broker provides an office, equipment, software to keep things organized, the power of signs on the ground, multiple support personnel to assist, keeps the lights on, the front desk manned, and provides large area promotion that same referrer says the broker is taking advantage of them by keeping something usually less than 25%- 30%. It gets even worse, as when a broker provides a lead for the agent to work and asks for that same 25% referral fee, the broker is likened to a thief. Are you kidding me?
It is time for professionals in the Real Estate industry to recognize that providing the services many take for granted is an expensive proposition. Brokers must pay the costs of operation every month whether or not there are any closings. They must invest in keeping agents in compliance. (Please tell me how a broker cannot review files, not provide wise counsel to their agents, not keep them within the legal guidelines, and still meet the requirements of being a Broker?). Brokers must provide Internet, copy machines, phone systems, printers, and a whole host of other items if the Agents are going to be able to close transactions. Thus, for a referred lead of a phone number and a name, with no financial risk for referring, no out of pocket expense, and no resulting fear of liability, 25%-30% is seen as “reasonable” when being received yet paying the same to someone who provided the tangible things above to assist you in earning your commissions is considered “expensive”! Are you kidding me??
You can always find someone who will charge you less, provide you less, and require you to pay in advance all of your own expenses. This sounds like it cost you less, but when closely analyzed, what full service brokers provide on their dime until and unless you close a transaction, what they enable you to charge, the administrative and supervisorial time they save you, the fact that you don’t have to worry about who answers the phone, pays for the lights, and keeps the doors open for business generally, results in you taking home more money! It also significantly reduces your stress.
Now ask yourself, would you put out the dollars to operate a company, provide the equipment and support, and let people work for you without getting it all back plus a reasonable return on your investment? Would you bet that you could simply hire enough agents who would do enough transactions that the mere volume of business would make it worth your while? If so, what happens when the market gets bad again and the number of agents shrink and the number of transactions declines but the expenses remain the same? What happens when an agent makes a large mistake and you must pay for that mistake. Willing to dig into your pocket to keep those agents going? Are you kidding me??
It’s not about your split, it’s about what you take home at the end of the year and how well you sleep at night! Recognize value and realize risk in what you provide and what you get!