Not enough agents treat their real estate careers as a business. When they interview with a real estate company, they ask what share of the commission they will get: is it 50%, 70%, 95%? What is included, what are you going to do for me?
That's the question asked by an employee, not a business owner. You're an Independent Contractor. That means you're in Business, even if it's a business of one. You ARE a business.
Turn the % around - what are you paying the real estate company? 50%, 30%, 5%? What are you getting for that money? It could be training, mentoring, brand recognition, print materials, advertising, floor time, leads - so many things. You need to analyze what you're paying for what you're getting, and determine if it makes sense. If the benefits are more than the costs, that's good. When that ceases to be the case, that's bad. Most business (at least for experienced agents) comes because of you, not your company.
How much of your business does come directly, from the company, or through referrals because you ARE with a particular brand or company? Figure that out. Of course the unknown is how much you would get by being with another brand, or on your own. Business forecasting, like any projection, does have unknowns.
This is the most basic question of business. Then go on to look at other aspects of your business.
What are you getting back for your advertising and marketing? How many calls to do you get - more important, how many transactions have you closed as a result of that advertising? Then compute your cost per sale. Compare that to internet strategies, direct mail, etc. Measure effectiveness and response, not vanity. You are a business.
Do you track how much time and expense goes into each transaction? You should. Use that to determine which buyers and sellers or types of transactions you should accept, and which to turn down.
Sharon, Well said.
Not only should you be concerned with the % you are paying the company and what you get in return but what about all of the garbage fees? Come on, I have had 2 different larger brokers want to pack an extra $10 a month for technology!!! I can show most o f them a thing or two about technology and they want to charge me... i don't think so.
Now Have a Blessed Day,
John Occhi, Hemet CA REALTOR
www.JohnOcchi.com
Sharon, very good post. I am reminded of something I keep in mind when when bidding jobs; 'Life will pay you exactly what you ASK it to pay you.'
We've each got focus on what you are feel we are worth!
Cheers, -B
Nice post, surely something to consider when evaluating the how green the grass is from one company to the next.
Before I actually got my license, I was pro-active in interviewing with MANY Brokerages to see what the difference was. I was amazed at the plethura of plans. I chose Fairfax Realty because when I sat down with them-they NEVER tried to sell me on how great they were and how much they had to offer.
They started with 2 main questions
1) Have you formulated a business plan? When I said yes he asked for the Readers Digest version and helped me tweek the plan.
2) What can I do to help you achieve the goals set forth in your business plan.
At that point I realized they were not about the money but the success of the agents! What more could I want?
Sharon,
I would hope that all agents would treat their real estate career as a business. I enjoyed your post--it was interesting to look at the situation from another perspective.
I STILL don't understand when people say they 'have an interview' with so and so agency. When they word it as if the agency is interviewing them and hiring them. Whenever I hear people talk like this, unfortunately, I already know they aren't going to make it in real estate. It's YOUR business, not anyone elses. You are NOT employed, you are an independent contractor.
Oh, and it drives me BONKERS how real estate agents are portrayed to be employees in TV and Movies. Simply bonkers!
Leigh - your Dad is a wise man.
Bryant - you're right. I know you'd be successful anywhere.
Kaye - some high grossers actually come out negative!
John - and I'll bet your technology hardware is more advanced than theirs.
Bryce - now that's carrying it even further. You have to know what you want out of life, too.
Jason - yes, it's always good to evaluate before you jump.
Maggie - some of us learn faster than others, but we all have to learn.
Stephen - goes back to the Ask Not question. Glad you found a company centred on its agents and their success.
Diane - unfortunately we can all hope that, but too many agent don't.
Mitchell, you're absolutely right - there are lots of variables that go into the analysis.
Christina - it does drive you crazy! Perhaps if the majority of agents regarded themselves as business people, the media might take notice.
Thanks for the entry in The "Carnival of the Economics of Real Estate". I'll be posting the entries and winners by Friday and will be sure to notify the winner about his/her new Forbes subscription. We had fifteen entries; two from new Active Rain members. You can see all the entries here with a star next to them.
Each entry was masterful. One person will win the Forbes subscription but all of you won something from your well thought out posts; increased knowledge. Be sure to comment on each other's posts. There is a lot to learn from each other.Sharon,
Excellent post. I will add from a Mortgage Brokers perspective as we have similar compensation issues.
One of the big reasosn that I left other companies and started my own was that for the "cost" of hanging my license elsewhere, I was not receiving the support, technoglogy, and other necessary items to justify that cost. The main reason is lack of flexibility and restrictions on my abilities to perform as a mortgage planner since those companies didn't fully understand what I was doing.
Any Realtor(R) or Mortgage Broker that has a license can and should go elsewhere if they are not receiving adequate value for their "cost" of employment (employer's cut). As you mentioned, we are all running our own "businesses" and need to trim the "fat" from our expenses and work towards better customer service (main key) and increased profitability for us so we can stay in business. Just my 2 cents.
Congratulations Sharon!
Along the line of what Jeff says: Hot Air Balloons don't sell houses - REALTORS DO!
I wish more people in our business "got it"
Congratulations Sharon... I knew I really liked this when you wrote it...
K
Congratulations, Sharon. You were in a MAJOR contest with outstanding posts so this victory should be extremely sweet. Thanks to all who entered.
I think the questions will come this weekend. I'm reading background articles about you and Lenn. You two are so interesting and have amazing careers!
When I got my real estate license, I'm thankful that someone reminded me that I was interviewing the BROKER, not the other way around, and it really helped me select the brokerage that best fit my needs. I enjoy the education and support, but what is MOST important is the bottom line. My broker has a 'cap' of what you need to contribute each year and once you reach that cap, all of your commissions are 100% until your next anniversary date. It is fantabulous!
Kerry - you were lucky to have that advice - more agents really need to realize they're running a business and that they're paying the broker, not the other way around.
A comment that I hear quite frequently is that "I want to hang my license with your company"!
I'm not sure exactly where that phrase came from, but it is a real turn off for me as a Manager.
The relationship between the Agent and the Broker should be a win win for both parties, and both should be bringing something to the relationship that the other needs and will benefit from.
When I first got my license my first question to the Broker was: "I have a business plan worked out, what are you going to do to help me implement it and be successful." I requested and received a mentor that sat down with me EVERY week and together we evaluated what was working and what wasn't.
While I was very interested in what I received in return for my fees, implementing my plan was the top priority for me.
There's another point. The plan's tactics have to be measurable. If you can't measure your results you're probably wasting your time. By the way, I had an excellent mentor named Mike Perry.
Don