As a realty agent, you are aware that partnering with a reputable and beneficial brokerage is one of the integral factors for making your name in the real estate industry. Experienced realtors and newcomers alike come across difficulties during their quest for an investor-friendly brokerage.
We have earlier discussed what the term investor-friendly brokerage implies, and what signs to look for when considering joining a real estate brokerage.
Today, we will focus on helping you leverage your knowledge and experience in the real estate business and make a profit out of it. How? By aiding you in choosing between the two brokerage models present on the market – traditional and 100% commission company.
Let’s take a look into the differences between the two, their respective pros and cons, and help you opt for the best brokerage solution.
Real Estate Brokerage Fee Models
Brokerage fees are charged for a variety of services – from transaction-involved such as purchases and sales, to consultations, negotiations, and delivery.
The real estate industry has been, for years, dominated by the so-called traditional model where agents and brokerage divided the commission per pre-agreed percentage. However, in the last several years, commission split model is considered inferior compared to the new 100% commission companies.
But what makes 100% commission brokerages so popular among realtors? Let’s review the differences between traditional and 100% commission companies and the types of fees the two models entail.
Traditional vs 100% Commission Brokerage
In the traditional brokerage model, the commission is split between the realtor and the agency, with the agent taking between 50% to 80%, depending on the agency or in-house agreement between the two. On the other hand, the 100% commission brokerages usually charge monthly or yearly fee, together with a flat fee per transaction closing.
Needless to say, the 100% commission company is the one you as a realtor ought to look for. Still, even though these brokerages provide agents with 100% commission paid at closing, they oftentimes entail various hidden costs and undisclosed payment structures.
Let’s look into the three different brokerage fee structures, what do they offer to you as an agent, and compare their pros and cons.
Commission fee
A traditional model type of fee, commission fee is a brokerage fee type where an agent and brokerage divide the commission earned. Mostly, the deal starts at 50/50, but in time, the percentage increases in favor of the agent. In most brokerages, the split is 70:30 or 80:20 agentwise, with the potential of moving up based on your performance.
The benefits of this fee type are that there is usually a moderate or no monthly fee and that it poses a low risk for agents. When it comes to cons, agents who complete many transactions face adding up fees quickly.
Therefore, this type of fee is the best for newer realtors who are just starting off, or those working only part-time with the brokerage.
Monthly Fee + Flat Transaction Fee
Monthly fee designates agents paying a smaller amount per month, but a higher per transaction. This type of deal is usually reserved for more experienced realtors who opt for a reputable, nationwide brand or are looking for a brokerage that can provide them with various services and training.
Benefits of desk fee include few limits on your take-home income and the fact that brokerages that are ready to offer such fee usually have a great level of services, and are a household name in the realty industry.
On the other hand, a lofty fee deal can pose a problem during slow months, when there’s not much commission to live off. Besides, rookie agents may find this payment structure challenging until they start earning more money.
Yearly Fee + Flat Transaction Fee
This type of brokerage fee agreement is relatively low-risk, and usually offers a win-win situation for both brokerages and agents.
A flat fee entails an exact amount of money, regardless of the commission amount. What’s great about this fee is that it allows brokerages and realtors to profit, which is why the flat fee is advisable for both experienced realtors who need brokerage services, as well as newcomers who are yet to learn the intricacies of the real estate industry.
On the negative side, monthly fees are usually a part of the deal as well, and brokerage services may sometimes be limited.
Which Brokerage Fee Model We Offer?
NB Elite Realty is a full-service, 100% commission company that charges a small yearly fee and a flat transaction fee. The transaction fee includes E&O and is structured like a sliding scale, increasing only $50 for every $50,000.00 increment in the sales price.
Besides 100% commission with a flat per transaction fee, NB Elite Realty is run by agent-investor and thus understands and provides real estate agents with the tools to succeed in their field.
Agents who join the NB Elite Realty team receive benefits such as lower-priced access to kvCORE, the leading real estate lead generation, CRM, management, marketplace, and analytics tool, and an abundance of marketing materials via Vistaprint.
Besides, as a true investor-friendly brokerage, we offer free investment training and educational webinars and comprehensive staff and broker support, as well as 24/7 access to the NB Elite Realty training interface so that you can find the information or a piece of advice you need, at any time.
Let’s Sum Up
The brokerage fee is an important aspect when choosing a brokerage, however, it ought not to be the only one. When opting for a real estate brokerage, you should always seek value.
Investor-friendly brokerages provide agents with considerable benefits, from investment training and realty management platforms to webinars, personalized marketing materials, and advice and support from experienced real estate agent-investors.
Still, brokerage fee plays an important role in realtors’ choosing of the brokerage whom they will partner with, and it’s up to you to define your needs and find the brokerage that will provide you with the best, personalized fee deal.