Real Estate Broker/Agent Commission Splits
If you are a real estate agent or want to be one, talking about broker/agent commission splits is like going to the dentist. The thought of it is awful but it’s something you can’t avoid and it’s something you have little control over.
Unless you are some superhero agent bringing in tons of cash, real estate agents don’t’ have much leverage when it comes to negotiating commission splits with a broker. Your broker holds all the cards until, of course, you show them you can leap tall buildings in a single bound with a sack of leads on your back. Because real estate agents must hang their license with a sponsoring broker if they want to do business, the Texas real estate broker has agents over a barrel, if you know what I mean.
What’s really bothersome is that many brokers don’t add much value to an agent’s business other than giving them a desk – shared with several agents in many cases - a branded business card and access to the office’s coffee machine. Sometimes the broker will foot the bill for a trainer or motivational speaker to come in the office and tell you how easy it is to make a million dollars a year if, of course, you buy their 25-step CD or online course.
For that, you get to cough of half of your commission for sponsorship. That’s even more than what the government takes out in taxes. At least that money goes to filling potholes and paying firemen.
There’s got to be a better way.
If you’re an agent that helps renters find an apartment, you typically collect one month’s rent as a commission or finder’s fee. Let’s say you earn a full commission on a leased apartment & the monthly rent is $1500 - $150 goes to the tenant as a rebate and you and your broker split the remaining $1350. You net a whopping $675 and gave up $825 for the stale coffee (the equivalent of 275 Starbuck's lattes, but who's counting). If you were using a flat fee broker, you, the agent, would keep the full $1500.
Agents deserve to keep their hard-earned commissions, and not fork over half of it over to a Texas real estate broker. Where is an agent going to find that in Texas? Well, there is a way to avoid paying for a broker’s vacation to Europe or their new Mercedes SUV. Texas real estate agents can be sponsored by a broker who allows them to run their own business without splitting a commission with anyone. Instead, all an agent has to do is pay a modest fixed fee to this Texas sponsoring broker . The best part is they keep whatever commissions they generate – all of it. And there is no franchise, desk, or transactional broker fees.
Whether you earn $2,000 a month part-time or $15,000, your cost remains fixed.
The only real difference in using a sponsored or fixed fee broker is you don’t have the headache, responsibility, and liability of becoming a broker yourself . The Texas Real Estate Commission requires you to have 4 years of active experience just to file your application. You get all the benefits without the hassle and cost of actually being a licensed Texas real estate broker.
Agents also get a whole bunch of other benefits typically provided by brokers. For example, agents can get training, mentoring, & assistance with lease verifications & invoicing. Texas Locator broker can even guide you through developing a website, search engine optimization, & creating a social media marketing strategy. They also offer personalized agent pages via an established locating partner for those that want to get straight to business.
Technology and social media continue to make it easier for agents to market directly to consumers without the need for a brick and mortar location . You’ve probably noticed the agents earning the most income aren’t sitting behind a desk very often.
Flat-fee is the way to go.
Having a flat fee arrangement with a Texas broker sponsor lets agents be their own boss and run their business the way they want to. And for those new to real estate, locator brokers help them ease into the business by providing tailored programs, consultations, and broker support. Texas Locator Broker aims to meet the needs of entrepreneurial, aspiring, or seasoned locator agents .
For apartment locators, another benefit of a flat fee arrangement is that an agent has more flexibility in the rebate amounts they can offer to their clients. Traditional brokerages have overhead and expenses that must be factored into their transaction cost limiting the amount of rebates agents can offer. Your competition probably can't, or won't cut their commission because their broker won't let them or because, given that they are getting whacked with a 50/50 commission split, there isn't enough money in it for them.
Going solo allows independent locators to offer better rent rebates to directly compete against their former brokers. In the end, it’s a win-win for both the agent and the tenant.
Any way you look at it, a flat fee vs a commission split is way better for Texas real estate agents. Instead of letting brokers split with your commission cash, make a move to Texas Locator Broker and keep your hard earned income.