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Independent Real Estate Business Models
“Good luck, I hope you make it” is a good way to sum up this model. You’ll see the independent type of commission structure with discount brokerages or 100% commission companies.
The main focus is the success of the broker, not the agent. This type of broker-centric model is one-sided and is not designed for agents that need training, technology or support.
Example
This is pretty simple example. Gross commission is $10,000. Sally keeps all $10K. She will have to pay her broker either a monthly desk fee or a transaction fee. These fees vary, but can range from a couple hundred dollars per deal or up to a couple thousand per month.
Dependent Real Estate Business Models
Dependent real estate companies are the most common type of brokerage in the industry. Their commission split usually starts at the traditional 50-50 split. This split can continue for as long as you are selling or it can operate with a sliding scale. Based on your production, it can move to 60-40, 70-30, 80-20 and so on.
The most important thing to notice here is you will always be paying your broker a fee. There is no cap or end in sight. Most franchises do not cap their franchise fee, so even if you work your way up to a 100% commission split, the broker is still getting paid. Dependent brokers also generate leads for their agents. Sounds good, right? Think again.
Example
A common referral fee for referring business to an agent is 25% of the gross commission. Let’s say the dependent broker generates a buyer lead and refers it to Sally. The gross commission ends up being $10,000. Sally is on a 50-50 split and owes the broker a 25% referral fee. The broker nets $7,500 and Sally gets $2,500.
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