The Myths and Mystery of the 100% Commission Business Model

Having spent almost two years running the largest 100% commission transaction fee brokerage in the country, I learned a lot. One of the most lasting impressions is that this is a business model that very few people in the industry really understand and even fewer give the proper respect to. 

 The Myths of a 100% Brokerage Model 

I'll start with the most common misconceptions.

  • 100% commission brokerages can't make money. In fact, Real Trends has done the research and shows that the 100% brokerages on their list are making at least the same amount of net revenue or better as commission split or traditional brokerages. 
  • That 100% commission brokerages don't offer comparable services and support as their competitors. This of course may vary by market but the large 100% commission brokerages absolutely offer tools, training, technology, mentoring, coaching and any other typical tool or service you would put on the list. 
  • That 100% commission brokerages don't give proper oversight of agents and compliance is an issue. In many cases, these brokerages have larger compliance teams than traditional split brokers and better technology to monitor transactions. 

 Now For The Mystery Behind the Success of 100% Brokerages

  • You need to run your operations extremely different than a traditional commission split brokerage does. This means fewer W2 staff, streamlining work, using technology and monitoring staff performance metrics closely. 
  • You can have physical locations without having salaried office managers and hourly admin staff. 
  • Physical locations are not necessary and agents going into bricks and mortar offices are not necessary to build culture and for agent success. 
  • Buyers and sellers don't care where your office is, they care where you are and how accessible you are.  The front door of the modern real estate office is your website. 
  • You can have office managers who are not on a salary.
  • This is a business model that only works at scale. You need to be or plan on being a big broker, but better yet a mega broker. This model does not work for small brokerage companies. 

One thing I know for sure, if you try to operate a 100% commission fee brokerage like a traditional split fee brokerage you will lose a lot of money and you will fail. However, with the mindset, vision, plan of action and operational roadmap you will have a value proposition for today's real estate professional that is very competitive. 

Need proof, check out these 100% brokerages (in no particular order). 

HomeSmart

Realty One Group

Fathom Realty

JP & Associates

Charles Rutenberg

Benchmark Realty

Big Block Realty 

My Home Group

 

 

 

Close

Join my mailing list to stay up to date on my latest content, freebies and other news.