Licensees and brokers. How does your brokerage charge? (new agent, commission, Realtor)

[keeperk]

After reading the latest posts on "Are commissions fair? the point came up how brokerages charge their associates.

Being a qualifying broker of a small office. 1, was just me, now there's two of us, #3 wanting to come on board....

My question is how do you charge as a broker?
or, How do you pay an associate?

My new associate #1 has been with me since Jan 07. Brand new licensee.
I set her up with the where to and how to get listings. All of my own advertising in place and new advertising and walk ins has been the main source of her buyers. In the end, by the end of this year, she will probably make more money(net)than myself who is paying all the bills to keep everything going. She has virtually walked into an already proven buyer zone at no expense. I can't complain about her efforts. She has earned her keep. I advise & supervise, the work effort is all her. She's is a keeper. I just love her. I have other brokers kicking their own butts for not taking her on. She came to me as the last resort as I was so far away. I reluctantly gave her a chance as I was a one man show. Wasn't looking for anyone.
Would hate to see her go now!

She is in a market I've wanted to take over, but have not had the time to do.
That works out great for me and is close to where she lives. I have internal questions I've not been able to answer like, if those buyers did not buy there, would they have bought what I already had? I was rocking and rolling in sales and now I'm not. They are buying in her district. It's almost like I'm competing with myself at a lower commission rate. I'm in 4 counties.

I charge her 1% franchise fee of our side selling price(we usually always sell our own listings) and 25% of commission of the net for the brokerage.

Being a sales person at heart which I am, I could not imagine letting another person in my office. I was a one man show. Now I can see it can be profitable? unless those would have bought my listings? is a delimma I've not figured out yet.

But seeing the light of commissions at the 25% net, that I've layed the ground work for by effort of $$, and knowledge, I'm thinking another associate could be profitable if I had sales person #2 on board.

I'm thinking about hiring associate #2 and letting her take over my listings in place. I know her background as I trained her in the business, she knows my inventory and she worked under me for 5 years. She was almost ready to pass the teacher. She wants to quit where she is and come on board with me. I'm not sure I can support her in my office yet with sales and myself.

For all of us, I have to make enough money to stay afloat in the personal world and keep the office afloat. I don't want to be greedy. I want to be fair for all of us to make a living.

What is the smartest not greediest way to charge? So far, other brokers have told me their associates pay for their own advertising. Thus far, my associate #1 has not had to pay a dime for anything except gas to get to work.

Local brokers do not share this information.
Please share your thoughts!

[jimj]

My old realtor (who is now a friend) pays a flat fee every month for his office,phones,internet,office support and office advertising. He pays for his own paper goods and advertising. He does not pay % of comissions. I think he said it was around $1500 to $2k a month. This seemed fair, his income is totally based on what he sells and is responsible for budgeting money for the slow months.

[cynmkolohe]

My last brokerage was a larger office and I worked first as admin, so I had an opportunity to view the breakdown for the broker in charge. The office took from 20% up to 50% of the commissions earned, the amount of the split depending on the agent's productivity. Everyone started at a 50/50 split and moved up as high as 80/20.

There was no desk fee. The office paid for all stationary (very basic, just printer paper and envelopes with a pre-printed black and white return address/logo), all printing (Xerox and a decent color printer), and a folding machine for mail-outs. Also, agents could earn advertising credits by sitting floor shifts ($80 for a 3-hour shift). So there was potential to have a monthly advertising budget of about $400. The office did pay for some newspaper ads for new listings and a 1,000 pc. "farming" newsletter that could be sent out every 6 weeks.

The broker in charge received a % (either 10% or 20%, I can't remember) of the company share of each commission--the rest was for the business. So he made more $ from a new agent who required a lot of his time. He made less off experienced agents who were also spending a lot of their own $ on advertising. He did list properties, but was not actively competitive with the office. Most of his listings came from established relationships with two different developers (plenty listings to keep him in the game) and clients with whom he had a long history.

The downside: that company had a really basic website and did very little advertising on its own.

My new company has a similiar structure, but does not give an advertising allowance or provide color copies. (They do provide black and white copies and postage and some office supplies, including professionally printed stationary.) They also pay a percentage of some advertising, if it is approved in advance and features the company logo and services equally with the agent's personal info. They pay for newspaper ads for new listings.

The company is larger--6 offices islandwide, though still local and independent. We have a great website (with an in-house web-designer) that generates leads distributed to agents and excellent print and "name-recognition" advertising.

For me, the difference in marketing strategy was well worth taking on a higher % of my cost of advertising. My new company has an excellent reputation and is recognized as an entity. When with my old company, I met lots of people who have lived here for years and never heard their name. Their system encouraged the agents to market themselves and there was little supervision over their efforts, so branding was all over the map, some more effective than others, but little that promoted the reputation of the company.

Hope there is something useful here for you, but the difference is that each of these offices are large compared to your structure. (About 30 agents in each local office.)

[Greatday]

We are a 100% company.

We charge our agents $25 @ month, $350.00 per transaction and $75.00 per transaction E+O. No Franchise fee. No copy/desk/fax etc fees. Full Service office. Full time TC's. Full time broker.

[AnimalLover]

My company charges $275 per transaction, with a minimum of 15 and maximum of 27 every fiscal year. Monthly charges in addition to this are $325 'management' fee, $350 office rent, $45 utilities, $15 internet access, $20 E&O. They provide clerical support to schedule showings, enter MLS data, etc. They provide black and white printers and fax to local numbers at no charge, everything else such as color printing or photocopies are charged per print. I pay for all my own advertising and any other expenses. I keep 100% of my commission (minus the transaction fees).

[jimj]

Originally Posted by Greatday

We are a 100% company.

We charge our agents $25 @ month, $350.00 per transaction and $75.00 per transaction E+O. No Franchise fee. No copy/desk/fax etc fees. Full Service office. Full time TC's. Full time broker.

As a consumer and not an agent I think this is the fairest way to do things. The agents do all of the work so they should be in control of what gets spent where, not to mention in control of % of commission charged.

[Charlottean]

95% of my commission.
$1200+ a month office/admin expenses.
All the flexibility in the world is worth it to me.

Motivation is key on this plan.