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As someone else mentioned, I suggest you interview at 3-4 places in your area that you could work at and go with the company that you feel will train you the best. When you are just starting out you are going to need lots of help. What split you get doesn't matter. I wouldn't want to pay $200+ a month to have my license anywhere with no deals coming in though.
Greg, I don't know of any sane minded person who would wish to pour even $50.00 per month into something that doesn't return an investment benefit. Now, am I mistaken?
At my office, we all, including myself, pay $236.00 per month into a combined "ad-fund". It pays for, well you know. don't you, the balloon on tv, in the air, on bill boards, radio, and so much more. It is why the "balloon" is ranked with the Nike "swoosh", the Coke bottle, the Apple "bite" as one of the top ten logos in the world, not just in Austin.
You are certainly correct, but last I heard nearly 25% of your brand's hometown office had zero annual productivity and they paid $50.00 per month just to be part of the office. I can't substantiate this, but you might want to check into it.
Oh, well.
In her book about luxury home marketing, Laurie Moore-Moore spoke of recognizing that some homes just weren't meant for the typical buyer. So why try marketing to those that won't be buying that home. Example, I am in negotiation to list a luxury home that has only two bedrooms. It has over $4,000 finished square feet, but only two bedrooms. Won't likely be marketing that home to a growing young family.
At most RE/MAX offices, we don't market (recruit) agents who will be satisfied with less than $3-4,000,000 in annualized volume. Doesn't mean we don't recruit newbies, but when we do, we select those who understand that every office is a collection of small business owners. A viable small business person recognizes that advertising is key.
I don't understand. I am a newby. If I go with Remax or such -- I don't split my commissions, I pay for the Remax name, correct? Monthly? or what?
The business in Houston of low housing prices, ending up with 1/4 split, then adding in gas and all that goes with it and how does anyone survive? I am not married or have a back-up plan!
How does someone like me get started (signs, etc.) and pay the bills?? It doesn't seem possible. I have an interview with Century 21 in a couple of days and I want to be prepared so I am not bs'd into doing something stupid.
Am I forced into a contract at a agency if I decide to go with one? I am going to obviously need help in the beginning . . . where do you go, not split your 1/2 commission, AND, get help? I have everything I need for supplies, printing, etc. at home for free. So it would not be worth me paying to sit at an office. I don't know what to do!! help?
I don't understand. I am a newby. If I go with Remax or such -- I don't split my commissions, I pay for the Remax name, correct? Monthly? or what?
The business in Houston of low housing prices, ending up with 1/4 split, then adding in gas and all that goes with it and how does anyone survive? I am not married or have a back-up plan!
How does someone like me get started (signs, etc.) and pay the bills?? It doesn't seem possible. I have an interview with Century 21 in a couple of days and I want to be prepared so I am not bs'd into doing something stupid.
Am I forced into a contract at a agency if I decide to go with one? I am going to obviously need help in the beginning . . . where do you go, not split your 1/2 commission, AND, get help? I have everything I need for supplies, printing, etc. at home for free. So it would not be worth me paying to sit at an office. I don't know what to do!! help?
So, you spent upwards of $1000 to take the classes and exam, and you don't have a plan? Did the school you went to not discuss these things or bring in experienced agents to talk about what happens when you're done with the classes? Let me guess, you took the classes online?
The business in Houston of low housing prices, ending up with 1/4 split, then adding in gas and all that goes with it and how does anyone survive? I am not married or have a back-up plan!
How does someone like me get started (signs, etc.) and pay the bills?? It doesn't seem possible. I have an interview with Century 21 in a couple of days and I want to be prepared so I am not bs'd into doing something stupid.
As to the first part many people get into the business without understanding the cost and without a plan. That is why there is a 92% dropout rate after 2 years. You need to sell lots of homes. For that to happen you need good training and support.
First pick a broker than will train you and spend one on one time with you. Don't worry about the split, go for the company that you feel will put you in a position to sell homes with training. Once you become self sufficient then you can look around for a company that offers a more attractive commission agreement. I suggest meeting with your local C21, CB, ERA, KW, and RE/MAX offices. Different offices will have different brokers and owners so don't be afraid to go to multiple offices with the same franchise as the office environment, training, and commission splits can vary.
Questions to ask: What training plans do you have for new agents? Do you have individual mentoring programs? Where can I find clients? Do you offer leads and do they have a referral fee attached? What commission splits do you offer? Can I meet some of the agents that started here and talk to them about how they were able to succeed? How much has the average agents production increased under your guidance? Will you help me put a business plan together and implement a marketing strategy? Do you have seller and buyer presentation to help me secure clients?
Next time you see someone complaining about how high commissions are think back to your first sentence and then tell them your commission isn't negotiable, or my favorite "Do you think it will take a higher commission to get your home sold?"
Just wanted to say this was an interesting thread. Enough so I had to make a quick registration.
I'm out in CA and have been with KW the last year and a half since being licensed and started on a team. I've progressed to where I've gone out on my own and now am looking into other options. I only looked at KW at first because I knew somewhere there and the training seemed (and was/is) very good. Now that I've learned more and started creating a detailed business plan and chatted with some folks that left KW, it seems to me I'm leaving money on the table.
I've met with a smaller firm I've not heard of until I talked to someone and my costs are super low. At 15 deals of a median PP of 250K it's a 20k difference in my pocket. While that sounds good, I'm concerned about the lack of name recognition to a degree. I'm meeting remax, cb, intero and another smaller firm this week.
My feeling with my office is that they are focused more on becoming the biggest office in the world that those of us mid level newer folks get lost in the shuffle.
Anyways, I just wanted to say I've enjoyed this post and got some ideas from it. I'm glad I started where I did but feel I out grew it for where I want to take my business.
I agree with the fact that this is a very interesting thread. I know I read this before I chose my which brokerage to hang my license with and I figured I would take the time to lay out my decision with simple facts as to why I chose Keller Williams as my brokerage. I believe that after you read this, there will be absolutely no argument as to why KW is the best option for anyone.
Let me first say that the first company I talked to was KW. They laid all of the facts down for me. It was a 70/30 split up to 21k + 3K in franchise fees and then it went to 100%. So in an anniversary year, I ultimately would pay 30% of my commissions until I paid a total of 24k in a 12 month period (for me it is February to Febuary). On top of that, I would pay $56.77 a month for realtor.com showcases, technology fees, E/O insurance, etc --- they laid everything out to the penny to show where it was going.
They also briefly talked to me about their profit share program. In a nutshell, if you bring people into KW, whenever they close transactions, you will retain a portion of the 30% that KW keeps from said agent if KW is profitable that month (they give 1/2 the profits back to agents --- and they are always profitable). This was simply another stream of income to look forward to and motivation to tell people about the extreme advantages of KW over other companies.
At this time, I hadn't even started my 75 course (I live in NY) and the person at KW said to focus on the course and pass, but before I decide to hang my license, he told me to interview with other brokerages to learn what they have to offer.
I finished my course and became license --- and meanwhile it took me a year to decide what brokerage to hang my license with.
So, I interviewed with Hunt Real Estate, and Century 21---these are your worst choices (Caldwell Banker too---just no good). I am all about the numbers, because I believe that if you are going to run your own business (and real estate is running your own business) you need to have a good quality of life associated with it. With these companies, they take ~6% off the top of your commission and then take 50% --- so you are making less than 50. Gradually they slide your commission up....but it is never 100% --- the highest I saw was Hunt at 90%. Their claim to fame is that they pay for everything. But the agent is paying for it in rediculous commission splits. One sign is $100 or so. Over time, you will accumulate signage, but if you do 2 million in sales, they are taking $35000 of your $70000 for that year. Then you have to pay tax on the 35k and still have health insurance. They just take wayyyyy too much. To hang your license under a company like this (any company other than RE/MAX or KW ultimately) shows that you did not do your research whatsoever and you will a) succeed and throw away TONS of money or b) wash out because you don't make enough. It is simply idiotic.
If anyone reads this that is part of one of these companies, please get in touch with me and will point you in the direction of someone to talk to from KW.
Ok, so then I talked to RE/MAX.
I talked to RE/MAX 3 times and almost hung my license. Here is the scoop:
RE/MAX believes that agents build their own brand, not the company, so they allow your picture on your signage, your own phone number, etc. They say that they believe that you should be able to grow your own business based off of your standards and how good you are as an agent --- sounds great!
They charge $16000/ year in desk fees. Everyone pays it and therefore everyone in the office is equal---fair enough, no giving scarce leads to top producers only--got it.
They also have a 95/5 split. So you pay 16k a year plus 5%.
My first year, the broker owner told me he would do a 70/30 split until my 16k was paid...so they were willing to work with me.
They boasted, as other people have here about how RE/MAX agents sell more homes than anyone else, blah blah blah.---
I am going to explain why this statistic is flawed and why you will make the most money with KW than RE/MAX now!
Before so, I want to give you some stats though for central NY.
There are 1200 REALTORS in CNY --- average annual sales is 3 transactions per year. This is because you have to factor in people that quit, are retired, do it for the "social aspect", and do it part time.
RE/MAX charges so much in DESK FEES, that NO ONE CAN WORK PART TIME. Because of this, they only have full time agents that are producing....Full time agents typically produce more than part time agents, therefore they will have more sales.
Also --- It DOES NOT MATTER what company you hang your license with. People will do business with YOU, the AGENT, based on a) if they like you, and b) if you have good references. If you know what you are talking about, are pleasant, and seem like you genuinely care about them, you will get the business.
Before I get to RAW NUMBERS...I want to hit on a few other points.
One this that really urks me with RE/MAX is their advertising that agents pay so much for when they pay RE/MAX international. I saw an ad on the TV the other day --- it said:
"Looking to sell your home. Contact a RE/MAX agent."
Let me explain something to you --- that has 0% influence on people. For a company that says they believe in promoting the agent, not the brand, they do a lot of advertising for the brand rather than the agents.
If you want to list your home, you are not going to go to a specific company. You are going to tell your friends and family that you want to sell your home and get a referral for an agent that someone had a good experience with.
If you are a buyer, you will be looking online on zillow or realtor.com at homes yourself and more than likely call the listing agent or just show up for an open house.
Nobody calls RE/MAX or ANY company just because of the company. So those RE/MAX dollars are ABSOLUTELY WASTED.
Ok. Now lets talk about the nitty gritty numbers. I am going to give you three scenarios and you will see who makes more money.
Average Home in CNY $150,000
Average Commission Kept 3.5%
Scenario 1:
New agent does $1,000,000 in sales. In CNY this is about 7 homes. (Average home again is 150k)
That is $35,000 in commission-able dollars.
Re/MAX Takes 5% -- 35,000 - 5% = 33250.
They also charge 16,000 in desk fees = 17250 for the year.
Keller Williams take 30% up to $24,000
30% of $35000 is $10,500. $35000 - $10500 is = 24,500 - 60/month in desk ($720 a year). = 23,780 for the year --- AND because it is a split up to a cap, there is WAYY LESS RISK BECAUSE YOU DONT PAY $1300/MONTH NO MATTER WHAT.
Scenario 1 -- new agent -- KW Wins
Scenario 2
Agent makes $5,000,000 in sales for the year. This equates to 33 homes in a year (this would be a decent year for full time agents in my area). Commission-able dollars before any splits equal $175000.
KW 30% of $175000 is $52500. KW is capped, so they only take $24,000. $175,000 - $24000 = $151,000 - $720 (desk fee) = $150,280
KW WINS BY $30. Oh and keep in mind, because they just have a split, there is no risk or mandated $16,000 desk fee if you have a slow month or two.
Scenario 3
Agent does $10,000,000 in commission-able sales (these are the top 10% of agents in the CNY area. Real masters of their trade). This equates to 66 homes a year (realistically might be less, but keeping the average home at $150,000 for the sake of the post). Commission-able dollars at 3.5% (like scenario 1 and 2) would equal $350,000 -- not a bad living.
KELLER WILLIAMS WINS AGAIN! I want to mention again, that until the agent caps at $24,000 they were not paying high risk desk fees at Keller Williams....so it a LOT less risky (I have mentioned this 3 times now).
Now...there is a point between, 2,500,000 and 5,000,000 where RE/MAX agents WILL net a little bit more than KW agents, but the whole idea when you are running a business is that you want to MITIGATE RISK.
Bonus Scenario 4
Agent does 3,500,000 in sales. This is 23 homes. Gross commission is $122500
Again, for the 5th time....is it worth it to risk $16000 in mandatory desk fees to make an extra $2500 if you end up in this small window of commission-able sales? If you make too little, RE/MAX will take more than ANY OTHER COMPANY because you have to factor in their desk fees. If you make more, then you keep more money WITH KELLER WILLIAMS.
All the while, aside from the fact that you net the most $$$, then you can factor in the profit share (which we didn't include in numbers as passive income) and training.
What do I mean by training? KW has Ignite, BOLD, Family Reunion, Masterminds--SO MANY TRAINING PROGRAMS for beginners up to advanced, experienced agents.
Keller Williams was ranked #1 training company in North America --- and that isn't just out of real estate companies folks. #1 out of ANY company.
I think you can see why I picked Keller Williams and I hope that any new agents or existing agents choose KW also. If you have any questions or comments, please feel free to connect with me via email ryan.*****rd@kw.com
Ryan, of course branding matters. Plenty of people call RE/MAX because of the brand. Do you buy Chek Cola or Coca-Cola? They are the same. Do you buy Tylenol or the Walgreens brand? They are the same thing. What about Kleenex vs. tissues? Do Just because you feel brand doesn't matter doesn't mean everyone does. I just listed a property Friday that they came to us because we're RE/MAX. I wear branded shirts and people constantly start conversations with me because of the RE/MAX logo.
RE/MAX does have the most transactions per agent and more sides per agent than any other company, those are facts. You say it's skewed because part timers don't work at RE/MAX? You're right, we don't part-timers, we prefer full time professional agents at RE/MAX. I wish all companies had such high standards.
You spent a lot of time on math. I hate to burst your bubble but each RE/MAX is independently owned so splits and fees can vary. In fact my RE/MAX office has offers both a 70/30 with a cap (no other fees) or a 95/5 with a desk fee. As it happens both options once exceeding the cap will result in a higher net agent than my local KW. But different locations for both companies have different costs, splits, and caps. You also talk about the split being no/low risk? If an agent is consistently doing high volume do you think that small office fee is really a risk? Is so, then do the split instead.
In your scenario the agent net is very similar but what is the value? Is KW promoting their business as well as RE/MAX for essentially the same cost? Are they driving business to the agents like RE/MAX? If you got a few extra deals now are you making more at RE/MAX? Both are fine companies, both have great training. Please don't think I'm attacking you or KW but I wanted to point out some flaws in your post. KW spends their money driving agents to their business, RE/MAX spends their money driving business to their agents. It's just different philosophies but both are excellent franchises with some very good agents. Same is true for C21, CB, and ERA.
Oh, and nice job getting the typical KW recruiting pitch in there at the end. They did train you well. KW was recently ranked #1 in training but then why is despite having the most agents KW was only ranked 8th (or was is 6th?) in actual transactions closed? RE/MAX also ranked #1...in actual homes sold which I believe is what real estate is all about-helping people buy and sell homes.
I would have to respectfully disagree with your branding comparison. People buy certain products because of the standard --- ie Coke vs Chex, Kleenex vs Tissue. In the real estate business, the quality is provided by the specific agent. It doesn't matter whether that agent works with RE/MAX, C21, or KW. The hightest producing agent in CNY was originally with RealtyUSA, before coming to KW---making 30,000,000 in sales in his first 30 months. My partner averages 11,000,000 a year by himself. There are agents making 30,000 and others making 300,000. To say that people make more because of RE/MAX is a complete fabrication though.
You say you listed a home the other day because someone called RE/MAX. I won't challenge the validity of this, but let me ask you how many listings do you get from people calling RE/MAX vs referrals & old fashioned lead generation? I spend 3-5 hours of my day on the phone consistently doing lead generation. This has nothing to do with my brokerage, it has to do with my motivation. I don't work for Keller Williams. No agent works for their company. They run their own business and hang their license as required by law with a broker. That's why generalized real estate stats are always all messed up. It is a standard 80/20 rule. 20% of the agents in any city are doing the real business. The other 80% (at any company) fall to the wayside. RE/MAX eliminates the 80% through absorbinately high desk fees. That is great, but irrelevant. The people that are willing to seek out the business will do more business.
Now...as far as my math, I was basing all of my math off of Central NY and the brokerages that I interviewed. If there is a RE/MAX company where you live that has 100% commission plans, you may pay less than KW, but as long as you have to pay a percentage as a split, eventually you will come out keeping more with KW because of KW's cap.
To answer your question about 8th most closed deals vs RE/MAX -- again it doesn't matter because RE/MAX fees are so high, people need to produce. At KW, we have people that don't produce because they are on a split----they also are the ones driving 1998 Explorers instead of brand new F-150s. If you took the top 10% of RE/MAX agents and the top 10% of KW agents in the same city, I bet they would be very close. But if you take two premier agents, one at KW and one RE/MAX, the KW agent would net more money. You can't argue with the math, at least where I live.
Also, thanks for the compliment on the recruiting pitch. It's hard not to want to tell someone about a company when it is so much more better than its competition. (Not attacking you either---I just believe in keeping the money I earn and I have been extremely happy with my decision not to pay for the heat of sending that stupid balloon up in the air during the Superbowl. I'd rather take my wife out to dinner with the extra money that I keep with my brokerage. To each his own though!)
Your numbers are still flawed because when you cap at KW, they still charge you a transaction fee PLUS they charge you for any copy you need when you need to turn in contracts if you don't send them electronically. That transaction fee adds up quickly if you're selling a lot of homes past your cap.
Also, if you asked the Remax guy, there is a cap on the 5% they are allowed to keep. In my market, I wasn't on 5%, I had a much better split, and the most they were ever allowed to take beyond the desk fees (that are MUCH less than what you listed- I would never pay so much in desk fees) is $7500. So, if you factor in the cap that they have, your numbers are completely wrong.
I was with RE/MAX for over 11 years. People DO search specifically for Remax agents. I received many out of state people that only contacted me because they went to the Remax site and searched for specifically a Remax agent.
I recently made a change, and now I'm at a different fee structure making even more money. KW would NEVER EVER compare to my money in a million years. You could do scenario 25 or 67 or however many scenarios you want, but the KW model is not the clear-cut winner in most areas. You have your rose-colored glasses on. Why would I ever want to pay $24,000 a year to my broker, and how rude of you to tell everyone else that you've made the best decision and we've all made a bad one. You're nuts! You've been in the business for 5 minutes and you think you know what's right for everyone?
We'll see if you're even still in business in 6 months.
...
Also, thanks for the compliment on the recruiting pitch. It's hard not to want to tell someone about a company when it is so much more better than its competition. (Not attacking you either---I just believe in keeping the money I earn and I have been extremely happy with my decision not to pay for the heat of sending that stupid balloon up in the air during the Superbowl. I'd rather take my wife out to dinner with the extra money that I keep with my brokerage. To each his own though!)
This is the attitude that turns a great many brokers off on KW, as well as being a violation of CD TOS to solicit business.
Profit share is legitimate. Pestering people to listen is crass.
3-5 hours/day telemarketing? Yuck. Welcome to 1965 marketing.
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