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Old 03-14-2010, 09:00 PM
 
Location: Louisville KY Metro area
4,809 posts, read 8,255,830 times
Reputation: 1958

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Ladies and Gentlemen, RE/MAX has become terrible in explaining its model commission structure. May I explain and compare?

First, A RE/MAX agent has more power over their commission splits than any other business model. Most Home Services of America (Warren Buffett is the principle owner) bring new associates in at a 50/50 commission split, KW brings people in with a 70/30 split, and most Realogy firms do a 65/35 with a 6% franchise fee per deal, Exit Realty does a 70/30 with a 10% override to the recruiting associate.

RE/MAX brokerages all are independently owned and operated. I am one of those. I will speak only of my office model, but it's modeled off the RE/MAX International plan. At my office, we charge each agent a monthly co-operative advertising fee. 100% of that amount is paid to our RE/MAX region which uses it to purchase national, regional, and local advertising. Those great RE/MAX TV advs. come from that funding.

We then bill agents a set of fixed amounts. For example, there is a Broker Management Fee which covers the costs of brokerage including broker profit margins. Another fee is the shared office expense. Lets say we have 20 agents in the office and the rent, staff payroll, phone, etc is $100,000. That would mean we have a $ 5000 per agent share of the office expense. If we have 40 agents and the total costs are $160,000, then we have only $4000.00 to share amongst the agents. For associates who have joined RE/MAX since 2004, there is a 5% transaction fee also.

So, lets say the total cost to an agent is $15,000 per year plus the 5% transaction fee. If that agent only sells $50,000 Gross Commission Income (GCI) per year, they still have a 65/35 split, while at $75,000=75/25; $100,000=80/20; $150,000=85/15; $200,000=87/13; $300,000=90/10; and $400,000=91/9%.

So when you say RE/MAX "fees" are out rageous, take a deeper look. There is a reason RE/MAX agents sell more real estate than anyone else.

"Did you know?" That RE/MAX offers a modified "split plan" for people who are afraid to take advantage of the economics offered by the pay as you go plan? It's called RE/MAX Alternative Pay Plan or RAPP. At my office, an agent only pays a small percentage of the annualized total fees.

Last edited by tomocox; 03-14-2010 at 09:13 PM..
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Old 03-15-2010, 08:25 PM
 
Location: Fayetteville, NC
1,484 posts, read 3,078,744 times
Reputation: 1494
Great Post, Tom.

That is the best breakdown of REMAX's system that I have seen.

I hear "oh the fees are too high" from lot of other companies agents. But, the better your production the better you come out.

A year ago our REMAX franchise was going though a change of ownership and lots of agents were jumping ship. I broke down our (my wife and I) production numbers/profits and compared them to a local Realogy brand office we interviewed with. We would have payed out a good bit more to them and be pressured to sell in-house listings to get a higher split.

We made the right decision to stay with the "Balloon" and ended up having our best year ever. Plus, we can honestly tell our buyers we are independant and will not steer them to our companies listings for our own benefit.
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Old 03-15-2010, 09:49 PM
 
Location: Colorado Springs, CO
1,571 posts, read 3,512,814 times
Reputation: 1317
Eveyday I thank my lucky stars! I pay no desk fees, no IT fees, no monthly rent, etc. I can't beat the deal with a stick! Truly, I consider myself very lucky!
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Old 03-15-2010, 09:58 PM
 
Location: Austin
4,449 posts, read 8,405,069 times
Reputation: 3593
I had two KW agents badgering me last week about why I wouldn't join their company. I said, "I like to keep my money, and I don't understand why you don't..."

The amount of "fees" I pay for RE/MAX is tiny compared to what other brokers want. Plus, RE/MAX is the ONLY company who has had national TV ads for the past 2 years. Where is everyone else?
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Old 03-15-2010, 10:27 PM
 
Location: Cary, NC
19,691 posts, read 31,496,365 times
Reputation: 16779
Quote:
Originally Posted by FalconheadWest View Post
I had two KW agents badgering me last week about why I wouldn't join their company. I said, "I like to keep my money, and I don't understand why you don't..."

The amount of "fees" I pay for RE/MAX is tiny compared to what other brokers want. Plus, RE/MAX is the ONLY company who has had national TV ads for the past 2 years. Where is everyone else?
Well, I apologize for their behavior.
KW has plusses, but badgering is out of line, anytime.

Tell them to just go sell a house if they need money....
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Old 03-16-2010, 06:27 AM
 
Location: Louisville KY Metro area
4,809 posts, read 8,255,830 times
Reputation: 1958
Quote:
Originally Posted by MikeJaquish View Post
Well, I apologize for their behavior.
KW has plusses, but badgering is out of line, anytime.

Tell them to just go sell a house if they need money....
Mike, I agree with you. The KW program does have pluses, but when a professional Realtor is more worried about recruiting than about helping buyers and sellers, they are not giving their clients total commitment. Exit Realty is absolutely the most unprofessional franchise (not necessarily its agents) when it comes to agent recruiting.

Here is a fact that can not be ignored. According to Real Trends (2008 data), and (2009) data that I have but can not verify its origin, RE/MAX agents have been involved in substanially more sides (every real estate deal has two sides: listing & selling) than any other firm. Keller Williams actually has more agents in the US than RE/MAX, but RE/MAX production was far and away greater in total sales volume and agent sides.

There is a reason "RE/MAX sells more real estate than anybody." The educational opportunities, the no middleman international referral system, the unmatched brand name recognition (included with Nike, GM, GE, IBM, etc) and the freedom to serve clients in any manner which is legal, ethical, and moral without franchise restriction make RE/MAX agents the best.
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Old 03-19-2010, 10:12 PM
 
Location: Southwest Austin
5,000 posts, read 9,897,444 times
Reputation: 3492
Honestly, that rundown on fees was depressing to read and explains why I'm happy to be independent again.

My wife/Broker and I owned our own independent Brokerage for 13 years, then sold it in 2004 and took a year off.
In 2005 we joined KW and very much enjoyed our time there, the culture, the people, the training. It was nice after being solo for so long.
But in 2009 we decided to go independent again because I couldn't justify the annual outlay of splits and fees and rent.

We now have no fees (other than the standard Realtor dues, etc). I pay $30/mo. for a mail box address. We work from home with laptops and meet people in the field, or title company conference rooms, or coffee shops, or at the properties. We'd been working that way 97% of the time anyway, so it was an easy transition. We rarely met clients at the office.

I'll never work from a brick and mortar location again. It's so unnecessary. It's so 1983.

Different strokes. Just my 2 cents. It's hard for me to look at any list of fees and say "gee, that looks great!"

Steve
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Old 03-20-2010, 02:50 PM
 
Location: Louisville KY Metro area
4,809 posts, read 8,255,830 times
Reputation: 1958
Quote:
Originally Posted by austin-steve View Post
Honestly, that rundown on fees was depressing to read and explains why I'm happy to be independent again.

My wife/Broker and I owned our own independent Brokerage for 13 years, then sold it in 2004 and took a year off.
In 2005 we joined KW and very much enjoyed our time there, the culture, the people, the training. It was nice after being solo for so long.
But in 2009 we decided to go independent again because I couldn't justify the annual outlay of splits and fees and rent.

We now have no fees (other than the standard Realtor dues, etc). I pay $30/mo. for a mail box address. We work from home with laptops and meet people in the field, or title company conference rooms, or coffee shops, or at the properties. We'd been working that way 97% of the time anyway, so it was an easy transition. We rarely met clients at the office.

I'll never work from a brick and mortar location again. It's so unnecessary. It's so 1983.

Different strokes. Just my 2 cents. It's hard for me to look at any list of fees and say "gee, that looks great!"

Steve
Steve, I understand your 2 cents worth. Yet, it's what's in your bank at the end of the year. 99/100 agents flying a balloon will find a nice Christmas bonus. The fees don't break out on a monthly statement. I just gave you the chemistry to know how the monthly costs are developed. At the end of the day, week, month & year, its all about the value proposition.
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Old 03-22-2010, 10:13 PM
 
Location: Columbia, SC
7,033 posts, read 11,161,829 times
Reputation: 3555
Quote:
Originally Posted by tomocox View Post
Steve, I understand your 2 cents worth. Yet, it's what's in your bank at the end of the year. 99/100 agents flying a balloon will find a nice Christmas bonus. The fees don't break out on a monthly statement. I just gave you the chemistry to know how the monthly costs are developed. At the end of the day, week, month & year, its all about the value proposition.
Are you saying that Re/Max give a Christmas bonus to 99% of their agents?
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Old 03-23-2010, 10:40 AM
 
Location: Northern, VA
980 posts, read 2,079,299 times
Reputation: 521
I'm a KW agent and I just want to clarify because the second sentence is rubbing me the wrong way. I've been with the company for almost 4 years and there is one person here because of me...and I didn't ask her to come. She found out I left Weichert and she followed me. So that everyone understands how we operate, there are no quotas, requirements, penalties etc. if you don't bring agents on board at KW. Because I don't care about profit sharing, I don't care if I bring anyone in or not.

As for brokerages, to each his own. All I care about is that I get paid on time and my broker doesn't treat me like an employee. If I ever leave KW, I'll either end up with a boutique type operation or I'll start my own.

Quote:
Originally Posted by tomocox View Post
Mike, I agree with you. The KW program does have pluses, but when a professional Realtor is more worried about recruiting than about helping buyers and sellers, they are not giving their clients total commitment. Exit Realty is absolutely the most unprofessional franchise (not necessarily its agents) when it comes to agent recruiting.

Here is a fact that can not be ignored. According to Real Trends (2008 data), and (2009) data that I have but can not verify its origin, RE/MAX agents have been involved in substanially more sides (every real estate deal has two sides: listing & selling) than any other firm. Keller Williams actually has more agents in the US than RE/MAX, but RE/MAX production was far and away greater in total sales volume and agent sides.

There is a reason "RE/MAX sells more real estate than anybody." The educational opportunities, the no middleman international referral system, the unmatched brand name recognition (included with Nike, GM, GE, IBM, etc) and the freedom to serve clients in any manner which is legal, ethical, and moral without franchise restriction make RE/MAX agents the best.
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