Some Thoughts on Non-Traditional Brokerages
Some Thoughts on Non-Traditional Brokerages

by Kim Finley

I have been seeing a lot of advertising and articles about different types of real estate brokerages; discount, no fee, salaried, cloud, flat fee, etc. They all have their own plans and strengths and weaknesses and that is as it should be. This is America, the land of innovation and change and an ever evolving business landscape. Change is good, and that means there is something for every personality.

From my position as a self-employed Realtor at an independent brokerage, there are some things that consumers might consider when looking at the different brokerages that agents are affiliated with.

The “traditional” real estate agent/brokerage set up is like this: Various agents or Realtors (that is a whole different conversation) have their license to practice real estate registered under a brokerage’s supervision. That Broker is responsible for making sure that those agents are following the law of the industry, keeping paperwork in order, maintaining a positive public reputation, helping agents market listings and their business, etc. Most brokerages take a percentage of their agents earnings and also charge fees for some services. But the relationship is not really that of employer/employee. Agents are free to leave at any time and can also negotiate their own commissions and their own pay structure within the individual brokerages. They are the essence of Independent Contractors, their career and their day-to-day is what THEY make it. So that also means they are responsible for generating, growing, and handling their own business.  When working at it’s best it is a symbiotic relationship between equals. And for self-motivated folk who like to work hard and enjoy people, it’s a great fit.

So what are my concerns with the alternative options to traditional brokerage?

If an agent is at a brokerage where they are on a salary, and not commission based, what is their incentive? How motivated are they going to be working for the client, how on top of customer service will they be? Will they answer the phone on weekends and evenings? Are they going to be available for a client since they are required to be in the office for a certain number of hours a day/week? Does it matter to them that their clients are happy (or not), since they get paid the same amount either way? The bulk of those agents that work by salary are getting their clients thru the advertising that their brokerage handles, not by referrals or by growing their database thru their own efforts. And typically, the agent/employee does not even OWN their own database…they surrender that to the brokerage when they are hired.

And that is just one alternative type out there.

As a consumer I would also be concerned about a “discount” brokerage. If your agent is charging you much less than the usual and customary commission in your region for selling your home. how hard are they going to work for you? How much money are they going to spend on marketing your property? Are they “discounting” their time spent and their motivation as well?

Cloud brokerages are an interesting new type of agency; your agent is earning a higher percentage of their commission, we all like to make more money. But, the weakness there for me is that the Brokers are usually not local. There might even be only one Broker per state, responsible for handling hundreds of agents in hundreds of cities. How much one-on-one care is that broker going to be able to give his agents? What if there is a problem with a transaction, and an agent needs that broker to help problem solve, or handle a dispute? Don’t you want your agent’s Broker to be local, someone who knows your market and your area and also the local people in the industry? Real Estate is the most “local” of any business that I can think of.

To sum up, in real estate, you almost always get what you pay for.

And when it comes to selling your home or getting professional help with purchasing one, you need to know the details. So ask your agent or Realtor how their brokerage works, and how they get paid. Most of us are happy to be transparent and will gladly show you why we feel our particular choice is the best for us. We all all different and what works for one might not work for another. The best part about being in this business is that you can forge your own path and find your best fit.

 

 

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