In years past, a 50% starting split was considered to be industry standard.
Even in today’s world, many brokerages charge a percentage of commission earned in exchange for support, mentorship, training, and having an office to meet clients or conduct “floor time”. Many brokerages charge a monthly rate, technology fee, desk fee, franchise fee, and a commission split. The reason why some agencies must charge these fees is quite simple; overhead.
Maintaining a large office in a nice part of the city can be expensive. Whether or not agents come into the office to work, some brokers still believe that maintaining a brick and mortar building is necessary. In addition to the lease payment there are utilities, internet, and many other fees that add up quickly.
Many successful real estate professionals have never stepped foot into the “office” that they are charged for each month. Successful agents are busy showing properties and meeting with clients, not sitting in real estate offices gossiping!
The future of the real estate industry is the “100% model.” “100%” means that the agent will keep 100% of the commission they have earned in exchange for a flat monthly, yearly, or per transaction fee. Of course the brokerage must charge something to remain operational; however the fees are often times less than one-third as much as agents would pay at a traditional brokerage.
With the traditional model of paying a percentage of your commission, “the more you make, the more you pay.” Whereas paying a flat fee is just that, a flat fee. Whether you make a million dollars in commission or a thousand dollars in commission… you are still only paying the same amount.
When it comes down to it, you must ask yourself what is best for you and your business. Do you like paying for services that you never use?