In this episode of The Ken Jones Real Estate Show I address the debate about what type of real estate agent really makes more money; an agent who works in a traditional fee-split firm, or one who works in what's called a "100%" firm.
For those of you who don't know, there are basically two types of real estate brokerage companies that an agent can work for:
- 1A so-called "fee-split" company where the broker provides various services to the agent and they share the commissions generated by the agent, and
- 2A "100%" company where the company doesn't provide anything to the agent, the agent pays all of their own expenses, including advertising, and in return, the agent is paid 100% of the commissions they generate.
To determine which type of agent makes more money, which has a greater return on their invested dollar, and has the lowest level of risk, I created a scenario where I pretend to be one real estate agent who's trying to decide which type of agent would be more profitable with the lowest cost and least amount of risk.
To do this, I developed a list of expenses that each type of agent would typically have. I then made the assumption that - under both the fee-split and 100% scenario - this same agent would generate the same number of transaction units at the same price, generating the exact same amount of commission.
I think you'll find this analysis and results to be very interesting.
What are your thoughts on this issue? Leave a comment below or leave me a voice message right from your computer. Just press the Start recording button below and start talking.