There was once a time when the only workable realty firm model was that of the split commission. Agents would close deals, commissions would be received by the firm, and the firm would split that commission with the agent and sometimes take upwards of 40% of an agent’s commission in the process. As an agent’s expertise in the industry as well as their interpersonal skills with clients improved, they became much more valuable assets. These producers would see their splits reduced in order to keep them performing for their firms; as low as 10% for some of the best. For Oregon’s cities with high property values; like Portland, Lake Oswego, Salem, Bend, Corvallis, and Eugene the subsequent commissions can also be high, and therefore the change between 40% and 10% can be a life changing amount of income.
Some of the tangible aspects of associating with split commission firms is that, at the very least, they don’t require monthly dues. This means that in a down trending economy, when real estate may not be transferring hands as often, the firm won’t take money unless you make money. Additional benefits may include access to branch office facilities from which you can work and hold meetings with clients. There is also the ability to shadow industry veterans in order to learn tried and effective methods for generating business and successfully closing deals on behalf of your clients. Branch managers, in engaging with the walk-in business of potential clients, may also distribute those clients amongst agents like yourself, providing you business without having to produce the client yourself.
Intangible benefits that you may find beneficial, comes from using the firm’s “brand” as a means of developing your own legitimacy. Decades of operating within the industry and generating business, as well as using those splits to fund local advertisements as part of a branded marketing campaign, can have a positive effect in the minds of future clients. Being a Realtor for these firms, like Coldwell Banker and Century 21, can therefore provide a veil of legitimacy that otherwise would have to be developed personally by a skilled and charismatic agent. Meaning a rookie agent can make up for what they lack in confidence and effective customer relationships through branded association with an already well-known firm.
Bottom-line with split commission firms is that the more you make the more you lose to the firm, and while initially the association is beneficial for the rookie, the veteran Realtor begins to see the loss as too much. To prevent attrition the firm reduces the split, but it is apparent to the competent Realtor that they don’t need the firm as much as the firm needs them.