Traditionally, the real estate industry operates by splitting commissions between brokers and agents in a 30:70 ratio. The agent takes the larger percentage of 70 percent and the broker gets the rest. However, those who have experience in the industry know that this split used in a realtor career is not always as straightforward as it looks. There are other charges that may be in consideration and can reduce the net commission of the agent.
Aside from the initial deduction, there broker may charge other fees. Examples of these are franchise fees, document storage fees, monthly fees, internet usage fees, and receptionist fees All these, when put together, can further reduce the net commission of an agent by up to $300 per month. Taking all these into account, the missing chunk in the income derived from a realtor career can be quite significant at the end of the year.
The financial impact of these charges in realtor or real estate agent income should then compel real estate agents to be vigilant in how they make their payments of broker’s fees. As individual business owners, the agents should know for what purpose their payments are being used and what benefits they actually derive from their payments.
That being said, fees are not inherently bad. Not mean that all shares allocated to the broker should be avoided as some may actually pay off in the end. The broker is actually a vital part of the real estate industry because a realtor career can be quite difficult to navigate without the proper guide.
The broker functions as a reference that helps the agent comply with the requirements of real estate transactions. Oftentimes, these can be quite difficult to understand because it involves market and legal concepts. The assurance of quality work and peace of mind for the broker is the ultimate goal. In this sense, the payment of fees for help is a sound investment.
Aside from this, brokers provide a support system that can benefit the agent. Through lead generation, marketing tools, and even counseling, affiliation with the broker can help the agent close more transactions. As more leads are produced, so does the chances of the agent to generate more income.
What is important to remember is that fees paid out to the broker have to be useful for the agent. As an independent business entity, the allocation of resources has to be geared towards those that can produce growth. If the fees paid out to the broker are meant to cover items such as the needless strength of a brand name or a cubicle that is never used, then the agent may be paying too much.
When it comes to setting the limits to the broker’s fees, there is no clear-cut answer. The line of excess is based on the needs of the agent. It all depends on whether the fees yield good results for the business. A good indicator of reasonable fees is if the benefits received outweigh the deductions in realtor’s income to qualify as a good investment.