The Commission Myth
René Rodriguez
Best-selling Author | Keynote Speaker | 30+ Years of applying behavioral neuroscience to solve some of the toughest challenges at work.
Why Chasing High Payouts Can Hurt Your Growth
Imagine a seasoned real estate agent, Charlie, who has just switched to a firm offering a coveted 100% commission payout. For Charlie, this felt like the ultimate win—more commission meant more money in his pocket. But within months, the cracks started to show. Without the firm’s investment in technology, marketing support, and advanced training, Charlie was left scrambling to manage everything himself. His productivity dropped, his clients grew frustrated, and the financial windfall he expected never materialized.
Charlie's story is not unique. In industries like real estate and mortgage, the pursuit of the highest commission payout is often seen as the gold standard of success. But as we’ll explore, this singular focus on commissions can lead to diminishing returns and overlooked opportunities for long-term growth.
The Hidden Costs of High Commissions
Let’s dissect why the allure of 100% commissions doesn’t always pan out.
The Value of Sustainable Commission Structures
Consider Alex, another agent, who opts for a firm with a balanced commission model. Alex receives 80% of his commission, but the remaining 20% fuels a suite of services: weekly training sessions, marketing support, a dedicated transaction coordinator, and cutting-edge technology. Alex closes more deals, builds better client relationships, and has time to focus on long-term growth.
This story highlights a critical principle: sustainable commission structures allow firms to amplify the resources they provide to their agents, creating a win-win dynamic.
Research Backs This Up A study by Deloitte found that companies investing in employee development see a 24% higher profit margin. In the mortgage industry, firms that allocate margins toward technology and training outperform their competitors in customer satisfaction metrics and close rates.
Why the Race to the Bottom Hurts Everyone
The drive to offer higher and higher commissions has created a competitive arms race in the real estate and mortgage sectors. But instead of fostering innovation or excellence, it often leads to commoditization. When firms compete solely on price (or in this case, commission), they lose the ability to differentiate themselves.
In contrast, firms with a strong value proposition—be it superior technology, a supportive culture, or exceptional client experiences—retain top talent without sacrificing their margins.
A Call to Rethink Commission Models
The "Commission Myth" is rooted in a short-term mindset. Yes, a 100% commission model might put more money in your pocket today, but at what cost to your growth, your clients, and your career longevity? By shifting the focus to what firms can do with that additional margin—investing in their agents, enhancing client satisfaction, and fostering innovation—real estate and mortgage professionals can unlock far greater potential.
The next time you consider a commission structure, ask yourself: Am I choosing short-term gains at the expense of long-term success?
America's #1 Attitude Keynote Speaker, 3X Award Winning Podcast Host, 2X #1 Intern'l Best Selling Author
2 个月As great as you are the tidal wave which is "race to the bottom" will continue. Top tier entrepreneurial agents will continue to flourish and grow without overpaying branches/traditional brokerages. They offer no value to the true pros. New agents and mid tier agents which are many should be listening to your message! Happy new year Rene you are always an insightful follow! G.T..I. #gettheink
President at Zenith Home Loans
2 个月I love this, Rene. Everyone wants and deserves an equitable exchange of value. And in the absence of value, price is king. It is incumbent on the company to demonstrate and deliver value to its staff, just like the LO or Realtor has to demonstrate and deliver value to their client. Otherwise, we get commoditized. Then, the race to the bottom begins.
Transformational Leader | Impact-Driven Business Strategist | Entrepreneur | Executive Leadership Expert | Global Icon 2023 | World’s Most Notable CEOs | GCC CEO of the Year
3 个月Craig Philip Reilly comments: This is an excellent point, Rene. I've seen firsthand how the race to offer the highest commissions often undermines long-term stability and growth. Investing in comprehensive training and robust support infrastructure not only benefits individual agents but also strengthens the entire organization. In my experience, a balanced approach that combines fair rewards with essential resources creates a more sustainable and successful business model. How do you think emerging technologies can enhance this balance and support agent success?
Empowering Loan Officers to scale their business through transparent pricing, direct access to decision-makers, and a seat at the table, all while building YOUR brand. NMLS 118381
3 个月Tricky question. The real question is, what do you get for the commission you earn? It comes down to if you can't sell it, you can't get it. It could be training, support, fees, or cost. It's a balance that the company and the salesperson must figure out: great topic, and thanks for the insight.
Real Estate Broker Specializing in Luxury Residential Sales, Commercial Investments & Land Development Opportunities | Top 1% of Texas Real Estate Agents
3 个月Great point René Rodriguez! I believe collaboration, tools and leadership are worth so much more than higher splits. True professionals and business leaders recognize this and align with the right teams and companies. They receive as much as they give and this is the definition of winning and success…and the commissions always follow suit…in my experience!