Flat Fee w/CAP vs. Splits w/CAP

The real estate industry is and has been going through a transcendent “WHO MOVED MY CHEESE” moment. It’s a fascinating game to watch! Especially if you are actively on the field with the other players… You have the same traditional BIG BOX BRANDS that are still pushing full steam ahead. You don’t hear much from them… However, one thing is for certain, they are historically consistent(give or take) when it comes to their overall production which annually ranks them at the top of the food chain.? A few new players are currently spiking in growth as they take a traditional BIG BOX BRAND approach, with some slight twist to their model in the pursuit of attracting agents with a promise of more income streams and better technology. Not to mention the number of players that went public(IPO) in the last 24 months.?

We are losing so slow, we think we are winning!?

by Gary Keller

Without naming them, I’ve obsessively studied all brokerage brands on a national level that have significant market share and/or are gaining market share. I’ve also studied and compared this new era of Flat Fee Brokerages and seemingly progressive Traditional Brokerages that offer traditional splits. Without boring you with the details, it’s an amazing science attempting to decipher the ideologies as to why Agents join one type of brokerage versus another. At times the reasoning adds up, oftentimes you can tell that an Agent doesn’t really know what they need/want from a brokerage, and then there are those Agents that are simply following the crowd without a clue as to “How, What, When, and Why” they joined their brokerage other than the fact that their friend(s) signed-up with some high level of excitement and no real details about the value proposition that could individually impact and/or improve their business. If that wasn’t baffling enough, ask an Agent at some of these Brokerages to explain their compensation plan, perks, and the value proposition that's being provided to them. Sadly, other than their split and cap, they really don’t understand how things work. However, they subscribe in mass to the possibilities, not the realities. ?

It’s easier to fool people than it is to convince them?that they have been fooled…

by Mark Twain

The last time I checked, real estate involves a lot of math, negotiation, and numbers. So, when an Agent joins a Brokerage, are they doing the math? The Brokerage an Agent is thinking about joining, does their business model compliment your business? Will your Brokerages business model, help your business grow? With that being said, the amount of commissions paid is routinely a hot-topic throughout the country via news publications, industry outlets, and among Agents in social media groups. Some markets are averaging 2% to 2.5% per side, while other markets are averaging 2.5% to 2.75% per side. In regards to Agents, a tight market with fewer available listings is widening the gap between the “Haves and Have Nots” by the day. Consumers are getting smarter and smarter.? Buyer-Agent commissions are getting lower and lower. New technology is getting better and better. And, more and more well funded new models are being conceived daily.?So, with all of these factors, where does that leave you?

You never change something by fighting the existing?reality. To change something, build a new model?that makes the existing model obsolete.?

by Buckminister Fuller?

I’ve always been taught in business to keep your cost low, and always try to find ways to increase your revenue(bottom-line). Do real estate agents, who are in fact small businesses(Independent Contractor), understand this Business 101 Rule? Did you know that most Agents throughout the country don’t use 10% of the technology and tools that their Association and/or Brokerage provides? Did you know that approximately 85% of all Agents are Buyer-Agents? Did you know that approximately 75% of all Agents don’t have a Customer Relationship Management(CRM) System? Did you know that the National Association of Realtors?(NAR) reported that 87% of all New Agents fail within five(5) years of getting their license? Did you know that approximately 33% of all Agents close zero(0) transactions a year. Did you know that approximately another 32% of all Agents only close 1 to 3 transactions a year? Do you believe that the influx of Agents entering the real estate industry combined with a tight market is going to make these numbers worse??

As REALTORS? we routinely tell a seller “The market?will dictate the value of your home…” What happens?when that same market decides to dictate your value?and how much they should pay you??

by Bobby Bryant

Currently, less than 10% of all Brokerages in the country are Flat Fee Brokerages. However, I unequivocally believe, given the collective changes that are pressing against the real estate industry that within the next 5 to 10 years at least 50% of all real estate firms will be Flat Fee Brokerages.?

What is a Flat Fee Brokerage? A Flat Fee Brokerage refers to a real estate brokerage that charges its Agents a fixed fee per transaction instead of a percentage-based compensation.?

Per my research, this new era of Flat Fee Brokerages offer just as much, if not more services, support, technology, and training than most Traditional Brokerages throughout the country. Also per my research, due to a commission split model, several Agents at Traditional Brokerages expressed the lack of freedom and flexibility to be more creative with how they charge their clients which results in them closing less deals.?

EXAMPLE:?

Traditional Brokerage

$400,000 Sale?

X 2.5% Commission Paid

$10,000

80/20 Split

Agent $8,000

Broker $2,000

Other Fees $?.??

Flat Fee Brokerage(DOSS)?

$400,000 Sale

X 2.5% Commission Paid

$10,000

$395 Flat Fee

Agent $9,605

DOSS $395

No other transaction fees!?

Give yourself and your business a pay raise! How would you like to make $1,605 more on this same transaction, with better support, technology, and training at a next era Flat Fee Brokerage? Why pay high CAPS to earn 100% of your commission, when you can start earning 100% of your commission today and only pay a Flat Fee CAP of $7,900. At DOSS, unlike other brokerages, after you CAP, you don’t pay any more transaction fees until the year starts over again.?

The only thing more unthinkable than leaving was staying; the only thing more impossible than staying was leaving.?

by Elizabeth Gilbert

To get more information about DOSS, email [email protected].?

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DOSS: BETTER. FASTER. SMARTER.