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Real Estate Trends

Are Real Estate Commissions excessive?

My wife and I recently had our vaccine shots.  Of course upon exiting the Pharmacy my wife's first words were "so where are we going on vacation?".  We decided on a nice beach resort in Cabo San Lucas.   When we arrived there was large group of about 600 real estate agents from EXP Realty.  They were having. sales/marketing/recruitment event.  We spoke with many of the attendees and they were a pleasure to be around.  

For those who do not know EXP is a relatively new Real Estate Brokerage with a different twist for revenue sharing.  They have been growing in great numbers and I can understand why.  From what I understand, agents not ony receive commissions for their own sales but also receive revenue from any agents under them.  As well as revenue from downstream revenue from those agents. Much like you would see with an Amway or other multi level marketing group. I might not have it 100% but you get the gist. During our conversations I would often hear about "XXX" agent with XXX downstream agents making $XXX a month in residuals from those gets. Some of those agents were getting anywhere from $10,000 - $100,000 month.  

I have to admit, as a Broker myself, those numbers sounded very attractive. Plus I believe those were real numbers.  They were not just being made up.   However being a true believer in FSBO I had to start questioning, how much commission is really warranted? I have no qualm with an agent making a nice living doing real estate.  There are some great agents out there who are worth every penny.  BUT if someone is making $50,000 a month just off of residuals from other agents, isn't the system a bit bloated?  I realize not everyone in that group was making $50K a month but I did hear a lot of $5,000 - $20,000 month in residuals plus their normal commission. 

I am a big believer in giving home owners a choice in the way they sell their home.  At TexasFSBO/MyCastleRealty our clients have the option of For Sale by Owner/Flat Fee MLS or Full Service Realty.  

 

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