In many ways, real estate is the most accessible of all business endeavors. No formal education is required, obtaining a license is fairly easy, and start-up costs are relatively small. People from all walks of life, many with no business experience or orientation, join a brokerage without first evaluating its financial model to ensure it is the best fit for their goals, and offers fair value relative to their efforts. But the financial model of the brokerage you choose is the biggest determinant of financial success. If you choose the wrong model, you could be putting yourself on a financial treadmill. Not running the numbers before choosing your brokerage is a primary reason why agents fail to achieve the financial success they expect.

In our effort to shine some light on this crucial issue, we’re breaking down the numbers for the different brokerage models that operate like a team. Our experience with observing teams, and running our own, highlights two important facts. First, you don’t have to be in a formal team model to obtain the value that teams offer and, frankly, often traditional team leadership is inadequate to helping you get where you want to go. Second, there is only so much commission "pie" to go around, so you have to make sure that your slice is fair.

Let’s run the numbers.

Numbers Don’t Lie. Let's assume the average "mega" agent does 36 deals per year with a $280,000 average home sales price, and an average commission of 2.75%. That's just over $10,000,000 in sales volume and $277,000 in gross commission income.

Now let’s look at how much of that $277,200 you get to keep with three different team models: 1) when you're a partner agent at Momentum Realty, 2) when you're an agent on a Traditional Team  (a team with a traditionally-modeled big-box/indie brokerage), and 3) when you’re a salaried team employee. 

* Assumes a split of 50% to the team owner and a $12,000 cap on commission paid to brokerage. Assumes agent pays Momentum’s $250 broker fee themselves.

The numbers don’t lie: by choosing to run your business at Momentum Realty, you’ll keep 89% of your commission versus 46% on a Traditional Team, likely netting 2X your profit.  If you choose Momentum over being a $50,000 salaried employee, you can nearly 5x your net profit.  Of course, these numbers assume the same volume of sales—although at Momentum, where we work smarter, not harder, it may actually mean fewer hours.  

Now, you may say, sure, but my team buys me leads, they help me with branding, and/or they help me with transaction coordination. That’s fair. But how much do those services actually cost you, and are there other, better options available? Let’s compare what’s covered at our three models:

** Momentum sponsors lead buys through its optional Elevate program.

This chart reveals that what Traditional Teams offer in top tangibles isn’t much different from what is offered at Momentum Realty. So, the question becomes why would you give up the lion-share of your commission in order to be a salaried employee or a member of a Traditional Team? Shouldn't you just find the right brokerage that can help you with these top tangibles so that you can net 89% of your commission?

The Intangibles. Beyond the money, there are intangibles, quality of life/business issues that are important in choosing where you want to work. We get that because we evolved from a team model, and know how important qualities such as being with others who share your work ethic, having flexibility with your schedule, providing 5-star service, and having access to top-level training and coaching, are to making you feel good about going to work. In fact, we created Momentum Realty in large part to offer those intangibles to agents without requiring them to give up most of their income in return. The fact is, despite suggestions to the contrary, creating a team-based business is not complicated, and you don't have to join a Traditional Team to get the value of being on one. Let’s take a look:

Respect and Life Goals. The bottom line is that Momentum respects that you are an entrepreneur, a business owner with control over your own work life, and we offer the support and camaraderie of being part of the Momentum team. That’s a big difference from being an employee -- or being on a team where you are treated like one -- with no control over your schedule or many of your business choices, where the pay you bring home is often not proportionate to the hours and effort you put in, and where you are building the legacy of your employer or your team, instead of yourself and your family.

Is your current tribe providing the leadership, business planning, and coaching that you need to succeed? Is your current leader working toward helping you accomplish your professional goals? If not, what makes you believe that they might do in the future what they haven’t done yet?

We set up Momentum so that agents can net the lion-share of their income, while experiencing the full benefits of being on a top-performing team. We invite you to review the numbers with us, and evaluate whether the brokerage model you have now supports your financial goals. If you're interested in learning more, contact us.