Where Are the Profitable Real Estate Agents Today?
Five years ago when Brittany and I were considering launching an independent brokerage, we decided to look deeply at compensation and wealth building for real estate agents.
Since we had just become financially free after a three-and-a-half-year grind, we were inspired to help others build wealth too.
One defining day for us that made us investigate agent compensation deeper was when one of our top agents on our team came to us privately to express financial concerns.
She said she had sold more than 20 homes with our team in just a handful of months -- but was still broke.
We were floored.
She explained that between the team split of 50/50, the brokerage split of 36%, the E&O fees, and monthly fees, there was barely anything left for her and her family.
This struck me hard. I had always done the financial math from my perspective as the team leader, but I had clearly failed to see the impact of the math on my team members.
How in the world was a Top 5% Producer in the marketplace experiencing virtually no financial gain?
Other teams were set up the same way.
In fact, teams were taught to be set up this way - a way where team members would have very little financial upside for the work that they do.
We wondered: was anyone on a real estate team doing well financially? Even if they were, was the effort to do that volume long-term sustainable?
So we started asking around and found that most team agents and team leaders had no problem sharing their revenue numbers, units, and volume, but remained quiet about their NET profit.
Net worth or cash flow wasn’t even in the conversation.
Thus, we did the math ourselves, and we found that in most cases (not all), agents would need to sell 4-5x the number of properties to make the same amount of PROFIT as a solo agent under these brokerage compensation models.
We had so many questions running through our minds, but our main one was: how do we solve this problem?
Looking deeper, we realized that this was an industry and education problem.
Agents were not doing the math on their compensation, team leaders were not breaking it down for them (we were guilty of this, too), and brokerages were indeed taking a large chunk of agents' commissions, which was much more than the value they provided to agents.
Simply put - there was a value gap. The system for agent compensation was broken.
We started talking about how agents deserved a brokerage where they would get access to resources and valid leadership that someone on a team has AND be able to receive the compensation at the level of a top-performing solo agent.
Thus, we launched Momentum Realty in 2020 (right before the pandemic, perfect timing!)
We chose a small fee 100% financial model we thought would make the most sense long-term for solo agents, for team leaders, and for agents on teams.
As our company grew from 4 agents to 72, and from 72 to now today 198, we found that the larger we grew, the more economies of scale we could achieve. We could get discounts on technology, leads, and other marketing platforms, and provide even more value to our agents at an even lower cost.
We continue this philosophy today.
Reducing costs for agents is a massive value add, while also introducing new value propositions each year.
In a market like today where the number of transactions is falling, less fees to agents are needed, not more. Though companies are still adding junk fees of all kinds, including monthly fees, additional $250+ fees throughout the year on various transactions, and large annual fees, without adding more value. This "leaky ship" nickel and diming does not help agents grow financially.
If you want to explore your savings and value gain at Momentum Realty vs your current affiliation, don’t hesitate to send me a DM and have a confidential conversation.
We’ve helped hundreds of agents save cumulatively, millions and millions of dollars in commissions just on splits and fees, while entering a productivity environment where the average agent at the company earns $105,000+ per year in revenue.
-JB
