Is high commission or good commission better for real estate agents?
Many real estate agents who have just finished their studies, start looking for a brokerage immediately after graduating. The only factor that many of them look at while searching is the commission rate of different real estate agencies. They forget that this should only be one of the things they take into consideration when trying to start a real estate career. In this blog post, we will go through other components that accompany a high or a good commission rate in the real estate industry.
Real Estate History of Commission
Commissions are made up of 100 cents to each dollar. In the GTA and Toronto, the norm used to be a 50/50 divide for the agent and the brokerage. Many companies would only hire 24 real estate agents per agency in order to maintain a good payout and to be able to look after customers in a more attentive way. The brokerage paid all the marketing and administrative costs, too. As soon as high commission brokerages appeared (a divide of 60/40 or more), most brokerages had to catch up too, by hiring more agents. This led to agents having to pay for their own material and advertising costs. Nowadays, there are many ways brokerages operate and administer the real estate commission rates.
There are brokerages which offer high commission to their real estate agents. This means that the agent may get up to 60% share of the commission and the brokerage gets 40%. In this case, trainings and mentoring are rarely provided and the real estate agents will have to pay for the marketing costs and do all the paperwork themselves.
There are also 100 percent commissions available for agents. This is also known as the rent-a-desk agreement. These agents pay a flat monthly fee to rent a space and a few services from the company. They have to cover 100 percent of the expenses in exchange for a 100 percent commission. For the newbie’s own sake, he or she has to be a well-established, well-educated agent and not to mention ambitious to start such a business. As good as a high commission may sound; these types of brokerages are not recommended for new real estate agents just starting their career.
Earning a good commission, which is around 50% of the 5%-7% in the GTA and Toronto, is the safest bet for a real estate agent who is just starting up. Earning a decent commission share on each sale and gaining some valuable experience are the most important elements to consider. Full service brokerages like Your Community Realty offer trainings, mentoring, workshops and various other tools to help a new real estate agent get the knowledge that he or she needs. Having a great marketing backup from the employing brokerage is a definite advantage in the long run, since not every salesperson is a natural born marketing expert. With the strong background of a well-established real estate agency like Your Community Realty, a new agent will have the chance to learn from the best in the market and not on his or her own loss. Commission is a great thing but it doesn’t exist until the deal is done. And the only way to get a deal is by being well-trained and ready for business. Are YOU ready?
Your Community Realty offers a comprehensive and complementary starting program within the Real Estate AcademyTM for every new agent in the Vaughan area, the GTA or even Toronto. Contact us today to start a career in real estate!