Entry by Jim McCaughan

Calling ACRE Brokers

  9 Comments

I am the broker of a large office which operates on commission fees. I believe that some consumers will opt for consulting fees if given the choice and I am curious to know how brokers are splitting the fees with their sales associate.

In our office there is a minimum cost to open and process a transaction which attracts a file fee to the sales associate, If a sales associate did a small consultation there would often be very little left for them after office fees.

I am hoping to generate some discussion around this topic with brokers or sales associates who are currently using the consulting fee model or anyone else who has information or opinions on this topic.

9 Comments

Although I have a broker's license, I never acted as the broker of record so I can't add much.

However, the majority of our newer ACREs are brokers so please weigh in on this discussion as it's important if alternative compensation methods are to grow. How do you handle fees? Do you, like Jim, have minimum costs to open and process a transaction? What if there is no transaction but simply a consulting fee? What other issues does consulting present in your offices?

I am an indepedent broker with four agents so I have total control over what we do without having to answer to a corporate entity or pay franchise fees.  I am running the consulting model on the agent split.  I think that the agent needs to figure in their split when considering what they consulting fee schedule will look like.  I view it this way, I would rather have some money coming in consistently than a bunch of "maybe money" floating around out there in hopes of a contract.  I think the problems that most agents will run in to is the lack of understanding of a fundamental shift away from old school thinking from their brokers and/or managers.  Brokers may find themselves challenged by the confines of the corporate structure that many of them work under.  I think there are ways to work it on all levels, but it will take careful consideration and planning to make it equitable and understandable for everyone involved.  The biggest hurdle I see at the agent level is keeping agents in the mindset that compensation must go THROUGH the broker, they do not collect money directly.  The broker must compensate the agent and 1099 them for that income.  I just see this as a win-win for everyone if they can just all get on the same page and see this not as a threat to the sacred cow that is commissioned listing, but rather as a way to increase revenue and build credibility with the consumers.

The Broker/owner of the Keller Williams we work with uses the same office splits that her agents are acccostumed to and when they "Cap out" then there is no further splits and the agent keeps all the fees. 

I am a broker of a 100% commission office, and just became an ACRE.  I would like to eventually convert the agents working under me to become ACRE's.  I have a few ideas as to how I could accomplish this with the agents. And feel maybe 10 - 15% of the fee would be sufficient.  I agree with Jeani about having some money coming in consistently rather than waiting for "maybe money." 

As brokers I also fee it is our responsibilty to train and enlighten our agents to the alternatives that being an ACRE offers.

I am still new to all of this and have a long way to go but I have strong feelings for the ACRE business model and feel it is definitely the wave of the future.

The creation of a Office Policy & Procedure Manual in relation to three billing units i.e. Billable Hours, Flat Fee, and Contingency Fees , a Fee Schedule, the  Corporate Policy of the brokerage firm, and the Procedures to be followed and forms to be completed and maintained.

The monitoring of sales associates and their files to ensure compliance with the Office Policy & Procedure Manual due to a tendency among some sales associates to take on anything and everything in which they may earn income, and unless closely monitored could lead to instances where the particular consulting tasks required are beyond the abilities of the sales associate and could lead to claims of misrepresentation.

Where there are office fees payable on the opening of a file, such a fee could be paid out of a initial non-refundable retainer, and the compensation  paid to a sales associate could be on the based on a percentage of  the fees billed to the client and exclusive of disbursements, with the larger portion going to the sales associate.

I have worked for fees, in addition to commission and addressed my situation with Brokers that I worked for.  They have worked with me on fee payments, so that they didn't deduct the usual commission fees they typically do for special circumstances.

And, now that I have started my own firm "Brave New Realty LLC", I can, of course, handle the fee intake as I choose.

Communication is key.  If a Broker isn't willing to work with you, it's time to find a new office/Broker.

I am broker owner and I currently have 18 agents and have adopted the ACRE business model and have adapted it to coincide with the traditional commission fee model. I am currently sking all of my agents to sign up and get theri designation as an ACRE to use the system. But since I have employed this in my own business, I have seen a more consistent income flow since the adopted model. How I intend to work out the fee structure with the agent is fairly simple.  I have created an actual work order price list for consulting fees that every agent will be able to use on any appointment. This list of fees is a set price list and if the agent uses a consulting fee in any capacity to help a client this fee is discussed and agreed upo. Once the fee is retained, The agent still receives their agreed upon commission spilt on the initial fee and any fee incurred later with the same client. That way the income comes though the company and split accordingly. 

Kudos to you!!!

Glad this thread got resuscitated (had to look up that spelling!) - thanks, Carol! I get a lot of questions about how fees are handled from a broker level (splits, payouts, etc), so it's good to know we have plenty of ACREs to chime in on how it works in their offices.

This page contains a single entry by Jim McCaughan published on March 30, 2011 12:11 AM.

My FIRST Consulting Gig! was the previous entry in this blog.

I did it! Let's see what happens next. is the next entry in this blog.

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