Real estate offices are closing all over the country. Real estate agents are hanging up their licenses in every state. The traditional bricks-and-mortar real estate brokerage is hemorrhaging, and all that keeps this archaic business model alive is consolidations. As offices close, some agents quit, but the survivors move their licenses to another sinking ship, a ship that looks just like the last one and often with the exact same name on the bow.
A large franchise office closes it’s doors, no longer able to keep the lights on after more than a year of operating in the red. The agents are worried sick, not knowing what they will do, until their savior walks in the door.
A broker from a large bricks-and-mortar across town with the same franchise offers to take all the agents in with the exact same contract terms: each agent pays $600 per month and keeps 100% of their commissions. The agents sigh in relief and quickly sign the new contracts like sheep to the slaughter.
Since the broker can’t generate enough leads for the agents, and since the agents aren’t selling enough to make the broker enough money on commission splits, any kind of split wouldn’t make sense for the broker today. A sharp broker will charge each agent a monthly fee. He laughs all the way to the bank, because with 60 agents paying $600 per month, he’s making $36,000 a month just for living.
Three years ago I sat across the desk from a franchise broker who looked at me and said, “Well, we’re feeding the business every month. You have to do that when times are tough. But we’ve been through tough times before, and we always come out okay.” I remember thinking to myself that was a silly thing to say coming from a man who told me he had no business plan, no budget for marketing, and no written vision for the future of his business. Unfortunately, that same broker just issued a press release that he is permanently closing the doors of his bricks-and-mortar and will be hanging his license with another bricks-and-mortar. Another consolidation.