Monday, January 28, 2013

Breaking Commissions Begins

As I mentioned in a previous post, I have started initial research into writing a book covering real estate's mainstream business model, real estate commissions. The name of the book will be the following:

Breaking Commissions: The Dark Side of the Real Estate Commission Model

The main title of the book is a play on the tv show, Breaking Bad, in which the main character breaks bad or commits illegal acts to support his family. The subtitle is a homage to the film Star Wars and its antagonistic theme, the dark side of the force.

The tentative chapter order and names are as follows:

  1. Introduction

  2. The Anti-Model

  3. Independent Conundrum

  4. The Miseducation of All

  5. Survivor Realty Show

  6. The Act of Unaccountablilty

  7. Cult of Control

  8. The FUD Principle

  9. Too Tight Coupling

  10. Wag The Dog

  11. For Sale By Owner

  12. Fee-For-Services

  13. Project Management

I intend to post excerpts and revisions as I develop the manuscript.


Sunday, January 27, 2013

Taking the High Road Instead of the Low

In the news this past week, a consumer complaint website,, reared its ugly head then was quickly and swiftly shut down by its domain registrar. Besides possibly being sued for trademark infringement, what exactly did the registrants of accomplish? Nothing except for one aspect that taking the low road to a real estate industry issue has no purpose and is pointless. Historically, others attempted to sue the National Association of Realtors for trademark and anti-competitive issues. The United States Department of Justice was successful in their litigation attempt, but others have not been and most likely will not be in the future.

So, what is an alternative method to compete, complain or fight a real estate goliath? The better methodology is referred to as taking the high road. My point is that instead of taking the low road of litigation or derogatory websites, a high road of positive promotion and education should be taken. For instance, in lieu of disparaging real estate salespersons, an alternate method is to promote alternative real estate models such as fee-for-services and for sale by owner. By taking this approach, educational content describing how alternate real estate business models work and potential endpoints for contacting alternative business services are not only more professional actions, but also more ethical ones.


Monday, January 21, 2013

A New Book Beginning

Gaining inspiration from my latest research on strategic human resource managment and the real estate industry, I decided to begin new research on the real estate commission model. This topic has many tentacles to flesh out so below is a beginning point for what I hope will become an eventual book. I intend to post excerpts of the work here on my blog as I develop the project. I look forward to contributing a new view on this mysterious space.


Luke knew deep down that there was still good in his father, Darth Vader, and he was right.

Deep down, real estate agents are good people, too. You may snicker or laugh at this statement, however, I believe this to be true just like Luke did about Anakin. What makes real estate agents seem like bad people or potentially unprofessional is actually the business model that they are bound by to conduct their services. This business model is known as the real estate commission model. When one first hears of real estate commissions, images of big cash payouts and large commission checks come to mind, right? I am assuming you agreed. Well, unfortunately there is a dark side to the real estate commission model.

This book objectively discusses and points out the many flaws of this business model which is implemented throughout the industry and for more than a century now. My motivation for writing this book is not to call anyone out or any specific businesses, but bring to light the inner workings of the real estate commission model for the new agent ready to enter into "the business", for the public consumer who is in "the market" or for anyone else curious to know more about this subject.

Secretly, my aspiration for this book’s discussion is for one day, real estate brokers and agents will eventually realize the negative aspects of this business model outweigh the positives ones and turn to the light side by switching to an alternate business model such as the fee-for-services model or a project management model which I will propose as an alternative solution at the end of the book.

This is my new hope.


Sunday, January 20, 2013

Multi-generational Issues in the Real Estate Industry

From my Strategies in Human Resource Management graduate course, below is this past week's assignment discussing multi-generational issues within real estate brokerages. Other industry issues discussed are education, fee-for-services and technology.

From a consumer’s point of view, the real estate industry is known to be dynamic in nature due to the presence of buying and selling of properties within the market. From a real estate broker’s perspective, today’s brokerages face a new type of managerial challenge involving salespersons from different generations. Sprague (2008) defines multi-generations as four groups: traditionalists, boomers, generation x and generation y. A major contributing factor to multi-generational realty brokerages is the low educational requirement for becoming a state licensed real estate salesperson. In the state of Florida, the requirement for becoming a licensed salesperson is attending a 63 hour pre-license course and passing both the end of course exam and then the state exam as well. Other minimal requirements for becoming licensed are acquiring a high school diploma or equivalent degree, being at least 18 years of age and disclosing any criminal record, name aliases or denial of prior disclosures (Crawford, 2007). Since a large percentage of the general public qualify under these minimal standards, one can realize the constant challenge of managing the continuous influx of newly, licensed salespersons comprised of the four multi-generational types especially during housing boom periods similar to the early 2000's.

As a former licensed salesperson, broker and instructor, I witnessed first hand the many issues of multi-generations within a real estate brokerage. First, salespersons working for a broker are considered non-salaried, independent contractors. Crawford (2007) describes a salesperson as a licensed individual performing real estate services for compensation under the management of another person or specifically speaking, a broker. This employment arrangement creates an atmosphere of intense competition between all of the broker’s salespersons for obtaining new property listings which will hopefully lead them to closings and then an eventual commission check. Because of this “list or die” scenario, experienced, highly networked salespersons, usually the traditionalists and boomer agents, will attempt to out market the younger and less funded agents by blanketing signage across designated sales territories and executing constant advertising in magazines, billboards and on the web. This type of strategy tends to strain the working environment within a brokerage along with defeating any possibility of a team effort.

Maximizing potential revenues, a broker may spend more time and effort with high producing or “top producer” salespersons because he or she will likely earn more revenue from the increased likelihood of more closing commissions. This normally means more face time with traditionalists and boomer agents than generation x and generation y. To add to the difficulty of being a new agent, the only form of compensation received is by receiving a commission split from payment by the seller or buyer to the broker (Crawford, 2007). In reality, a new agent may not receive compensation for months or even more than a year when first starting out in real estate. This causes many new agents to leave the industry after two years because of insufficient funds for living expenses and business costs such as office fees, membership fees, and marketing expenses.

Second, the top producers of a brokerage may receive a more favorable commission split with the broker because the broker is more confident these agents will "Always Be Closing" which is known as the ABC's of real estate. Generation x and y are at a disadvantage again since their broker is taking a higher percentage of the commission split. Third, if the the brokerage is a well known franchise such as Remax or Century 21, a training department with trainers may exist to help train new agents. However, for many smaller and independent brokerages, the broker must individually train each new agent which may encompass a day or two of in-the-field property driving and in-house reviewing of the multiple listing service and many contract forms. In addition, a broker must also deal with the many political issues of which agent will work the sales floor during business hours along with distributing incoming calls from potential sellers and buyers (Crawford, 2007). Again from a broker's point view, these first points of contact should ideally go to the more experienced agents, traditionalists and boomers, within the brokerage because they have the necessary experience to better close these potential deals compared to the generation x and y agents.

Before the introduction of the Internet and World Wide Web, traditionalists and boomer agents marketed using physical books and newspapers to advertise themselves and their listings to potential buyers and sellers. Nowadays, the younger generations who have grown up with the latest technologies market themselves and their properties effortlessly on social networks and personal websites. Brokers realize this new division of technical skills between the older and younger generations and are challenged once again with managing multi-generations within brokerages. Since the average age of a salesperson is 56, most traditionalist and boomer agents are at a technical disadvantage because they are generally deficient in the areas of computer programming and web design (Inman News, 2011). Whereas, generation x and y may have gained prior technical skills from another industry, an internship or in a recent academic course. Real estate brokers must once again weigh the pros and cons of recruiting younger more technical agents while intermixing them with older less technical agents within their brokerages.

Unfortunately, the real estate industry, brokerages and brokers have not successfully reacted to the above trends. Licensure requirements remain minimal which continues to create a very low entrance barrier into the industry. Furthermore, many laid off workers from other industries, retiring workers and individuals with dreams of big commissions will continue to flow into the real estate industry just to exit as soon as a housing bust occurs or when personal savings evaporate. Technology is constantly changing which causes agents and brokers to chase the next "bright shiny object", without considering how these trendy technologies integrate into their daily business operations which eventually become time management distractions. But, in my opinion, the main reason why managerial issues continue to exist between multi-generations in real estate is because of the commission model which creates a one-size-fits-all model for talent management as mentioned by Sprague (2008).

In my opinion, solutions for managing multi-generational brokerages begin with the elimination of the commission model. A replacement model for introducing an hourly rate and providing an a-la-carte menu of services is known as the fee-for-services model as recommended by Garton-Good (2001). Once fee-for-services is in place, salespersons become consultants paid by the hour rather than commission only junkies.This scenario leads to a possible base salary in addition to an hourly consulting fee for new salespersons which would provide a monetary cushion in the event billable consulting hours decline in the current period or in future periods. More importantly, the fee-for-services creates an increased cooperative workplace and possible level-playing field for managing and treating all salespersons in the same professional way (Wong, Gardiner, Lang, & Coulon, 2008).

Another immediate benefit of the fee-for-services model for brokers is the retention of current staff. Because of the removal of "list or die" originating from the commission model, agents are able to grow their career and develop their sales and consulting skills instead of dropping out of the industry in two years or less. Also, staff training across generations becomes more consistency and higher valued for the broker due to less defections to other industries and decreased terminations. Competition still exists between the multi-generations because of varying consulting rates, however, team building can be produced among generations along with challenging younger sales agents as mentioned by Wong et al. (2008). By implementing the fee-for-services, a broker has a new opportunity to synthesize the organization's brand, products and multigenerational staff for optimizing its business operations while providing a viable service to the private sector.


Crawford, Linda. (2007). Florida Real Estate Principles, Practices & Law. Chicago, Illinois:Gaines & Coleman.

Garton-Good, Julie. (2001). Real Estate a la Carte: Selecting the Services You Need, Paying What They’re Worth. Chicago, Illinois: Zigmund.

Inman News. (2011). Today’s Realtor: older and more experienced. Inman News. Retrieved from

Sprague, C. (2008). The Silent Generation Meets Generation Y: How to Manage a Four Generation Workforce with Panache. Human Capital Institute, 1-15.

Wong, M., Gardiner, E., Lang, W., & Coulon, L. (2008). Generational differences in personality and motivation: Do they exist and what are the implications for the workplace? Journal of Managerial Psychology, 23(8), 878-89.

Sunday, January 6, 2013

Second to Last Semester

Tomorrow marks the second to last semester for my pursuit of a master's degree in nonprofit management. I started in the spring of 2011 at the University of Central Florida and expect to finish this summer. Two of the final four courses I will take next semester are:

  • PAD 6335 Strategic Planning and Management

  • PAD 6417 Human Resources Maangement

However, I may enroll in a third public administration course, PAD 6746 Intellectual Property, Technology Transfer and Commercialization. By taking a full load this semester, one final elective PAD course is then required this summer for graduation purposes.