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What You Need to Know before Opting for the Zero Split Real Estate Brokerage Model

What You Need to Know before Opting for the Zero Split Real Estate Brokerage Model

Typically, real estate commissions are divided between the brokerage firms and the agents. But is it possible to keep 100% of your commissions as an agent?

Yes, 100% commission or zero split real estate commission models aren’t just a dream. It is possible to keep all your commissions if you opt for this model and partner with the right brokerage firm. But is it the right model? Well, let’s find out.

How It Works

As the name implies, in this commission model, an agent gets all the commission. This is possible because the agent may be required to pay a monthly administration fee. Although this may be deemed a significant amount by some agents, proponents of the model prefer it because it caps their costs but not their income.

The amount that an agent is required to pay may range between a few hundreds to thousands of dollars per month. It depends on the reputation of the real estate brokerage firm and the type and size of the office that you are given as an agent. Some brokerage firms may also ask for a given amount per transaction.

As hinted above, the model is not popular among new agents because of the fixed costs that they have to pay per month. This is because they find this model a bit stressful given that they don’t have an idea of where their commissions will come from when just starting. Some brokerage firms also hunt for new agents to benefit from such monthly payments.

Here are the top benefits that you stand to gain as an agent when you opt for this model.

You Will Earn More

A bigger percentage of a real estate agent’s earnings come from commissions. Whether you are a new or experienced real estate agent, you should be splitting commissions with your real estate brokerage company.

When you join a zero split commission brokerage firm, you won’t be leaving a lot of money on the table. You will receive the whole amount of the commissions that the seller pays for the sale of a real estate property. Even if the commission that the seller pays is low, they add up with time.

Additionally, compared to other models where you pay a percentage of your commissions to your brokerage firm after closing any deal, you will only be required to pay a fixed amount of fees on a monthly or yearly basis in the zero split model.  If you can close more deals, you will definitely earn more money, although it is recommended to ask beforehand how a company’s commission model works. Most real estate brokerage firms in Canada may charge administration fees, monthly fees, or risk reduction fees.

On-Demand Support Benefits

Running a real estate office comes with a lot of financial and logistical challenges. When agents choose the zero split model, they tend to think that they won’t get enough support from the brokerage firm. However, most Canadian zero split commission brokerage companies provide great on-demand support to help their agents’ businesses grow.

Inquire about the type of support that your brokerage firm can give. Can you use their office spaces? Will they take care of the transactions? Do they have a referral program that can help you grow your earnings? All these questions will give you a better idea of what you can expect from a given firm.

Finding the Best 100% Commission Brokerage Firm

To find the right zero split commission partner, you need to think about a few factors, including:

  • Costs: Not every real estate broker in Canada charges the same fee. Most popular fees include yearly fees, monthly fees, and a flat fee per deal. Each of the three options has its pros and cons, so do your math and settle for what works best for you. You also need to be aware of hidden fees, including training fees, technology fees, file review fees, franchise fees, compliance fees, and E&O fees.
  • Reputation: How popular is the broker you plan to work with? What achievements, honors, certifications, and community recognitions does that broker have? What do other agents say about working with them? What’s their future—do you see them becoming more innovative, keeping up with the latest trends or expanding in the future?
  • Insurance: Every brokerage firm must have errors and omissions insurance. But what does a company’s insurance policy include? Know the coverage amount, deductibles, exclusions, coverages, and All Other Peril coverage as well as insurance representation that the policy offers.

Although joining zero split commission real estate breakage isn’t for all agents, you need to consider its pros and cons and stop leaving money on the table. Hopefully, the above tips will guide you in the right direction.

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by Rebecca Jones // Contributor to Businessing Magazine.

Opinions expressed by contributors are their own.