Originally, real estate brokerage firms had a vested interest in training their salespeople. When a new agent went to work for a brokerage there was a tradeoff. The agent agreed to accept a split commission with the brokerage in return for supervision and training. Usually, new agents received a 50/50 split and, as time passed, and the agent became more productive, the split would increase, topping out at around 80/20 for the most productive agents. During this time, brokerage firms like Century 21 or Realty World, etc. clearly had an incentive to train their agents because the brokerages only made money if their salespeople were productive. All this changed in the eighties when RE/MAX popularized the concept of a 100% commission. Instead of splitting commissions with an agent, RE/MAX agreed to pass on 100% of a commission to the agent. In return, instead of keeping a part of the commission, RE/MAX charged its agents fees. For example, agents were charged for desk fees, phone fees, technology fees, and transaction fees, etc. The RE/MAX model proved so successful that almost every brokerage in the country quickly adopted it. This was due primarily to the fact that the RE/MAX business model is extremely cost effective because it drastically cuts a brokerage’s overhead. Unfortunately, as a result, brokerages now have little if any incentive to spend time or money training agents because, under this scheme, it simply does not matter if an agent ever sells a single property, it only matters that the agent continues to pay fees to the brokerage. In effect, brokerages have ceased being teachers and have become landlords. This has led to a situation where the once ubiquitous small real estate franchise (with a dozen or so agents) has given way to huge mega brokerages each employing several hundred
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