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Agents as Shareholders & MLM downlines

April 23, 2019

1:49 Minute Read.

 

Smart agents can look past the hype and clearly see reality.

 

There are plenty of business models available for real estate agents.

 

There are broker-centric, agent-centric, and pricing-centric systems. You can hang your license at any one of them you choose. As any experienced agent knows, there’s plenty of positive and negative found in each.

 

 

The hype:

We’re all one, big happy family!

 

The reality:

We’re sucking your wallet dry.

 

 

Recently, we’ve seen quite a few articles describing shareholder brokerages. That sounds like a great idea until you look beneath the surface.

 

Here’s the elephant in the living room: Why would any agent want to pay extra from their commission into a system that simply re-distributes only a portion of their money back to them?

 

That system likely only benefits under-performing agents. They may get more back than they contribute. But high-performing agents will always carry the load in that system. Where's their benefit? 

 

And don’t get me started about “your down-line”. Another problematic approach is the MLM-styled brokerage.

 

Multi Level Marketing (MLM) and other pyramid systems (where you receive a benefit from agents you recruit) are even worse than the shareholder model for 2 reasons. First, all pyramid systems are designed to benefit those at the top the most. Secondly, the math just doesn’t work. A friendly agent tried to recruit me into one of those MLM brokerages years ago. For those who are math-challenged, I’ll share the same story with you as I did with him. Let’s see how fast you can identify the problem:

 

Say there are 10 hard working, smart agents that start a MLM-style brokerage. They’re Tier ONE.

 

That’s 10 agents.

 

Each of those 10 agents recruits 10 more agents creating Tier TWO.

 

That equals 100 agents.

 

Then each of those 100 agents recruits 10 more agents creating Tier THREE. Wow! Everything is great and the money is really flowing now!

 

That equals 1,000 agents.

 

And then each of those 1,000 agents recruit 10 more agents creating Tier FOUR!

 

That equals 10,000 agents!

 

Wait. What? There aren’t 10,000 agents even available locally. At last count, there are less than 2,400 salespeople in our entire board. And what’s the likelihood that you’ll recruit agents outside of GRAR? So, let’s imagine killing off every other brokerage in town and recruiting every one of their agents. EVERY. SINGLE. ONE. You still cannot move much beyond the third tier. So, if you’re past Tier two, forget about making any real money.

 

Let me say it another way: It’s simply not wise to give away 30% of your income to occasionally receive a check for a couple thousand dollars.   

 

Both shareholders and MLM recruiting systems could carry the same slogan: “Give me all. I’ll give you some back.” Sounds a lot like a government wealth redistribution program.

 

At Best Homes of Michigan, we’re sticking with the old system – you’ll keep 100% of the commission you earn.  We know that system works. We take nothing from your commission. Zip. Nada. Nothing. We only earn a $295 broker admin fee from each transaction that your client pays.

 

Unless of course, you want to voluntarily give us more of your money.  ;)

 

Before calling us, please know we’re an exclusive bunch. We’re only looking for the best and brightest real estate agents. Our business model works so well because we have great, professional agents. If you think you have what it takes and you’re ready to move to the next level of income and success, call me. I’m happy to meet with you over a cup of coffee to discuss your future.
 

 

 

 

 

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