A Broken Agent Compensation Structure

At one time, a real estate agent was the local expert you relied on to help buy or sell a home. The average agent had a decade or more of experience, and they were a necessary piece of the puzzle in helping people transition from one home to another. Today, traditional agents have significantly less experience than in years past because they tend to leave the industry before they even get started. Who’s to blame?

Agents are typically paid on a commission-based structure and invest a majority of their time competing for new clients with all the other agents in their local market. In general, there are too many agents competing for too few potential clients so their efforts often do not result in compensation.

For most brokerages, there is little cost in having a team of agents so they work to recruit as many as they can - more agents equate to higher revenue numbers. From a broker’s perspective, having less experienced agents working for them isn’t optimal but it doesn’t hurt them either because even a blind squirrel can find an acorn once in a while.

Most real estate agents are good people; they’re just stuck in a broken broker-agent compensation structure. Traditional real estate brokerages are desperately trying to retain agents and their outdated compensation model instead of evolving their team and system to better serve today's more educated buyers and sellers. It's a structure that fails clients, but it also fails new agents with the desire to add value to the industry and the clients they serve.