Chicago, IL · Member since 2013 · 27 posts · 8 votes
Hi all,
I just passed the real estate license exam here in Chicago, my intention is to do this for family business purposes and am looking for a favorable commission structure. I found one brokerage, Kale Realty who have the commissions going 100% to broker but you pay $325 per transaction, for rentals its 80% to broker and $15 per transaction. In addition you pay $49 monthly fee + $199 annual errors and omission insurance.
For someone who is most likely only going to do a handful of transactions a year mostly in renting, does this sound like a fair deal or are there better alternatives?
Real Estate Consultant · Chicago, IL · Member since 2014 · 720 posts · 439 votes
9y
Hi Daniel,
You are not looking for the right thing. If you want to learn the business and make money, you need a brokerage that will teach you the business and give you leads, which means that you'll start at 50% plus Yearly Error and Emission.
90% of all new brokers are out of business after first year, as they focus on getting the biggest share of the commission instead of focusing on working with as many clients as possible and learning the business.
Also, keep in mind that the brokerages that charge fees they make their money that way, as they know it's a numbers game. The monthly fees alone for 100 brokers will be 60K a year for the company, while they don't really care if you do business or not!
Real Estate Consultant · Chicago, IL · Member since 2014 · 720 posts · 439 votes
9y
Hi Daniel,
You are not looking for the right thing. If you want to learn the business and make money, you need a brokerage that will teach you the business and give you leads, which means that you'll start at 50% plus Yearly Error and Emission.
90% of all new brokers are out of business after first year, as they focus on getting the biggest share of the commission instead of focusing on working with as many clients as possible and learning the business.
Also, keep in mind that the brokerages that charge fees they make their money that way, as they know it's a numbers game. The monthly fees alone for 100 brokers will be 60K a year for the company, while they don't really care if you do business or not!
Chicago, IL · Member since 2013 · 27 posts · 8 votes
9y
Hi Lumi,
Thanks for the reply. As noted in my original post, my intention isn't to do this full time due to already having a career. I mainly got it for transactions related to family owned assets, and of course if any friends or family ever need my help with anything.
That being said, I estimate on average of 4-5 rental transactions a year and the one off purchase/sale, is it worth paying 50% commission? I completely agree in what you mentioned, if my plan was to jump into being a real estate agent full time, I by all means would be looking to join a standard full service brokerage for purposes of learning and obtaining leads.
Thanks for the reply. As noted in my original post, my intention isn't to do this full time due to already having a career. I mainly got it for transactions related to family owned assets, and of course if any friends or family ever need my help with anything.
That being said, I estimate on average of 4-5 rental transactions a year and the one off purchase/sale, is it worth paying 50% commission? I completely agree in what you mentioned, if my plan was to jump into being a real estate agent full time, I by all means would be looking to join a standard full service brokerage for purposes of learning and obtaining leads.
Think of it as price you will be paying to learn the tricks of the trade. The brokerages w/ 100% comission don't have a mentorship program like some of the other brokerages do. Also, seldom they give you leads. Lumi is spot on in her advice. Weichert Realtors is another one who has great mentorship program.
There are plenty of realtors who are part time like myself, who started out with big brokerages like Weichert, and then moved on to discount brokerages. Learn the trade proper way even if it means that initially you have to cough up some percentage of your commission, otherwise you are better off hiring a good experienced realtor to do it for you. Mistakes in real estate can be very, very expensive.
That being said, I estimate on average of 4-5 rental transactions a year and the one off purchase/sale, is it worth paying 50% commission?
If you can project the average size of your 4-5 transactions per year then you can answer this question yourself. Take the total $ volume of your transactions then determine the costs for joining a traditional broker vs a Kale type brokerage vs becoming a managing broker yourself. Pretty simple math.
Real Estate Consultant · Chicago, IL · Member since 2014 · 720 posts · 439 votes
9y
@Daniel F. , I understand that you are part time, however, I will assume that you want to do a good job for yourself, your family and your friends. If you don't learn the tricks of the business, how will you do that? Most of my best deals I got for my clients and myself are from owners listed on fee MLS brokerages or working with part time brokers. These brokers have no time to do showings on their own listings, can't take calls as they are at work and don't know what to do when they have the time to show up.
No matter what I say or other people on the site will tell you, you'll make your choice. And, if you really want to learn this business, and be a successful broker and investor, find possible co-listers in case you do get listings, going with a commission based office is best for you, at least until you learn the business.
Half of the brokers that work with fee only brokerages have been in the business full time for awhile, or they've moved to part time and they just park their licenses with these offices. The other half are new agents and few of them really make it.
I have represented the kids, the parents and even the spouses of part time Realtors, as their own family told them to go with me for investment properties.
I am not saying to go with my company, I am saying look for a good company that will teach you the business! Good luck to you!