Real Estate in a Virtual World.


Would a Salary Based Compensation Package Appeal to You?

Is a Salary Based Compensation in Our Future?

picture The current real estate agent base has not adapted to the changes necessary to meet the needs of the consumer.  Most attribute this to the generational gap between the agent (53 years old) and the average home buyer (31).

The industry needs to get younger.  An infusion of new talent that understands today's consumer and is focused on customer service.

This new generation has the communication and technology skills to connect and provide the required services.  First-time home buyers will comprise 50% of the transactions in 2009 and most will hire a buyer's agent.

Will the younger generations see opportunity in our industry?  If they do, how will they get started?  Where will their business come from?  Can they earn enough in their start-up years to survive?

Would salary based compensation (guaranteed draw) with commission overrides provide the security necessary for entry level agents?  The agent will have to be accountable to the sales process in order to receive this guaranteed income (like the corporate world).

The company that offers this compensation package must have these key elements in their value proposition to the agent:

  1. Lead generation in order to "guarantee" a flow of business for the agent.  As the agent gains experience and starts to develop their own sources of business they can demand a higher commission split in exchange for reduced lead flow.  The company would then offer those leads to new agents.
  2. Exceptional training and support so that the agent develops the necessary skills quickly.  Mentoring and coaching is part of this process.
  3. A performance standard for the agent whereby they are accountable to a work flow.  The company is taking a "risk" with the guaranteed draw and must have a structured sales process to insure success.

If you were considering a real estate career, would this business model appeal to you?



Comment balloon 12 commentsFred Doleac • April 23 2009 07:14PM


This will be interesting to see others view point on.  I am not sure myself.  Part of the reason that some of the top agents are the top agents is that they are hungrier and more disciplined than the rest-not all of them, but many of them.

Posted by Heather Fitzgerald, REALTOR Greenwood Indiana Real Estate (REALTY WORLD-Harbert Company, Inc.) over 11 years ago

No No No. If all I wanted was a paycheck I would have stayed in the factory. If I wanted a check based on my time and not on my skill I'd join the union at the factory. I want to earn my money and I get my satisfaction by knowing I have done so by supplying a great service to my clients.

Posted by Dayne Riddle (Coldwell Banker Select Professionals) over 11 years ago

I want to get paid for what I do the services of helping individuals not just a guaranteed paycheck.

Posted by Pat Champion, Call the "CHAMPION" for all your real estate needs (Coldwell Banker Camelot Realty) over 11 years ago

I am all about commission!

Posted by Nannette Hilliard, CDPE, ABR, CRS (Century 21 Zwygart Green County Real Estate) over 11 years ago

I have worked with companies that have offered the salary plus bonus proposition but opted for the commission.  They only offered this to agents with a proven track record and it was based on the previous years production.

Posted by June Piper-Brandon, Piecing Dreams One Home at a Time (Houwzer Inc) over 11 years ago

I am shocked at the responses, goes without saying a Realtor is a totally different peron that the average. I think Prdential tried this on the west coast and in Orlando but I never heard anything else.

Posted by Charles Stallions, 800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl. (Charles Stallions Real Estate Services ) over 11 years ago

Fred..That is a very interest philotweetsophy...I also like your illustration...Very good food for thought..Thank you

helpfulhannah your friend in Philadelphia

Posted by Hannah Williams, Expertise NE Philadelphia & Bucks 215-953-8818 (Re/Max Eastern inc.) over 11 years ago

Dane, Pat and Nanette,

I get the commission concept.  However, let's assume your base draw was $2000 a month with a 70% override.  You still have the upside.  My thought was to attract agents like you that need to get in, get established and then build a career.  I think there are a number of potential superstars that never give our industry a serous look due to other opportunities.

Posted by Fred Doleac, Real Estate in a Virtual World (Fred Doleac - Bean Group) over 11 years ago

From the comments Im not sure real estate agents know what a commission draw is or how a guaranteed draw works. I think your use of the word "salary" threw them off.   What you are talking about is still all about commission. 

With a draw you are paid a set amount on a regular schedule. If your commissions exceed the draw you are paid that amount too, if not, you are paid your draw against future commissions. With a regular draw you must pay the company back the any money, you wrer paid in excess of commissions earned. With a guaranteed draw you dont pay it back.

In 1985 Sears owned the brokerage firm, Dean Witter. Their plan was to grow to be the largest (in terms of number of brokers) of all the major firms. To do this they needed to agressively recruit. Part of what they did to attract experienced people from other professions was their compensation package. It started with a salary during training. (4 months) and then a decreasing guaranteed draw for the next year.  (the draw continued, but the guarantee dropped to zero by the end of a year). The expectation was that you would be earning a whole lot more than your draw by the end of your first year.  Although we were 100% commissioned based we were employees (w-2) with health benifits and retirement plans.

If I was a broker trying to grow my business with new agents (and not just steal them from the compitition) Id look seriously at a system like Dean Witter used



Posted by Ron Parise ( over 11 years ago

Ron- Thanks for the clarification.  I think you are correct about the"salary".  I have a company that has qualified lead generation that will support agents on a draw with commission.  The difficulty has benn in communicating this to agents.  We are currently recruiting through Craig's list and Career Builder for agents in New England.  If you know anyone that wants to make money and work for a progressive real estate company, please send them our way. Career

Posted by Fred Doleac, Real Estate in a Virtual World (Fred Doleac - Bean Group) over 11 years ago


 Thanks too for the clarification. But I still don't like it. The average age of todays agent is 53. Most didn't just enter the business right out of high school. They had to become some what financially stable and mature in order to get into and survive as an agent. If you open the door and make it easyer for anyone to become an agent you will have the industry overrun with people who just think it's an easy way to make a fast buck. "Hey, if I get fired from my factory job I can always get a job as a Realtor for a year till I get something else." Not the direction I'd want us to go.

Posted by Dayne Riddle (Coldwell Banker Select Professionals) over 11 years ago

Just look at this company in Charlotte,NC,proven Success just thought i would threw them in for FYI


Posted by island cove about 11 years ago