Are Real Estate Agents Collected by Real Estate Agencies?

Are Real Estate Agents Collected by Real Estate Agencies?
Posted By Jeffrey Hogue @ Mar 23rd 2015 8:25am In: Real Estate

A look at the agent collector model and how it hurts real estate agents and ultimately customers

I have now owned Weichert Realtors® Neighborhood One for almost two years. In that time I've surmised that while making a profit is good,  profit in and of itself, means little if your customers are having a terrible experience using your service. Real estate companies are about offering good service. This comes from having a good real estate broker, staff and owner all with the intent of meeting the customers goals competently. In most if not all states real estate agents have to work under (supervised by) a broker. Real estate agents are a kind of extension of the broker. Brokers are actually responsible for the actions of their real estate agents. This link explains the difference between agents and brokers.


Most consumers are completely unaware of the fact that when they sign a listing contract or buyer agency agreement the broker of the agent's company is actually in authority. If your home is listed or you are a buyer that has signed contract to be represented ask yourself these questions...Do you know the broker? If not, are you aware of what the business relationship is between you and the broker? You may be surprised what you find out. In Pennsylvania the law is clear on this. The contracts and agreements are between the broker and the customer whether you, the customer, have met the broker or not. The agent is simply an extension of the broker's authority.


This does not mean that you should not trust the agent you choose. On the contrary, the agent will likely be the one that services your account. Just know that if something comes between you and your agent it may be pertinent to understand the broker client relationship that exists. The broker can help in situations where a rift is forming in the agent customer relationship. But be careful. Some agents take it very personally when a customer reaches out to their broker for advice. In a way they feel under appreciated and betrayed. In many cases, they believe you are their customer and take full possession. Unfortunately that is what many real estate agents are led to, or desire to, believe.


Today's real estate business model leaves some things to desire. One such thing is unsupervised agents. I have strong evidence that on many home sale transactions I have worked with unsupervised real estate agents. Prior to owning my company I myself was rarely supervised for most of my 21 year real estate career. I have even heard people teaching real estate licensing classes giving false and ambiguous advice to new agent candidates. Fortunately, I had the opportunity to work with some of the best minds in the local real estate industry and took full advantage of their shared wisdom.


Supervising real estate agents isn't about having them come to an office or having them use a company email account. It is about examining contracts and talking with them enough to know how they are handling various situations. It is about knowing who their clients are and offering to help them work through transactions. Many agents might not be aware of the extent of their lack of knowledge. They have simply been exploited by the "agent collector model."


The “agent collector model" has been a popular and growing business model for real estate companies nationwide . These companies collect new agents so that they can increase the number of bodies in their offices. Hire ten real estate agents and hope one or two work out. Wonder what happens to all the customers who worked with those agents that did not work out? What is even scarier is that if the agent has enough money to pay the real estate company a fee they can normally stay there for as long as they like.


The business model is built around recruiting warm bodies. I am sure you have seen the ads "Looking For A Career in Real Estate, Call Today." Take my word for it, nobody gets turned away. I understand that these real estate companies want to make money, and they want their real estate agents to make money, but they don't want to spend the necessary dollars to train or assist the agent with getting their career started on a solid foundation. They may rarely pay much attention to what their agents are doing in the first place. these offices actually offer recruiting bonuses to their own agents if they can talk another real estate agent into coming to work at their office. My agents tell me they get calls from other local offices almost every week. They have become a commodity, a revenue unit. If they are a revenue unit what is the real customer?


The reason I personally believe there is a lack of overseeing real estate agents is pellucid. Most brokers and or owners would rather not deal with agent issues let alone customer issues. They lease real estate agents space in their office to practice real estate. the agent pays a monthly fee to sell real estate out of the office while the office supplies the basic services necessary to comply with the State Real Estate Commission. Most of these activities have nothing to do with education but more to do with escrow deposits and the like. This model also provides the office with a business model that is less taxing on management and ultimately less affected by swings in the real estate market as a whole. You see, the agent pays the same monthly fee whether they sell no homes or 1,000 homes a month. All that management must do is keep the agent happy to get paid. This is very helpful when a brokerage has many agents paying the fee. Almost by proxy the agent becomes the client of the broker not the home seller or buyer because it is the agent paying the broker not the customer.


Some of those companies have one broker and / or manager supervising a hundred or more real estate agents and have unlicensed office administrative help reviewing contracts and looking for mistakes. Sometimes the office staff is still enforcing rules that were changed years ago because no one told them, and they do not take the same classes brokers must take to keep themselves up to date with current laws.


The agent collection model has grown in popularity, as real estate agents are no longer tied down to offices with copy machines, telephones, company websites and fax machines. Yet technology has not changed the rules or responsibilities of a real estate broker.


We are all in business to make a profit — agents and real estate companies alike. In the eyes of the law, the primary purpose of brokers is to supervise their agents and be responsible for their actions. That means going above and beyond looking for mistakes in contracts. It could even mean helping them write better contracts and be better agents.


The core of my real estate company has to be about providing service, that service has to be high-quality service. The kind of service that can best be provided by intelligent agents who are as interested in real estate and their clients as they are in education and service. It is not about turning real estate agents into revenue units in order to fill a building. That sounds more like the broker is a landlord and the agents are the brokers less the education and title.


Agents, it works like this....Get your real estate license (passing grade school), join an office for training (college), grow your knowledge and your business (masters degree) and finally get your doctorate and become the broker / owner of your own company. Along the path you will have many happy customers and new friends. Unfortunately, those offices that you leave behind will not congratulate you. They will try to talk you out of leaving so you remain part of their system.


The Department of Commerce doesn't care if I make a profit. Collecting agents doesn't help the consumer. Having the most agents doesn't make it a better real estate company.


I am proud that Angela Tolosky is the broker of my company. She is a capable ally and serves the customers of Weichert Realtors® Neighborhood One very well. She is the real estate agents mentor and the customers broker as it should be.


Knowledge is power!

Jeffrey C. Hogue

Share on Social Media:

Comments (0)

Be the first to comment on this post!

Post a Comment

Email not published - will display gravatar if available