Sometimes real estate salespeople are like spoiled teenagers. They want money and freedom from Mom and Dad, without the responsibilities. Agents act the same way - they want money and freedom, but they want someone else to have the responsibilities and liabilities. Then, they resent the broker for wanting to make a profit!

The latest hue and cry by agents is over brokers charging referral fees to their own agents. It is a trend that is only going to get bigger, despite all the complaining in the world. I believe it is OK for brokers to do this and I'll tell you why.

Most agents have no concept of what is involved in running a brokerage. They know nothing of the costs; they care nothing about how hard it is to make a profit; and they feel that they are getting ripped off if a broker has the temerity to charge a referral fee on any company-generated business.

Assuming the broker owns the listing, and the broker pays for a web site and for all corporate advertising, and the broker is liable for everything that every agent does wrong, why shouldn't the broker charge a referral fee to the sales reps in his own office?

It seems to me that agents have a simple choice - If ya don't wanna pay the referral fee, then ya don't hafta take the referral. Right?

I know how agents will respond. You think the broker should be helping you, not gouging you. You believe that it is the agents who make the brokerage, not the broker. Company-generated lead fees are bribe money. Only the top agents will get the referrals because they can best afford the fees. And, besides, you wouldn't work for a broker who would treat people that way.

Well, it may surprise you to learn that I'm not a broker, and I still disagree with those arguments.

There are plenty of offices around North America where the sales people pay 25% referral fee to the broker for company-generated leads. There are a growing number of brokers who have a licensed, salaried employee answering inquiries, and then charging a referral fee to the sales reps who avail themselves of this business.

So, the question is, why are the sales people so p.o.'d about the broker collecting his costs (yes, profit is a cost of doing business, because if you don't include profit, you ain't gonna have a business) on a lead?

As an agent, have you ever figured out what it costs you to generate a lead? Have you sat down and figured out how much you spend per month on all of your advertising, and how much your time on the phone costs you? And then, have you calculated how many leads you get for that money? Do you complain about paying the costs of getting the leads that you generate? Of course you don't, because you are a business person investing money in making a profit.

And yet, you expect your broker to advertise for you, and/or to take all the risks for you, and/or to make the initial investment in technology, staff, office space, and then not make a profit on what s/he is doing?

Surely, the broker is entitled to make at least as much money as you are. Why would s/he want to be a broker otherwise? S/he has every right to want to make a profit that allows him or her to run a business, not to compete (as in selling real estate) with his salespeople, and to provide them with the facilities and equipment that they feel is necessary to compete in the business. S/he deserves to make a return on his investment. To many salespeople, this is regarded as some kind of sin on the broker's part.

What about those relocation referrals you get? Do you complain about paying those? Probably, but most of you take the leads anyway, right? So, when more and more brokers hire salaried licensees to handle the relocation business, are you going to complain that you are getting ripped-off because you don't have those referrals anymore? Probably, because the broker has actually had the nerve to think of his/her own livelihood, and keeping the company in business, and making good business decisions, and hey, maybe s/he has a family that deserve the same sorts of things that your family does?

The handwriting is already on the wall. There are a growing number of companies hiring salaried salespeople to handle lots of the business that comes in to an office.

Many organizations have done studies on the consumer reaction to salaried VS commissioned salespeople, and guess what? They all gave the salaried salespeople higher marks for service and satisfaction. Kinda like Saturn, with it's fixed pricing - no sleazy car salespeople to deal with.

As the costs of doing business continue to surge, brokers will have to assume creative ways to protect profits. And I, for one, would prefer that leads go to agents than salaried employees, even if I have to pay for them.

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