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February 12, 2012
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Response To: Can Low Fees Guarantee Broker Success? (Peter G. Miller - 03/06/2001)

Low fees = success? Not any time soon.
Posted By: Jim Lee - 03/06/2001 03:26 AM

And I think the reason is this.

Real estate is an expensive business to stay in although the start up expenses are relatively low in comparison to say, starting a McDonald's franchise.

Sure a (for example purposes only) 6% commission is a big hunk of a $300,000 sale but usually there are at least two agents typically from two different brokerages involved and so that $18,000 commissions gets split 4 ways and each party has to pay his taxes and expenses out of their share.

When you take $4,500 (assuming a 50-50 split between broker and agent) and then take expenses and taxes off the top it get whittled down pretty quickly.

And from that remainder each party gets to buy groceries, make house payments, go to continuing education classes, maintain and replenish their wardrobe, and so on and so on. Why it's enough to make a fellow want to go out and get a real job. ;-)

That's my reasoning why discount brokerages havn't succeeded and won't succeed.

They can't do enough business or gain enough market share to pay their bills.


Responses to this Post

A different view
Posted by: OurBroker - 03/06/2001 09:42 AM


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