{"id":4621,"date":"2023-08-10T20:31:59","date_gmt":"2023-08-10T20:31:59","guid":{"rendered":"https:\/\/preprod.realtrends.com\/blog\/2023\/08\/10\/opinion-the-invasion-of-the-flat-fee-low-cost-broker\/"},"modified":"2025-03-13T02:52:39","modified_gmt":"2025-03-13T02:52:39","slug":"opinion-the-invasion-of-the-flat-fee-low-cost-broker","status":"publish","type":"post","link":"https:\/\/preprod.realtrends.com\/blog\/2023\/08\/10\/opinion-the-invasion-of-the-flat-fee-low-cost-broker\/","title":{"rendered":"Opinion: The invasion of the flat-fee, low-cost real estate brokerage"},"content":{"rendered":"\n<p><a href=\"https:\/\/preprod.housingwire.com\/articles\/realtrends-launches-2021-market-leaders-report-compass-flat-fee-brokerages\/\" target=\"_blank\" rel=\"noreferrer noopener\">Low-cost residential real estate brokerage<\/a> is not necessarily a new phenomenon.&nbsp;About 50 years ago, a trailblazer named Dave Liniger created the concept of \u201creal estate maximums,\u201d birthing <strong>RE\/MAX<\/strong>.&nbsp;<a href=\"https:\/\/preprod.housingwire.com\/videos\/re-max-ceo-nick-bailey-on-the-importance-of-moving-swiftly-after-acquisitions\/\" target=\"_blank\" rel=\"noreferrer noopener\">RE\/MAX<\/a> was probably the most radical low-cost \u2018disruptor\u2019 this market has ever seen.&nbsp; <\/p>\n\n\n\n<p>About 10 years later <a href=\"https:\/\/preprod.housingwire.com\/articles\/whats-old-is-new-a-deep-dive-into-the-teamerage-revival\/\" target=\"_blank\" rel=\"noreferrer noopener\">Gary Keller<\/a> founded Keller Williams, and it was KW that revolutionized the cap-commission model, which, for all intents and purposes, is a low-cost model.&nbsp;The flat-fee model has also been around for decades, but only in the last 10-15 years has it taken off.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-are-agents-really-keeping-100\">Are agents really keeping 100%?<\/h2>\n\n\n\n<p>Flat-fee brokers advertise themselves as 100% firms. Real estate agents under their flag get to keep 100% of the commission earned in a transaction.&nbsp;The way these firms make money is by charging a monthly fee and\/or a transaction fee.&nbsp;Some may also charge other fees for such things as Errors &amp; Omissions insurance, desk rental, technology, etc.&nbsp;<\/p>\n\n\n\n<p>In reality, <a href=\"https:\/\/preprod.housingwire.com\/real-estate\/\" target=\"_blank\" rel=\"noreferrer noopener\">agents<\/a> are keeping somewhere between 92 to 98 cents on the dollar with these flat-fee firms.&nbsp;While not truly a 100% take, agents who hang their licenses with these firms are generally keeping more than agents listing and selling with firms that have the more traditional commission models.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Flat-fee firms climbing up the brokerage rankings <\/h2>\n\n\n\n<p>Interestingly, in 2013 only five of the top 100 firms in the nation, according to the <strong>RealTrends 500<\/strong> <a href=\"https:\/\/preprod.realtrends.com\/blog\/real-trends-500\/\" target=\"_blank\" rel=\"noreferrer noopener\">rankings<\/a>, were flat-fee firms.&nbsp;In 2023, 10 years later, flat-fee firms now account for 16 of the top 100.&nbsp;By transactions last year, flat-fee firms did 12% of the closed business of the top 100, compared to 5% back in 2013.&nbsp;Put another way, in just 10 years, flat-fee firms have more than tripled their presence among the nation\u2019s top 100 firms, while growing their production by 129%.<\/p>\n\n\n\n<p>Incredibly flat-fee firms now account for six of the top 25 brokerage firms in the nation.&nbsp;<strong><a href=\"https:\/\/preprod.realtrends.com\/blog\/articles\/nick-bailey-and-dan-duffy-go-head-to-head-on-brokerage-tech\/\" target=\"_blank\" rel=\"noreferrer noopener\">United Real Estate<\/a><\/strong>, <strong>HomeSmart<\/strong>, <strong>Fathom<\/strong>, <strong>Realty ONE Group<\/strong>, <strong>West USA Realty<\/strong> and <a href=\"https:\/\/preprod.housingwire.com\/articles\/cardinals-of-a-different-feather-inside-samson-properties-unique-model\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Samson Properties<\/strong><\/a> all have incredible growth stories since their respective beginnings.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Not all industry stalwarts welcome this model<\/h2>\n\n\n\n<p>Not all in this industry are welcoming the burgeoning growth of flat-fee firms.&nbsp;Many of the incumbents do consider it an invasion, and the primary reason is the &#8216;flat-feers\u2019 role in the wholesale margin compression that\u2019s been whacking this industry.&nbsp; <\/p>\n\n\n\n<p>Low-cost brokerage has kicked brokers in the teeth over the years.&nbsp;Before RE\/MAX, brokers were keeping between 30% to 50% of every commission dollar earned.&nbsp;With the national average retained company dollar now well under 13%, according to RTC Consulting&#8217;s latest benchmark report, there\u2019s no doubt it\u2019s been a grind.<\/p>\n\n\n\n<p>With flat-fee firms retaining a lot less than traditional firms, they need to operate lean and quickly get to scale to be economically feasible.&nbsp;Indeed, the fast-growing flat-fee brokerages that are permeating this industry are showing they have what it takes.&nbsp; <\/p>\n\n\n\n<p>I think the flat-fee model is here to stay, and I suspect we\u2019ll continue to see this segment capture market share.&nbsp;Fortunately, this industry has room for every model, and if anything the flat-feer\u2019s are forcing their competition to be better.<\/p>\n\n\n\n<p>Scott Wright is a partner with RTC Consulting.<\/p>\n\n\n\n<p><em>This column does not necessarily reflect the opinion of RealTrends\u2019 editorial department and its owners.<\/em><\/p>\n\n\n\n<p>To contact the author of this story:<br>Scott Wright at <a href=\"mailto:swright@realtrends.com\">swright@realtrends.com<\/a><\/p>\n\n\n\n<p>To contact the editor responsible for this story:<br>Tracey Velt at&nbsp;<a href=\"mailto:tracey@hwmedia.com\">tracey@hwmedia.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Flat-fee brokers advertise themselves as 100% firms.\u00a0Agents under their flag get to keep 100% of the commission earned in a transaction.\u00a0<\/p>\n","protected":false},"author":39539,"featured_media":4822,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3255],"tags":[],"coauthors":[57],"class_list":["post-4621","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-archive"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v25.4 (Yoast SEO v26.8) - 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