Fam Fest 2020 – Day 1
Compensation plan on Real Estate
I think it’s important that everyone understands where we came from, what our core values are, and fair is really important to us. So, you know, in doing that, it’s not a black and white all the time. Right. Deal. But we, you know, please understand that.
And I think if anybody knows us, they understand that we are we care about you and we try to be, you know, fair in all the decisions that we make.
So we believe we have a an extremely aggressive compensation plan for the agent to be able to advance along in their career and be able to be compensated extremely, fairly for what they’re doing as our brokerage.
We don’t have a physical office. OK, so we’re not charging for that type of thing. So we’re able to invest more in technologies and enhancements and not have to have those larger expenses that we pass on to the agent. That’s one of these core things that we have. And in doing so, we have a very, very fair compensation plan and very aggressive so that the agent is able to make quite a bit and there’s different different steps as we kind of go through it. So first, what we look at is how the deal is originated.
So any time that we kind of look at how a deal comes in or how somebody is compensated on it, the first thing that we have to look at is how it originates. It is not easy to bring a deal and to get it to be able to close. It takes a lot. And when you do that, you should be compensated. And that’s kind of the core thing that goes throughout its who originates this transaction. And so there are several different ways that a transaction can be originated. So the transaction can be originated with the agent doing it themselves.
And it’s their personal transaction where they enter it and put that stuff in. That’s where you receive the absolute highest compensation. Yeah, I’m just kind of I know we’re like in a bad spot, like we don’t have comfortable chairs and all of that. So that’s that’s the first thing that we start with is compensation where it’s personally generated. That’s how you get your highest possible flow. Then we will have company generated.
Fortunately, we do have company generated and that will come in all the time.
That will come in most likely directly from from Meggan or start. Yeah. So, OK, we’ll send those directly to you and it’ll be company generated. Those will come from the marketing spend that we put in place or from past client referrals from any one of those things. And it could come from a place that we spend marketing dollars or it could come from a place there’s increasingly a high percentage of people that we receive deals from that our referral partners where they don’t take a flat fee, but they rather take a percentage. So we will have a high number this year and an increasingly growing number. Our profiles are set up such that we’ve started to hit the right metrics and we receive a good amount of referrals from them and our close rates are high and our contact rates are high when Katie calls them back quickly. And all the things that we kind of do on the friendship division are starting to work well. So we get quite a few referrals.
And yes, we get calls all the time with different companies wanting us to take referrals. So there’s a lot of, I guess, investigating and time that is spent identifying all these different avenues and finding more avenues and the best avenues for you guys. So, you know, that’s something I don’t know if you realize, but that’s going on behind the scenes as well.
And I don’t know the exact number of ones that are active referral partners, but I would say that it’s probably seven active referral partners that we have to set up all this stuff for and lay the foundation, the groundwork for that to come in and like happen immediately and all of that. So the referrals are definitely a thing. And so all of that is a friendship division. Yes.
So. And those are at a at the 50 50 split. Yes, there’ll be a reduced split. OK, so that’s the personal then.
You’ve got Friendship Division, but I do want to dive into Friendship Division a little bit. OK, you know, I’ve heard things such as and we’re just going to be open talking about all of these things. I’ve heard things such as, hey, gosh, why in challenging why the split is what it is. OK, so one example may be, hey, I had to put this in a computer, like I had to do some work on this.
You know, I so you have to take a step back, OK? You had to do a little bit of work on it or it wasn’t, you know, it wasn’t ideal. But if somebody is giving you an opportunity, who cares? You were giving an opportunity. And I think this is how we have to, you know, shift our mindset is you were given an opportunity that wasn’t there before.
Ok, so someone took a call in probably an inconvenient time and and passed that on. And you have the option. If you can’t properly care for the client, don’t take it on.
Some deals are easy. Some deals are some are set up with lots of details. Sometimes they’re not. You know, when Mike and I first started this whole him set up and pass it on to me, I would sometimes come back to him and say, did you know this is like, well, no. And I’m like, well, you’re on the phone with them for fifteen minutes, guys. They are us either establishing a relationship and making that initial connection and then passing it on to you for an opportunity. You’re not having a to call. You’re not having to Dornoch. You’re not having to do all these things. You’re given an opportunity that’s pretty much prescreened to an extent. So I think if you kind of change your mindset a little bit about how that transpired and how you were able to get that opportunity, then maybe some of those minor things won’t bog you down, if you will.
Yeah, no, it’s a really big deal because what happens is you see, like kind of the tip of the iceberg that you see this all like, oh, there was only a ten minute conversation. You didn’t answer every single question. OK, sure. Yeah, fine. Right. Well, not perfect. Sometimes the client’s actually not perfect. I like I only have a couple of minutes. Right.
It’s like not to get a stand offish a lot of times if you ever had to cold call. So going back to when we sold advertising guys, I had to go and here was like a typical day. So you have your your territory go up to an office or your prospect. You go in and you’re having to sell them on something and then you walk out and and it’s still happening in today’s time. It just in a different way. I would walk out and see the person that sits three seats down from me coming in, trying to out do what I just tried to do, try to outsell me. OK, well, that’s happening all the time with us. When we get an opportunity and somebody calls in, you know, they’ve probably inquired multiple places and they’re getting bombarded with people. So being strategic in what you say to that client, to be able to get their attention and hold their attention to where they’re going to want to take it to, the next step to me is huge. I mean, that is that’s a big deal.
Yeah. You’re seeing the tip of the iceberg again when the meeting is set up. And there is like here’s the notes on it. Well, what it takes when you unravel it is it takes a lot of money, a lot of time, a lot of training, and then it takes a lot of phone calls and a lot of follow up. Right. So they all have a certain close right in those close rates. Might be like two percent. Five percent. That’s like amazing, right? Like ten percent. So what that means is there had to be all those other ones that came in that you called you called you email, you followed up with you set up search like all of those things that take place. And then eventually you get the ones that do something and sometimes you’re good and sometimes they’re not as good as set up.
You’re totally seeing the tip of the iceberg and the things that need to take place to go into it as far as money and time are are immense. And each each year it continues to be more challenging because there’s more people, right? There’s nine thousand agents locally that all want them and then all do.
Yes. Anything to get them. Yes, I’m sure we tried representing you just the same as they they did when I was out in. Field selling like that, no, no, they totally do.
So that’s kind of a setup referral and those could come with either a referral fee attached to them to a third party or without. But increasingly, there’s going to be a referral fee on there that’s taken off the top.
Now, the extent of the referral fee is something that we’re going to have the agents do is when you have a referral from Friendship Division, you need to understand that a lot of times these companies will just change their agreements all the time, right? Yeah. They’ll say, hey, you know, here’s your here’s your deal. You owe us a 40 percent referral fee, whatever it is. And then within a year, if that person sells, then you owe us this again. These are things that change all the time. So understanding and monitoring the agreements. Yes. When they send us an update, we we put it in and we have the latest agreement forever referral partner that we have. But what we need you guys to do is to ask the question, understand what this referral, what all this entails, because it’s going to affect
how you probably negotiate the buyer, the cell, or if you’re doing anything special for the client, you’re going to need to know what their you know, what their expectations are of you, of that deal. So you know how you can how you can proceed. Now, sometimes it’ll change, you know, and it’s easy. We want to we want to tend to to place blame or you know, you don’t like that. I agree. Nobody likes that. Nobody likes when you think you’re getting X and then all of a sudden you’re getting something different. Right. So take the time to understand that. Ask the question. We are working on a way we we’ve talked about this and you might you have to help me.
I don’t have it done for this moment because it’s a challenge. So what the challenge basically is, is the referral companies that we work with, we keep adding new ones all the time. And then when they come in, there’s a percentage that we owe to them on when the deal closes. And sometimes there’s like a minimum, sometimes based on this, sometimes there’s a predetermined discount that they’re giving this person in advance. Right. And sometimes it’s we owe them a referral fee. This person buys during X amount of time. Again, if they rebuy in these terms, like almost consistently changing all the time based on market conditions. And so we’re not really aware of all the terms and they just keep updating. So it could be goes from twenty five to thirty percent and thirty percent to thirty five percent. They tend not to go backwards. Right. And then they take a percentage of how long. So is it eighteen months that if we do any business with this person again, if they were to list or do a second transaction that they receive compensation in. Some do and some don’t, but most do. And it’s been a real evolution this year of how how expensive that lead or meeting really is. So there’s a bunch of different factors that go into it. And sometimes it’s like every person that’s at the meeting and I saw one the other day and I was like two. That’s really rude. But they put in who’s covered under a referral agreement and it was like, you know, everyone that’s at the meeting, their spouse and their in-laws, their parents, their, you know, said and their dog.
And they were like I mean, they created an opportunity. So let’s open our mind to think of both both sides. Right. And I think where it helps me understand maybe more than than maybe an agent who got into the business a little bit later is when we started. This wasn’t really a thing, right? You you create your own opportunity. So what happened over the years and how this is even a thing right now is it’s it’s a whole probably another topic, but basically how we fed our and and how real is this real estate industry as a whole treated? You used to have a listing and you put your sign in the yard. And that was like you were the queen of the member of the Queen’s right, because you would get every call, all these things. And that was how people searched for homes. They would drive around. And that was a you know, that was a way that you got your name out there and you got those calls. Now, buyers are looking online. They are they’re all looking online and they’re going to make a call to someone online. So we created that as a real estate industry. And like I said, I’m not going to get on my high horse about that. But we kind of. Did some things and in it created this basically where now, instead of you being the queen of the neighborhood is now you have your sign in the yard and now you’re paying for your own calls on the leads. Pretty much is how it works, right?
Oh, yeah. No, there’s not really much of a benefit. They eroded the value behind being a listing agent and it’s severely, severely eroded. It used to be extremely, extremely valuable from a lead generation. And people like sit in and take office like phone time and they would sit and do that.
Our industry decided to take our information and share it in a way that they didn’t see what the ramifications were going to be. But they have been they’ve changed how real estate is conducted pretty much.
And commissions are under siege from people like Zillow, from other from other parties out there that they’re trying to reduce how much an agent currently makes. And we try to stay on the full service and full commission model as much as we possibly.
So just, you know, if you want that opportunity, take it and be happy. Whether you it’s an easy deal and you get somebody, they go under contract and you close immediately or you get somebody and you have you go the other way down the road. Right. That there’s complication after complication after complication. And you get to the end and you’re here’s what you’re thinking. Oh, my gosh, I got to split this and that. I did all the work. Why should I have to pay? I know people think that way.
Well, that’s fine. So any time they feel that way, they can just spend the time with me for the day, well, see what I do. And then they can spend on money.
And then you guys, I feel they same more spending for the expense. I feel the same way I feel I get it. We all want to protect our, you know, our hard work and time and effort and income. I get it. All of us do, even the people who create the opportunity. So before you say yes to that opportunity in your mind, thank you. Know what I’m saying?
Yes to this and all the baggage and all of the things that come with it from beginning to end, I’m going to see it through all the way. If you think I don’t think I want to do this, don’t take it. If you get into it and it is way more than you really feel that you can handle and you can’t properly care for them at the time, please call one of us or the friendship division and say, hey, I think they need a different agent on this and we’ll transition it to someone else who who can handle it.
Now, from our perspective, the way I look at it is I want a person that’s going to want the good, that the good, the good, the bad and the ugly. OK, so it’s I’m not super happy about discussing, like, a return policy on a person that you’re not happy with and just taking a lot of easy money. No, no. We want to service all the planning. No, we have no earthly idea, but we want to make sure that the client’s well taken care of. And we want to make sure that you as an agent are accepting and being being happy with each thing that goes on. Yeah, OK. So the basic modification there is we have a lot of different referral companies now. Their models change all the time. I can’t control that. That exact numbers pass along. Right, period. So the next thing that we have recently is installed and you might have received some notifications. You had some that came in. Katy was nice enough to program. And an alert message is we have an agent agent referral. There’s no fee. We make like zero as a company for it. But we want to make sure that we are properly tracking if you as an agent can’t work a deal.
So this kind of comes into how you can be building your team. So the reason that you would build a team is because, like, hey, I’m too busy, I can’t go do this transaction, but I know whatever that I don’t like to use the the the word team not cause. But that’s how a team or of maybe a group like a network or your own, I don’t know, we’ll come up with something but no but like if you work somewhere else you would start a team and a team, you would start like support, you’d start an inbound sales, you’d start all these things. That’s like what we already have. And then you’d get a buyer’s agent would be like one of your first things. Then you get a listing agent. Well, the same thing if you have an interoffice referral agency. Right. So all you have to do is put it in and say, like, hey, I can’t work this person. I need blank percentage on this and it gets worked by somebody else. That’s it. So it’s super simple.
And that agent is going to get a referral fee. It keeps you honest. It really does, because sometimes you’re put in a situation where you feel like I need to help both and, you know, it’s going to cause some conflict. So this is a way that. Way to feel good about passing it off, knowing that they’re going to get taken care of and you’re also going to get a referral fee so and so it’s you can you can scale you created that opportunity.
You created the opportunity. It’s not easy. No, you should be compensated. Put the notes and tag it in in the system will be able to show that off. But essentially, it’s an agent to agent referral. There’s an email that’s generated it, notifies each person and it tracks it in the system that you put it in. Now, where those would be super useful is like, hey, somebody just called, I’m going out of town. I’m going to Europe for a little while whenever that time comes again. Right. Can’t properly service them. Put them in Tagget and you’ll receive a percentage and we’ll have the other person assist you with it. If you already have that person identified, then you can send it directly to them. If you need us to help you with that because you’re super busy, then Katie will pass it out to somebody else. So just put it in there and we’ll be able to assist it and do that. We received nothing for that. We’re just trying to merely facilitate what’s going on so that somebody else can close it. In the event that you are too busy and you need to be able to scale before it’s too far or it’s not the exact right price, like there’s all those plethora of options for where you would really want a buyer’s agent or a listing agent, a listing assistant to help you, right? Yeah. It’s kind of like how you create like it’s like a way to create your own team and be able to grow people like, oh, I want to do more business, but I can’t be in more places. Now you can write. That’s kind of an enhancement that you’re fortunate enough to be able to add in there. OK, so that’s adding on that referral there.
Read that Gina asked if there’s a standard referral split agent to agent that we’ll use. So we have the twenty five percent that we are you, you know, that we are doing with this. We haven’t talked about if it would be something different. So for for right now, yes. Agent to agent will be a twenty five percent referral split.
So the person that puts it in there receives twenty five percent and then the other party would receive the other four going ahead and doing that. If we need something different than that and we can talk about it and discuss it on a case by case basis, that’s, that’s just standard one when you just put it in the next item there is. So that’s how it’s originated. Yeah. OK, and now the referrals that will come in as well can come from any agent and it will also be able to come from from like the friendship division, from people calling in, wanting to do a transaction with like myself, for example, or Shana or whatever that is. Then those same things. Right. Would be handled in the exact same way. But we don’t want to do is treat our agents one way and then like kind of treat ourselves as an agent in a different way. Right. So what we’ll do there is those will be able to be handled this same exact way and they’ll be a referral fee that’s paid so that we can continue to concentrate on what we need to concentrate on.
We do not have any additional changes beyond those. Yeah, we’re not like changing any compensation. There’s no no switching, no anything that’s that’s going on. And so how the deals originate is the biggest part it and then which classification you currently are. So that’s the second component that goes in there, whether you’re on the experienced agent split in receiving the highest possible amount or you’re on like the current mentorship program still and you’re gaining some assistance and that has a lower number associated with it because somebody else is helping you out on it. Yep. So those are the two types of ways that that takes place.
So any other questions regarding that? So I want to make sure that we all understand that and we you know, we have a clear mind and understanding so we can go out and be our best. I don’t ever want anything to to be on your mind or bogging you down or, you know, that something that you have questions on. Because, you know, I know for me, when I carry a weight of something like that, once you get it off, then you’ve released it and you can move on and then past it. So, you know, and I know it gets confusing sometimes. And we all are you know, we all want our as much as we can get. We worked very, very hard. It just never is it what is that phrase? Never bite the hand that feeds you. I mean, I guess that’s basically it in a nutshell. Somebody create an opportunity for you guys, you know?
Yeah, we want to do that. So I do see a question that was chatting here from Rachel, also Rachel from is it McKinney asks a question here, so we’ll answer that one for us. Is there anyone who likes Lease’s? She gets a lot of those, but it’s not worth it for a busy agent. She hates to lose them.
So I have two things on that one, I can tell you that, you know, and this is way back in way back in the beginning, we took a lot of leases because so, you know, once you get to a certain point and you’ve got a full plate, then maybe it’s different. But I wouldn’t instantly think that leases are a bad thing to me. It’s an opportunity depending, you know, it depends on who is leasing. So you need to do a little due diligence and understanding of that client that we had someone that leased a house from us. That’s one of our best referral partners right now. They have bought and bought and bought. They moved here because they were transferred from Michigan and, you know, they ended up buying their primary home investment homes. Now they’ve sold them all. And so just an opportunity is an opportunity. So but as far as leases go, so, you know, we can talk about that on our compensation, too, is we treat the leases. You know, there’s always a broker minimum, but we treat the leases on a personal split level because there’s not a lot to be made on the leases. And we do it that way because we we understand that. So just so you know.
Yeah. So if anyone wants those in particular, then please let us know. We’ll get that on coordinated for you. Maybe if you want to take some leases, it would be good if you talked directly to Katie and she could help you out there and coordinate that type of thing. If you do have extra leases that you want to have somebody assist you with, then also ask Katie that same question. She’ll be able to help coordinate. So if she becomes that hub and spoke system, then each person to ask them like, hey, I want some and I’ll work them or I can’t work them and I need to give you some.
So there’s only so much of those, though, that can be split unless they’re doing some big luxury lease or something like that.
So you have to understand that, deliver quality service and you’ll most likely get some other things out of it to set expectations and know what you’re what you’re getting into. Yeah. Thank you. All right, great. So the commission agreement for this calendar year will be sent out to guys through DocuSign. You’ll be able to initial there. There is not we haven’t changed any numbers. All right. So the numbers haven’t changed. But we’ve had to do is clarify a couple of different things. Our commission agreement, my word, it was like two pages a long time ago, and then it went from two pages. And now I had no earthly idea how many pages it is. But essentially it’s like when all when a scenario comes up, it’s a different question. So now the commission agreements, like I have no idea how many pages, but but that’s good.
These things have happened that we’ve you know, we’ve I don’t know that are identified our plan and of course, of action with each.
It’s good. But anyways, just don’t make a lot of money, go make a lot of money and we’ll all really enjoy ourselves. All right.