Navarac - Well dreamers are known to do very well...I'd rather be dreamer.

You are right I am probably clueless as to what I am getting myself into but what college student isn't (haha) . But I will say this to have been in Real Estate for 7 months but 5 months on my own (was an assistant for 2 months). To have closed 9 transaction since Jan 2010 (w/ 4 pending)..I think I have done well so far. And besides if i do waste 2 years of my life seeing if this works. When it's over I'll only be 22yrs old at that time.. I would still have plenty of time to get things right


I'm not trying to convince anyone - I thought forums were used to discuss topics and people give their personal opinions.

Oh... OK, I get it now, I was confused. You've closed 9 transactions at full fee with 4 pending and you are searching for a way to make LESS money. Okay... Well... I guess a flat fee model would be perfect then.

You've done great New Guy! Don't change what you are doing. Not many new agents can do 9 transactions with 4 pending since January. Not many old agents for that matter. What's the average number of closings? I think it's 5 closings a year is average. I'm sure those deals have kept you jumping. Why get busier and earn less money as navarac suggests. By the way when I started doing flat fee I sold the most volume I had ever sold before. But volume means nothing. What you make is everything. And those years I didn't make to much. I have another business so it wasn't that concerning, but once I started going back to traditional I did less volume and fewer deals, but made more money. But you are right. Take a chance. You are only 20 it seems. I didn't even start real estate until I was 25. And just played around until I was 30.

Have no clue what state you are located in. 9 closings can be alot of money or very little money. Example you sell 9 crapholes with minimum 1,000 commission and with broker split take 800 a property before expenses.In that scenario you made 7,200 before expenses in 5 months.

However if you average commission check is much more per closing based on a higher area sales price at 3,000 after broker split you made 27,000 before expenses which is not bad.So it's all about what is going in to what is going out and the time involved.

I sent out a 45 cent expired letter and picked up 5 quad's about 5 weeks ago. We are under contract and set to close next month. Very strong buyer with no issues. My marketing campaign resulted so far in 41 requests for financial packages. Out of those we had 9 offers.

It is closing in June. My check because I am the broker will be 123,200. My client is also taking the extra proceeds and exchanging into another investment property.

So off of a 45 cent stamp I am looking at upwards of 200,000 in commission. Not all of these are grand slams like this but are always a nice check.I tend to like to work with a smaller group of clients and be hyper focused on a high level of service.

I have spent about 32 hours so far on this deal.Even if I double my hours invested again I will be at about 2,000 a hour ROI.I am then going to take a large chunk of this money and invest into a commercial bank foreclosure or pre-foreclosure commercial short sale.

The commercial market is probably the best cycle for acquisition and upside in the last 20 years.

There are many models out there. I have a passion for commercial real estate. I get up everyday excited to talk to people on the phone and put deals together. Residential does absolutely nothing for me. I don't do weekends or nights and that was the reason I sold my other businesses I owned before.The money was good but I was running myself into the ground and never had time to enjoy it and my quality of life and health suffered.

You can't just look at the money but have to look at is my business model a sustainable structure for the long term and if not what are my exit strategies?

You don't want to have something working and then it falls apart and go "Oh crap what happened?" Instead you want to have plan A,B,C lined up ready to go.

I wish you all the success just watch for burnout.

Navarac - way to make sense of irrational thoughts...Thanks

ColoBroker - You are right also - Given some time to think about it I think I'm going to wait until I'm established before I go off trying new things

Super - Yeah, the average is about 2800 after broker spilt. You are right back up plans are good to have...I'm glad I have one

Yeah I have all ready learned about the burnout a couple months ago....School full time + real estate full time + studying for LSAT + friends + a little community service = Burnout

I think my burnout stage has passed ... its all about time management and going by schedules

thanks for the help everyone

There is a paradoxical shift in the real estate industry. Though there is a place for flat fee business, limited services models will be the wave of the future. With the X and Y generation actively in the housing purchase faze the models of yesteryear will will be "fazed out". Many baby boomers will stick to what they know and that is full services and cash strapped consumers will be looking at flat fee. New guy.....cut your teeth at the full services then be prepared for the limited service shift.

Yes, it's coming, as sure as god makes little green apples. More and more limited service / specialized service / facilitation. Ways to go before we get there... but demographics and consumer empowerment can not be dismissed. It's all about information.

Kalstar - Yeah that's exactly what I plan to do... Although I will not make a full switch to flat fees. I will like I stated before I will do a couple of deals a month using the flat fee model I am coming up with. But when I will start taking on a couple listings at a flat fee. I am not sure.

Just as Broker says it is a ways away from now - Eventually I will be preparing myself for that time by taking on 1-3 per month on a flat fee basis. but again I a not sure when I may do that

Maybe eventually at some point for residential (maybe never) but I do not see it for commercial anytime soon.

If the day does eventually come I will be making huge returns off my commercial investments and can dictate if I will or will not work with a client.

Super - I do not think I would ever take a flat fee for commercial property... There is way too much work involved

I think the flat fee model that does not work is a flat fee only when the house sells. This contingency model is what makes a failure. If you are going to be paid only if the house sells then you MUST charge more to cover the listings that don't sell or are taken off the market by the sellers.

That is why models like Duffy Realty in Atlanta make it work and are extremely profitable - they charge up front and are paid for the marketing they have done up front and don't have to charge this seller a higher commission to cover the seller down the street who took their home off the market.

I tell sellers who choose the flat fee model that I will charge them less if they pay a little up front. If they don't want to pay the $495 up front then I suggest they go with my traditional full commission model. Everyone has to have skin in the game. They are either serious sellers wanting to save commission dollars or they are not. They can't have it both ways - low commissions and no risk.

Sorry to chime in late on this one... but in theory, I don't have a problem with the concept of a flat fee. However, assuming that the fee is significantly lower than you would get under a traditional commission, you really need to get that fee upfront, or at least a portion of it to offset your risk.

What a lot of agents don't realize is that the reason we're paid so much money per transaction (again, under a traditional commission/contingency structure) is because we take on risk when we work on contingency. A big part of our paid-at-closing fee compensates us for accepting that risk.

If you are going to significantly reduce your fee (under a flat-fee or discounted commission scenario), it's good practice to make at least part of your fee non-contingent - that is - you get paid whether or not there is a closing.

I offer a hybrid compensation option where the seller pays me $500 upfront and a reduced commission percentage at closing. The $500 is non-refundable and my sellers understand that it's there to offset my risk. I reward them for reducing my risk with a lower commission.

I did consider a true flat-fee option for awhile and eventually decided against it, for some of the reasons mentioned previously. For example, if I take, say, $3,000 upfront to sell a home and I don't sell it, that seller is going to be irritated with me, even though he fully understood the choice he made. He's not going to use me again or refer me to his friends. He's just going to be mad that I "cost" him $3,000 and didn't perform.

Jennifer - That is very simalar to Duffy Realty in Atlanta.. She takes non-refundable $500 upfront and reduced commission when the home sales

Home Seller Guru - Great way too look at it and you are right they are serious sellers who wants to save commission dollars or they are not

Jennifer & HSG - How is this working out for you?

HSG - Oops - I can't believe I posted without reading your comment right above mine. Okay, so you said what I said before I said it... and you said it well!

My sellers absolutely loved the concept. Some didn't go for the upfront fee, but they at least understood why I charged more to take on all the risk. This is what I feel the biggest benefit to a hybrid plan is - that it's a terrific way to explain to sellers why our fees seem high and they want them to be lower, they can help us with the risk.

That said, something I forgot to mention is that I offered this plan when I was at RE/MAX (and when I owned my own company), so I didn't have to share the upfront fee with my broker (or get permission). If you are on a split, your broker is probably entitled to a piece of that upfront fee.

I've been doing it this way for years; maybe Duffy Realty got the idea from me