Reforming the Brokerage Commission Structure: Good Idea or Not?

by Isaac Benmergui, Esq on December 6, 2013

Times are indeed changing in the real estate stratosphere, especially with this news about a Denver real estate startup company entitled Trelora Realty. What’s the deal here? In essence, we’re looking at a major revamp of the commission structure, typically standard at 2.8%. That may all chance, specifically with this realtor, sparking a huge debate about how commissions will now operate.

This owner Joshua Hunt is breaking ground here. Instead of taking a commission percentage, Trelora charges a flat 3D_Realty_Handshakefee, something unheard of in the industry. The fee, regardless of any stipulations or situations under real estate law, stays the same at $1.7K with $3K take-home compensation for the company. Not too shabby.

There is opposition to this, though, specifically from the National Association of Realtors, stating that the traditional commission system works fine. Essentially, if it’s not broken, don’t fix it. Change, however, can present new opportunities, new outlooks, and a new vision. In fact, you might’ve not noticed…. But the name “Trelora” represents the letters in the world Realtor, all jumbled together. Hunt claims they’re not “realtors” in the traditional sense. This is a new age.

The argument against this, though, is simple: it’s a flat fee, limiting services. And everything in real estate law and the industry itself is everything but limited. Can it turn out to be profitable? Surely, it might be an interesting benefit to homebuyers. But what about the market? Will it collapse from a flat fee not accounting for all the hours spent trying to get a deal through only for it to fall apart? Or will it strengthen given the opportunity for solid and dedicated revenue pouring at that high amount per prospect?  You decide.

 

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