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We are on a quest to transform the mortgage industry.
We believe there needs to be more transparency, which is one reason why we decided to share a monthly report on what we have learned, what worked and what didn’t, and what’s next in our plans to grow a Billion Dollar Brokerage.
We hope you find a few useful ideas and tidbits to help you in growing your mortgage business.
Welcome to November 2024
Brokerage Stats
Production since August 1, 2021
Volume: $2,416,247,235
Files funded: 5,520
October Production
Volume: $161,134,077
Files funded: 346
October Agent Stats
Rookies: 159 (+9)
Pros: 174 (+2)
Total: 333 (+11)
A Record-Breaking Quarter
We just finished a record-breaking 90 days. Our volume is up by $172 million and the average growth is up by 156% when compared to the same 3-month period in 2023.
Royalties versus Revenue Share
One thing that makes our brokerage unique is Revenue Sharing.
As there is some misinformation around how it works and why we do it, I thought I would break down why I believe that revenue share is better than royalties.
First, let’s look at the traditional model of royalties or franchise fees.
Most large national brokerages charge a royalty, often called a split, that is paid to the national brokerage and is a percentage of the gross commission.
The amount varies, but is usually around 5.65%. The profit from the royalties and other brokerage activities is paid out by way of dividends.
This means that others, who likely don’t even know you as a broker, are profiting from all the work you do.
Let that sink in for a minute.
I actually don’t have a problem with this as I believe that capitalism is still the best economic system. However, I believe that people want to see a shift to more ethical entrepreneurship.
In my definition, ethical entrepreneurship involves three wins—the customers, employees, and owners all need to win.
Let’s look at what a win looks like for our customers, the agents who join BRX.
(In a future post, I’ll share what a win looks like for the employees, and for BRX.)
Our mission is to help our agents earn more revenue per hour, and we do this by employing several strategies that we adopted from the two fastest-growing real estate brokerages in the world, EXP Realty and Real Brokerage.
Strategy #1: We are a virtual brokerage that strives to only spend money on things that we believe will help our agents earn more money. You will not find fancy ice sculptures at our events.
Strategy #2: Instead of hiring recruiters to expand our agency, we have a revenue share plan. We believe that good brokers know other good brokers, so instead of revenue going into recruiters’ pockets, we put it in our agents’ pockets.
Strategy #3: We have capped commissions, which means that any of our brokers can achieve a 100% commission split each year. In most other agencies, royalties do not cap, so the more you make, the more you pay.
Strategy #4: We offer stock options. When I showed this model to other owners prior to launch, they told me I should charge more because I could make more money. I could in the short term, but we believe in playing the long game, and want to attract and reward agents who believe the same thing.
Strategy #5: We have transparent contracts and compensation (see part 1 & part 2). Sadly, some brokerages still play games with their agents’ money. I have shared stories of some well-known brokerages not disclosing compensation from lenders (which their agents then learned about from our blog). This hasn’t made me very popular with some of the owners, but that’s okay—I’m here for the agents.
As I mentioned, I didn’t come up with this model (I’m not that creative). In observing the recent disruption in the real estate industry, I realized that a similar disruption in our industry was inevitable. And while we may have been the first to adopt this model, I don’t believe we will be the last.
Not surprisingly, when these models entered the real estate space, there were a number of detractors, many of whom were profiting from the old system.
However, the numbers show that realtors are voting with their feet, and the old brokerages are shrinking, both in production and in agent count.
Now back to royalties versus revenue share. No matter which way you slice it, someone is going to get paid for the work you do.
The question you need to ask yourself is this:
Would you rather that it be someone you have never met earning money from royalties, or a friend who is excited about, and invests in, your success, who earns a bit of extra money from revenue share?
Now that we are on the scene, you have a choice.
If you are an agent who has been in the business for more than two years, and want to talk to me personally about this, reach out here.
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