Real Estate Commission Paid Faster

Which 100% Commission Real Estate Company Pays the Fastest?

At Balboa Real Estate, if your file is complete at closing or you use our in-house transaction coordinator then you can be paid directly from escrow at closing. Otherwise, escrow sends a commission check or wire to the office. In the many years that I have managed Balboa, I know that agents like to be paid as soon as possible. If we get agents their commission fast, then they appreciate it. Maybe some don’t notice when it comes fast. However, every agent notices when it comes slow.

Many companies send checks slowly as a matter of convenience. For example, it’s easier to go online and have your bank issue the check for the brokerage. It saves the headache of printing a check, signing, stamping and mailing. The drawback is it can take days, often over a week. This does not make agents happy. In contrast, when we receive a check it’s a hot potato that needs to be accounted for and then issued to the agent as fast as possible. Cutting checks is our top priorty for our interal operations.

Have you ever had someone tell you they were putting a check in the mail and then it still takes days to arrive? This is the type of situation when someone walks out to the office park mailbox, after mail has been picked up for the day, then takes credit for mailing it that day. Meanwhile the check sits in there until the next pickup. At Balboa Real Estate we calculate the pickup and delivery times. This often means making trips to the local post office because the office mail has been picked up and we want the mail to go out that same day. In urgent scenarios, we make trips to the post office so that we can get a commission check out by the noon pickup. Despite having nearly 200 agents on the team, we operate at the same capacity as a small shop with a few agents – considerate and speedy service for agents.

To find our more about our 100% commission real estate program, please CLICK HERE 

https://youtu.be/b7-nFreG670

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#1 Common Mistake with the Referral Fee Agreement

Avoid the top mistake agents make on a referral fee agreement.

It all begins as to how the referral fee agreement is structured. The form stipulates the fee to be paid to the referring broker is based off of the gross commission earned. Now, this verbiage is important and necessary because it protects the referring broker. Imagine if the agent that received the referral had a terrible broker split or some sort of debt that would take a big bite out of the gross commission. Well, the referring broker should be subject to the arbitrary fees incurred by the recipient agent. Therefore, the referral fee should be calculated based off the gross commission. All this works well and fine until an exception comes up. An example would be a problem in the transaction where the recipient agent has to contribute a portion of their commission to save the deal. Another example would be if the referred client turns on the agent and tells them they want a rebate or else they will go to some discount outlet like Redfin. Well, an agent will usually chip in commission if it saves the transaction. Especially, if that agent has invested time working with that client.

Let’s imagine a made up scenario to show how it all goes wrong.

The referral fee agreement stipulates the recipient broker has to pay 25% of the commission to the referring broker.

The recipient agent has a 70/30 commission split with her broker.

The recipient agent has to agree to chip in $3000 to save the deal. So she assumes the 25% referral fee will be based on the $7,000 commission reamining after she credits her client. This is a reasonable mistake. After all, her 30% broker fee will be calculated off the $7,000 not the original $10,000 gross commission. Only at the end does she find out that her broker is obligated to pay $2500 to the referral broker off the top. So, the new gross commission left for her is $4500. Then she has to pay the broker fee of 30% ($1350), which leaves her with $3,150. Naturally this agent will be unhappy because they did the majorty of the work for 31% of the gross commission. To prevent this one of two things should happen:

  1. The Referral fee agreement should stipulate that any credits or rebates to the buyer must be deducted from the gross commission in which the fee is calculated.
  2. The referring agent is contacted and made aware of the need to credit commission to the save the deal and then add the verbage from line 1 or recalculates as flat fee amount to be paid as the referral fee.

If you are interested in the 100% commission model and working with a broker that has the foresight to protect you from scenarios like this then please CLICK HERE for more information.

 

 

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What is 100% Commission Real Estate?

What is hundred percent commission real estate?

(Transcription) This concept was popularized and entered the mainstream over ten years ago and since then it’s evolved and has changed somewhat. Before 100 percent commission was part of the mainstream program that an agent could get a real estate company. The big talk was about splits, so an agent, let’s say a new agen,t would join a company and they would get 50% and then the company would get 50%, so that would be a 50/50 split. As the agent progressed, they might get 60% or 70%. Companies would recruit agents based on an 80/20 split or 90/10 split and then hundred percent commission entered the mainstream and said here’s a flat fee per transaction and you keep the rest of the commission we don’t care how much the Commission is you just pay a low flat fee. There was also another version of that where the flat fee could have been an annual fee so an agent would pay a fee of let’s say three thousand dollars at the beginning of the year and then the agent would keep the Commission that they earn 100% of the Commission they earn on all the transactions they closed that year. Over time I think that this concept has kind of evolved and changed and companies have looked to find ways to increase revenue and still be within that hundred percent commission model. What that term encompasses now are companies that often charge a monthly fee, so there might be a monthly fee in addition to the transaction fee. Often these companies will charge for errors omissions insurance you know so there might be a risk management fee on each transaction or the agent might have to pay quarterly or semi-annually for their insurance, there might be fees for high-risk transactions or a fee for having access to the office or having a key, basically there are other fees. So if you’re looking at a hundred percent commission brokerages, it’s important that you clarify any and all fees that you could infer working at that office. With Balboa Real Estate over the years, we’ve experimented with hundred percent commission programs to find what would be the best, the least expensive to agents so agents can save more of the commission that they make and of course the company can stay profitable, we have done a flat fee per transaction and we’ve done the annual fee where agents pay the annual fee, and and then get a hundred percent of what they earn, and we’ve always paid errors emissions on behalf of the agent. We’ve never had agents have to pay theirs separately. So we we found that in certain situations where the sales price was very high our E&O; bill would go up because it was how the insurance was assessed, based on the revenue commission, revenue of a transaction. We had agents that were closing three, four, five million dollar properties and making these commissions that go along with it that would increase our E&O bill and we were still charging a very low flat fee. Which would essentially make the company take a loss on those transactions so certainly we can’t stay in business taking a loss on those transactions, but we want to be the lowest cost one hundred percent commission company so we camp with a plan that we implemented over a year ago, that’s been working quite well. Our commission plan is a flat fee per transaction that is ten basis points of the sales price. So the easy math on that is if the sales price is seven hundred thousand dollars, then the flat fee per transaction is seven hundred dollars to the brokerage and the agent will keep everything else. If the sales price is eight hundred thousand then the flat fee to the brokerage is eight hundred dollars. Again, the agent keeps everything else, Balbo real estate pays the errors and omissions insurance for the agents. There are no other fees involved, just a simple flat fee per transaction to keep it very easy to understand and low cost as well. then of course if you have a very high sales price it allows the flat fee to the company to go up just enough to cover the E&O insurance on the agents behalf. If you’re interested in our Commission model, what we believe to be the best hundred percent commission model in the industry, please CLICK HERE

 

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Contingencies Stay Active Until The Buyer Removes Them in Writing

Contingenices Don’t Expire Automatically, They Must Be Removed

Contingencies stay in place until they’re removed by the buyer in a contingency removal form. So the three big buyer contingencies are the inspection period, the loan period, and then the appraisal period. Default verbiage in a CAR purchase agreement or an oorp.org purchase agreement has 17 days for the buyers inspection period, 17 days for the appraisal, and 21 days for the loan contingency. Now, sometimes I’ll get a call from a listing agent and they’ll tell me that they’re 25 days into transaction or some number of days that’s far past all the contingency periods and they’ll tell me that the buyer’s not performing or the buyers Lender is having an issue and they’re not returning calls. One of my first questions is did the buyer remove contingencies or did you as the listing agent send a notice to perform when the buyer was late on removing contingencies? Often I hear the answer’s no. For one reason or another parties forget the listing agent forget to ask or they think that once they’ve passed the contingency period that they aut

omatically expire and they come to find out that until a buyer sends that CR form that constitutes your removal form, those contingencies are in place so a buyer could drag out the contingency period for 30 days or 40 days or as long as they want because they last indefinitely. Until the seller sends a notice to perform demanding that the buyer remove their contingencies or the seller can cancel then – and the buyer of course has to respond by either cancelling or submitting their contingency removal – then those contingencies stay in place. So, it’s important to send a notice to perform if the buyers late on their contingency periods or in some transactions that are higher risk for the buyer defaulting or there’s more tension, listing agents will send a notice to perform prior to the contingency expiring because you can, you can actually send a notice to perform two days before the contingency will expire so notice perform will have a two day period let’s say it’s for a loan contingency on day 19 the listing agent can send the buyer’s agent a notice perform to remove that 21 day loan contingency and it’s a way to proactively ask that the contingencies – you’re expecting a contingency to be removed and if on the 21st day the very date of the contingency is supposed to be removed. If it’s not removed by the buyer then the seller through that notice to perform form has the option to then cancel the transaction and that allows the seller to not be stuck at the buyers whim, to not be trapped in that transaction. It allows them (seller) leverage to cancel or tell the buyer that they were going to cancel unless the buyer performs. So remember, contingencies stay in place until the buyer sends a written contingency removal form.
Interested in 100% commission real estate in California? CLICK HERE

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How to Complete a Residential Purchase Agreement Tutorial

The tutorial is not done on a CAR RPA form because CAR does not allow their forms to be used in a public forum. I obtained this form from www.OORP.org. Although it is different than than the CAR RPA, it contains the same terms that are customary to any California Real Estate transaction.   

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3 Rules To Find Prospects and Convert Them to Clients in Real Estate

There are three rules to recruiting and converting prospects in real estate.

1. Meet as many people as possible. You can do this onlinethrough online marketing,  you can send mail, or you can meet in person. It doesn’t matter how. It’s whatever you’re comfortable with is what’s important. You need to get your name and your brand in front of as many people as possible.           2. When you meet these people tell them that you sell real estate. They need to know that your job is to sell real estate, you’re a real estate agent, they need to understand that when they meet you.                                             3. Tell them you want them as a client. it’s not just enough that they know that you sell real estate. It’s not just enough that you’ve met them, they need to know that you want them as a client and you expect them as a client. That you expect when they have questions about real estate, they’re going to come to you, so they understand that you don’t just sell real estate you want them as a client.

Click Here for more information about Balboa Real Estate.

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Customary Allocation of Title and Escrow Fees For Each California County

In Southern California, the seller typically pays for the owner’s title policy, and the county transfer tax. In Northern California, it varies county by county. Below is a guide for which party pays which fees throughout California.  Please CLICK HERE or the image below. 

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