Then they came upon an informant. This informant would be come to known as “deep throat” and he shared a three word phrase that applies today – “follow the money!”
Many real estate agents have reached the same dead-end as Woodward and Bernstein did and it’s time for you to listen to an informant and this informant is going to tell you to:
FOLLOW YOUR MONEY
When it comes to evaluating real estate brokerages the term is changed just slightly to FOLLOW YOUR MONEY.
You see a real estate brokerage in and of itself does not generate income. The agents that are working in the field do so. They are the ones that work with buyers and sellers and investors and they are the ones that caused the commissions to be earned. Now yes, the brokerages provide a value and for this value they collect a portion of those commissions from the agents.
So the very very important question is once the brokerage gets that money what do they do with the money. YOUR MONEY.
Other than the salaries for the individuals that are running the local office, the top places where the money goes in the typical brokerage structure is the following:
– brokerage brand promotion
– payments and servicing of debt
– shareholders earning per share / profits to owners
No One has been able to explain to me how this advertising helped any agent sell any more homes than if they had not spent this money.