The Great Fee Debate - Are You On A Real Deal Or A Fake Deal?

By Author: Smit Mathur
Total Articles: 102
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Today, being a professional salesperson is just that - sell homes and move on. Running a business where you have all the costs is running a business. (Lee Woodward, CEO Real Estate Academy). In other words, the two should not be confused.

If there were an award for the most controversial and widely debated topic in real estate today, that award would arguably go to the topic of pay structures in this industry.

In an attempt to gain direction and understanding of this issue, a number of prominent industry leaders gathered together in one room recently at The Complete Leader Conference, hosted by renowned sales coach and business visionary, Lee Woodward. Lee was joined at the conference by a unique line-up of leadership professionals, who, over two days, tackled head-on, a number of crucial issues facing real estate industry leaders today. In this way, it wasn't so much about being given the answers, but more an open forum where participants were encouraged to contribute and be open to a variety of views on many thought-provoking leadership issues.

Extensive research was undertaken prior to the ...
... conference in order to develop an interactive survey that formed a key part of the day. The purpose of the survey was to anonymously extract information about the delegates as a broad representative sample of our industry leaders. The findings of the survey highlighted that, in terms of pay structures, the average commission of a salesperson stands at 41 - 43%. Despite the average though and, as anticipated, pay structures proved to be a topic of great variance in opinion and controversy. It provoked much discussion and debate amongst conference participants and our panel of speakers:

Lee Salce (Phillip Webb Real Estate)

Anthony Toop (Toop & Toop Real Estate)

Mark McCleod (Ray White)

Peter Mumford (McGrath)

It was certainly clear from our audience response that the majority share an annoyance that attempts are made regularly by other agencies to lure their salespeople with offers of ridiculously high percentages. The fact of the matter is this - these are not representative of a real deal as anyone who is offered in excess of 60% is provided with no support. They have to pay for everything from paper and ink to all marketing and prospecting tools. At 41 - 43%, a salesperson is provided with the necessary infrastructure to get on with the job of selling homes. Anything above this and they are nothing more than a contractor to a business who pays for their own office space.

As Lee Woodward pointed out, don't be fooled by these massive commissions being offered. You have to ask yourself - is this the real deal or is it a fake deal because 100% of nothing is nothing.

Other interesting views on the issue of pay structures are more aligned with people and performance matters such as culture, leadership and support.

It is interesting to note that in our research, those leaders who rated their workplace moral as high also had the best staff retention levels despite offering average commission structures.

People and performance expert and Director of RealChange, Sadhana Smiles, said there is a misconception that salary is the number one reason for staying in a job, particularly in real estate. Research has shown however that people choose to stay for other reasons.

According to Sadhana, people today want security, support, recognition, opportunities, culture and lifestyle. Price, product and service are no longer the key points of difference because everyone's offering those.

In another survey, conducted by Manpower, Generation Y employees (under the age of 25) were asked to rate, in order of importance, the elements that were important to them in a job. The results were as follows:

1.Culture

2.Team

3.Management style

4.Flexibility

5.Conditions

6.Salary

When asked if there should be the same deal for each salesperson, Sadhana's response was a definite YES. She qualifies this view by saying that people inevitably talk amongst themselves and one of the standards she feels you must have to avoid discontentment is your pay structure.If questioned by an employee on this, Sadhana suggested the following response:

As a business owner, I am not prepared to change my business standards, however we can offer: (list other benefits of working with you, such as lifestyle, fuel cards, area exclusivity, your own database, health fund contributions).

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