How to Choose a Real Estate Sponsoring Broker

Choosing a sponsoring broker can seem daunting to a newly licensed, or soon to be licensed, prospective real estate agent.

Should you go with a big national brand or a more boutique firm? Should you go with a company that offers higher, or even 100% commission splits? Are there any hidden fees, quotas or ramp-up periods? What’s the company’s face-time or required floor-time policy? Is there any training, or is there too much training as in weeks of mandatory, in-person orientation?

We’ll cover all of these questions and more in this guide for new agents on how to choose a real estate sponsoring broker. It’s one of the most important decisions you’ll make in your career.

Table of Contents:

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Pros and cons of working with a big brokerage

The main benefit of working at a big brokerage brand, typically one that has offices or franchisees across the country, is name recognition, perceived prestige and the ability to access office space and any related amenities.

The cons of working at a big brokerage brand include low commission splits, numerous fees, no leads, being on your own and getting lost in the shuffle.

In our opinion, working at a big brokerage brand usually isn’t a great idea especially for someone who’s just getting started in the industry.

That’s because a new agent typically doesn’t have the requisite deal experience or network to be able to generate their own deals, and thus most likely will just end up wasting time sitting in an office enjoying the free coffee vs actually closing any deals.

Remember, big brokerage brands essentially offer what amounts to a shared co-working space for 50% or more of your commission. At any of these traditional brokerage houses, you’ll generally be expected to source all of your own deals, which can be quite tough if you don’t have any experience to begin with.

How are you supposed to convince your friends and family to work with you when you’ve never sold or bought a property before?

High commission split vs national franchise brands. Hidden fees. Company leads. How to choose a real estate sponsoring broker & more.

Low commission splits for new agents

While it’s fairly common to hear about commission splits at these more traditional brokerage firms being 50% of the total commission that you bring in, please be aware that starting commission splits can often be much lower. For example, some major brokerage firms will only let you keep 30% of the commission you bring in for your first 5 to 10 deals, and only after you meet this quota do you graduate to a 50% commission split.

Numerous often hidden fees

More traditional brokerage firms are also known for charging a myriad of often hidden fees that they gloss over when they try to recruit you. For example, don’t be surprised if they tell you after associating your license that you’re responsible for various start-up fees, desk fees, franchise fees, errors & ommissions insurance fees, software fees and more.

Make sure you understand exactly what you’ll be charged before signing up with a firm. For example at Hauseit®, our agents pay nothing besides the all inclusive monthly fee, which varies depending on which commission split plan they charge. We don’t believe in nickel and diming our agents with hidden fees, and we clearly state this in our agent careers page so there are no surprises.

No leads or referrals from the company

We’ve always found it curious why agents would choose to join a company that doesn’t offer them anything to work on, especially if they’re newly licensed and aren’t joining with a thick rolodex of client relationships to lean on.

No matter how good the free coffee is at the office, it’s not worth starting your career to sit around and not close deals. Presumably you became a real estate agent in order to close deals and earn commission, therefore it generally makes zero sense to join a firm that expects you to source 100% of your deals.

Management is inaccessible

Another con of joining a large, national brokerage brand is the total inaccessibility of management. Remember that management’s focus at these more traditional firms is entirely on the top 5-10% of producers who essentially do all of the deals.

As a result, they may be totally unresponsive to a new agent who joins, and will likely not even know who you are. As a result, it can be extremely frustrating as a new agent getting help with something, or if you need to speak with management about a deal or something else important.

High commission split brokerages

Another type of sponsoring broker new agents might see ads for are for high commission split, or even 100% commission split, real estate brokerages. As good as earning 100% of your commission might sound, be aware of the various hidden fees that they’ll inevitably charge in order to have a viable business model.

In fact, because these 100% commission split firms give away most to all of the commission, they typically have to charge a myriad of hidden fees in order to stay in business. These range from desk fees, software fees, franchise fees, office fees, form fees, insurance fees, startup fees to even transaction fees.

Death by a thousand fees

So even though a firm might promise a very high commission split, you’re still going to be nickel and dimed, typically more so than at a more traditional brokerage firm that takes a 50% commission split.

What’s most egregious are the 100% commission split firms that then charge a hidden transaction fee, typically a flat fee, per transaction.

For example, a sponsoring broker may tout itself as a 100% commission split company, but then has fine print that says the agent will have to pay $2,000 or $5,000 per transaction which effectively makes it not a 100% commission split plan.

You’re even more on your own

At your typical 100% commission split brokerage, you’re even more on your own vs at a traditional firm. That’s because in order to minimize expenses and to maximize how far your various fees go, the brokerage will try to be as bare bones as possible when it comes to infrastructure, support, branding etc.

This is why typically the only agents who sign up for a 100% commission split sponsoring broker are those who are quite experienced with a large roster of their own clients.

These agents typically don’t need any training or hand-holding, and have a strong network of clients to source their own deals from. For them, it may make complete sense to be completely on their own at a setup like this.

Still no leads or referrals

What’s worse about your typical high commission split sponsoring broker is that they are even less likely to provide leads or referrals. Remember that they’re really trying to maximize the value of your various fees since that’s all they have to live on. As a result, they’re even less likely to invest dollars to build a lead generation platform or to buy leads for their agents.

So sure, it may sound great to join a firm where you can tell your friends that you get 100% of the commission, but what does a 100% commission split matter if you’re not closing any deals? 100% of zero is still zero!

Brokerages that buy leads

Another type of sponsoring real estate broker you’ll see is one that touts its ability to provide paid leads to its agents. Typically, these brokers will participate in advertising programs with 3rd party real estate search engines like Zillow (i.e. Zillow Premier Agent).

They will sign up for large monthly contracts with companies like Zillow or StreetEasy (both owned by the Zillow Group) to buy an approximate number of buyer leads per month from certain zip codes.

Since these 3rd party search portals generate an enormous amount of traffic, these brokers will get a lot of leads generated. However, the downside is that the quality of the leads will be very low and very cold.

Remember that anyone can generate leads, and you can even buy whole lists of cold leads to cold call. But cold leads don’t mean conversions.

Cold leads have very low conversion rates

Why are the leads generated by these sponsoring brokers who buy leads in bulk so cold? Because the leads consist of buyers who were intercepted when they tried to contact who they thought was the listing agent of a property.

Instead of sending that buyer’s inquiry onto the seller’s agent, these property search sites re-route that buyer’s message to a random agent who paid to advertise with the website, usually through an auction mechanism.

As a result, even if the intercepting agent is able to quickly get on the phone with the intercepted buyer, the conversation is bound to be a bit awkward as the agent has to explain who they are and why the buyer’s call got re-directed to them vs the seller’s agent.

As you can imagine, this is usually quite a turnoff by many buyers who rightfully view this business practice as highly deceptive. Not only are you likely to get hung up on via this route, some buyers might even go so far as to threaten to report you to the authorities.

Low commission splits for leads sourced by the brokerage

Remember that nothing is ever free, so those leads sourced by the brokerage typically aren’t going to come with no strings attached. The sponsoring broker will typically offer a lower commission split for deals that were sourced by the brokerage, or charge some sort of other transaction fee for any leads the agent closes.

For example, a sponsoring broker whose business model is buying leads may offer a higher headline commission split like 100%, but in reality will split much less (i.e. 50% or less) for deals sourced by the broker.

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The Hauseit® hybrid model

We created the Hauseit® hybrid model for our agents because we don’t believe you have to settle for low commission splits, hidden fees or no leads. At Hauseit®, our agents benefit from high commission split plans that go up to 100% with a small, all-inclusive monthly fee. You won’t be surprised with any hidden fees like desk fees, software fees, franchise fees, training fees or transaction fees.

On top of this, we also offer our agents vetted buyer and seller leads and referrals from our proprietary lead generation platforms. We don’t depend on companies like Zillow to sell us leads, we generate them ourselves through our widely known and trusted brand.

In fact, we are the only brokerage that not only offers our agents buyer referrals and leads, but also seller referrals and leads. There is essentially no way to purchase a seller referral, so this is a tremendous benefit that we are pleased to exclusively offer.

Furthermore, agents won’t get lost in the shuffle at Hauseit® because we are a boutique firm with engaged management.

You won’t have to deal with the ignominy of being ignored or forgotten about as an agent at Hauseit®. In fact, we maintain private chat rooms in addition to team chat rooms with all of our agents, so you can easily ask us or the entire team relevant questions during regular business hours.

And just because Hauseit® offers high commission splits doesn’t mean you’ll be on your own when you join. We offer a mentorship program free of charge to all new agents, plus you can shadow any of the more senior agents throughout your time with us.

In terms of training, we offer a written and video based curriculum that teaches you how to do many of the most common tasks expected of a real estate agent, and we also offer in-person classes taught by our lawyer, title and mortgage partners. Better yet, these classes are often eligible for continuing education credit.

Lastly, we use world-class in-house and third-party software for everything we do, meaning you’ll never have to find a printer to get something work related done. Every piece of software we use is developed for real estate professionals, and meant for use on the go or remotely.

We hope you will join us on this exciting journey! Please choose a plan on our careers page and e-sign the independent contractor agreement on the next page to get started today!

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Disclosure: Hauseit® and its affiliates do not provide tax, legal, financial or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. No representation, guarantee or warranty of any kind is made regarding the completeness or accuracy of information provided.

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