If you open up a business that pays commission only, then is there no way to lose money in your business?
For example, if you open a local real estate business. You get 5000 applications for jobs as a real estate agent. You hire each and every applicant as an employee but the contract is commission only.
You get paid a 3% commission if you sell a house.
Let's say, out of the 5000 real estate employees you have, only 500 of them sold a house this year. So, you pay the 500 agents the 3% and also keep 3% for yourself for being the business owner. The other 4500 agents you have gets nothing. (Not even a minimum wage for the effort they put in).
Using this business structure, then is there no way you can lose money as a real estate business owner right? You don't have to pay minimum wage to the employees that didn't sell a house. Using this structure, you can even have a million employees and can't lose money because you are only paying when you already made a contingent sale.(Which guarantees you a profit) Right?
Errr uhhh operation overhead my friend. And in CA as of 2006 or so you had to provide workers comp even to 1099 agents. The more agents, the more insurance premiums.
I had an office, one full time assistant and a few agents until 2009. My overhead was $10,000mo. I would imagine an office with 20 agents could easily hit $25,000mo of overhead.
You can always lose money in business, always.
And why exactly are your “employees” giving you half their commission in this fantasy?
That's typically how it works. Commissions are often 50/50 with the shop and then divided after among the team. In a team of one, it would be 50/50
Yeah.. because the brokerage house provides resources, which OP doesn’t seem to understand.
There are less and less 50/50 shops these days. Many have a flat fee you pay to the house then the rest is 100% yours. Also, I believe the way the OP is presenting this is as if every deal is both sides.. Also, he's talking more of a resi shop than anything else. And even there 6% rarely exists on both sides.
I was paying out 90% in early 2000's. I offered very little support to the agents...cause most suck and I'm not going to pay their phone bill to call their mom. Or for copy machines for them to get a divorce.
Interesting. I'll stop spreading that one then. Funny how quickly things change.
Lol, SB'd
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