The New Way To Run Your Real Estate Brokerage

Since the compensation rule change was proposed for California Brokers and their Loan Officers, Many broker/owners are seriously contemplating changing from the traditional brokerage business model. So what will be the best way to optimize profits after the new rules are fully implemented? Brokers who were able to dictate commission structure for their Loan officers may now be forced into offering either w2’d compensation or a fixed percentage of commission pay for a specified period of time. This new concept is intended to better protect the consumer.

Brokers beware! You will more likely be able to choose tiers in the fixed compensation plan. While you will be tempted to always choose the highest paying tier, you should know that doing so may price you out of the market and steer savvy borrowers away from you. Also another thing to consider is tracking. Your unique NMLS number allows the DRE to follow your pricing habits and comprise short and long term history reports on the success or failures of loans sold to your borrowers. A conservative pricing approach may therefore ultimately serve better for both Broker and borrower.

In retrospect, the old compensation plan was flawed from the consumer prospective. While the new compensation plan will take some getting used to and will probably be tweaked in years to come, it should eventually bring stability to the pricing aspect of your Brokerage. Simply put, the new way to run your real estate brokerage may be to prepare for more conservative ups and downs in profit for your brokerage rather then the huge financial peaks and valleys of past years.