Chapter 1: Understanding the Current Market Dynamics

The current real estate market is experiencing significant changes. Inflation has reached a 40-year peak, new home sales declined by 7% in 2021, property prices are soaring, and interest rates continue to rise. These factors contribute to a growing concern among analysts that the number of homes sold in 2022 may decrease further.

Furthermore, the National Association of REALTORS® has seen its membership swell from 1.4 million to approximately 1.6 million in the past year, marking a 14% surge. This means more agents are competing for a potentially shrinking market. Despite this challenging outlook, there are actionable strategies that agents can employ to enhance their earnings compared to 2021.

Section 1.1: Strategies for Increasing Net Income

Real estate agents typically have three primary avenues to increase their net income: boosting sales volume, selling higher-priced properties, or reducing costs. Imagine if an agent could successfully implement all three strategies. What impact would that have on their earnings? This is the focal point of our discussion.

For many agents, the largest expense isn't marketing but rather the commission splits paid to their brokerage. This figure can range from $15,000 to $30,000 or more annually for most agents. Traditionally, agents have been led to believe that high commission splits are necessary to cover operational costs, training, technology, and support. However, is this truly justified?

A wise observation I once encountered suggested that commission splits only matter when there is a lack of value. I completely concur with this sentiment. But what if the playing field were level? What if an agent could receive all the necessary technology, training, resources, and support for a minimal flat fee per transaction?

Subsection 1.1.1: Exploring Cost Reduction Opportunities

Consider the possibility of an agent increasing their annual income by an additional $15,000—not through selling more properties, but simply by lowering their expenses.

Revisiting my earlier point, let's rephrase the question: If the volume of homes sold remains constant in 2022, yet we have 14% more agents, what does that mean for each individual agent's sales opportunities? If an agent sells 14% fewer homes, how can they compensate for the loss in commission income?

The answer is straightforward. Transitioning from a brokerage that demands a high percentage split of 20% or more to one that charges a flat fee—say $500—could result in an extra $1,500 or more from just one sale. Now, imagine multiplying that benefit across multiple transactions.

If your existing brokerage and Fathom Realty offer similar services, but the latter charges a modest flat fee, consider the potential uses for that extra income. You could allocate more resources toward marketing to increase sales, save for retirement, reduce debt, or invest in your child's education. The possibilities are endless; it merely requires taking a leap of faith. Don't wait for market changes to seize the opportunity to get ahead.

Chapter 2: Practical Applications for Enhanced Earnings

In the first video, titled "5 Steps to Successfully Negotiate Your Commission," Richard Robbins provides valuable insights on negotiating commission rates effectively to maximize your earnings.

The second video, "How to Present Price & Commission to Sellers," offers guidance on how to communicate pricing and commission structures to sellers, empowering agents to navigate client relationships successfully.

Written by Josh Harley

Fathom CEO & Founder

Click here to Subscribe to our Weekly Newsletter