For the most part, real estate professionals have been able to sit back over the last two years and observe return-to-office controversies in other industries, safe in the knowledge that they will never have these debates. Long before virtual workspaces and permanent home offices were the norm, agents and brokers found their own balance of independence and collaboration, parsing out a structure that seemingly works for everyone.
But is there possibly more to consider? Are real estate professionals thinking about their office vs. at-home opportunities as much as they should?
Last month, RISMedia’s exclusive 2023 Contract & Commission Study unearthed some surprising facts about this dynamic. Specifically, the report found that fully remote agents take home significantly higher splits—10% more on average—while paying significantly less fees. At the same time, in-office agents complete more transactions on average.
Depending on an agent or broker’s business model, these fundamental differences in compensation equate to hundreds of dollars per transaction and tens of thousands a year in GCI. On average, remote agents paid about $90 less in fees per transaction. And that 10% higher split translates to just over $1,000 more in commission on a median-priced house.
How should all this affect your decisions around brokerage and resources? According to Ish Kolya, a broker affiliated with eXp and based out of New York, it means you better be constantly reflecting on your goals and needs, since in-office or fully remote is a choice that affects your bottom line.
“It’s not a done deal. It’s not a once-in-a-career decision,” he tells RISMedia. “I think agents have to reevaluate their business every year or every couple of years to see what’s the best fit for them now.”
Katheryn Declerk, an associate broker also based in New York, affiliated with Howard Hanna, says that while these types of pure numbers can be enticing, the value of being in the office also translates directly into dollars in your pocket.
“When the broker’s investing in (in-office resources), agents should take advantage of them,” she says. “Because the broker’s not going to be providing them if they don’t benefit the agents. That’s how the brokers make money, their agents have to be successful.”
Choosing a work dynamic solely based on your qualitative preferences or personality isn’t always enough, Declerk says. Knowing what you are gaining or losing by that choice must be a part of what drives your decision, for anyone who wants to maximize productivity and effectively grow their business.
Sunshine Coyle, an agent affiliated with Coldwell Banker in California, points out that personality is a big part of what drives productivity, and should always be part of the equation.
“If an agent like myself wants a strong accountability and (to) always be present not just mentally but physically, to perform at a high level, then an in-office model is more suitable,” she tells RISMedia. “By showing up to the office we get to mastermind, role play, or interact with other active agents in person which is important to our personal and business growth.”
Chasing the bag
Another big finding in RISMedia’s study this year was that fully remote agents close on average five less transactions per year compared to agents who go into an office. While that might seem like a very strong point in favor of in-office work, the full story is slightly more complex.
Declerk points out that part time agents are more likely to work fully from home, and rarely if ever go into an office, even if their brokerage has one.
“That may be also why they’re getting part-time results because of part-time output,” she says.
eXp, which boasts close to 90,000 agents and is heavily focused on virtual rather than physical space, also attracts agents new to the industry to an outsized degree. While this is nearly enough to tip the scales in a nationwide survey, it would indicate that newer agents—who close less transactions due to their inexperience—end up working fully from home to start their careers.
Kolya also argues that for some agents, going into an office is actually a way that productivity gets stymied.
“You don’t want to be in your own bubble, but it’s also easy to lose sight and get off track,” he explains. “Oftentimes, agents in the office end up chit-chatting their whole day away, and it’s not necessarily about real estate.”
Maybe the most important thing to remember is that if your broker is paying for an office, then you are paying for an office. One of the biggest mistakes an agent can make is to affiliate themselves with a company that offers a physical space and a bevy of in-person training, activities or opportunities, and then never take advantage of them.
Declerk says as a state approved real estate instructor, she tells newly licensed agents to really look at more than just splits when choosing their brokerage.
“So I make sure they take the time and ask the questions and that it’s the right fit,” she says.
Looking at these services and amenities as something that you are paying for yourself is one way to make that decision. Coyle lists several services that her brokerage offers that she views as worth that expense.
“They have been doing more vendor training in person, offering free lunches, etc., and I find that to be more engaging, fun and with lots of agent interactions,” she says.
But for an agent who is confident in their ability to be productive without these things, the higher splits are absolutely something to chase. RISMedia’s study also found that remote agents were much more likely to take home very high splits—90% and above. So in the short term, forgoing in-person amenities can do a whole lot for your GCI.
When describing the kind of approach needed to be successful in a remote dynamic, Kolya makes a distinction between the work that potentially grows your business in the long run, and the work that gets you a paycheck this month. He uses the analogy of planting a seed that will grow food later, or taking a fishing rod down to the river.
“You can plant a mango seed and wait for it, but by the time the first mango food arrives in five years or whatnot, you’ll be dead. So we need to worry about what we’re going to eat tonight,” he says. “Same thing, going to the office and talking about (the local market) is important, but if we’re not actually making calls to buyers and sellers, then that’s not going to be useful in the long run because we won’t be in the business in the long run.”
The whole pie
Both Declerk and Kolya agree that both models have quantifiable value. Choosing to drive to the office five days a week and pay those higher fees with lower splits can result in just as much GCI, if you are truly more productive and closing more transactions. And working from home every day doesn’t prevent you from building a business for the long term.
Declerk says in her experience as a 24-year veteran of the industry, the in-office experience is often worth investing your time and money in.
“I’m sure there is a segment of the population who’s never going to set foot in an office if they don’t see a reason to. I think it depends on where you’re practicing,” she says. “But in some of these suburban locations—which is where our offices are—people like knowing you have a location that the buyers are going to come to, when they’re a seller.”
That type of consumer appeal can obviously increase your transactions, but there’s more than that. Declerk describes staying abreast of trends—particularly marketing trends—as adding immediate value to being in an office with other real estate professionals.
“You learned it your way,” she says. “You might get generationally stuck in some habits…a lot of the young people today, they’re on TikTok and they’re doing social media differently. So unless you’re exposed to it—it gives the opportunity for an experienced agent to learn from a newer agent.”
Coyle agrees, saying that while veterans might be generally more able to work remotely, experienced agents and brokers “seeking consistency” will still value the in-office experience.
“Whether it’s a large or small brokerage, productive agents tend to show up to the office more than a non-productive agent,” she says.
Additionally, having close, personal relationships with colleagues makes all the difference in closing transactions when the market shifts, Declerk adds.
“When the market changes and it becomes a buyer’s market, the value of the relationships between agents will rise,” she claims. “When no one’s showing your listings and you’re having broker open houses or broker lunches, and you want other agents to turn out, having the relationships built with the other agents I think is going to be much more vital.”
Kolya acknowledges the need to be around other agents. He says his team all gets on Zoom together, cameras on and makes calls together for multiple hours a day, to ensure that they are staying connected. Events can also be organized outside of the office, with team-building exercises ranging from white-water rafting to an apple-picking outing.
In the end, Kolya argues that it is whatever situation allows you to challenge yourself, to do the hardest and most uncomfortable parts of the job that will earn you the biggest payday in the end, and it isn’t your split or your fees that determines that.
“All of these things are important, but again, that’s not what’s going to bring in the next paycheck,” he says. “We stay busy with the comfortable things—I mean, who doesn’t like designing a new business card on some website? But as new agents or seasoned agents, it’s important to keep an eye on what’s important, and where the dollar-producing activities are.”
To view the full report, sign up for RISMedia’s Premier here.
