The 8 Types Of Compensation That You Should Be Offering Salespeople When They Join Your Team

Welcome back to the Business Freedom Podcast. Today on the podcast we're going to talk about the eight types of compensation that you should be offering salespeople when they join your team. My name is Lars Hedinborg, founder of Real Estate B School, co founder of High Performance Real Estate Advisors out of Charlotte, North Carolina. And I've been in this game, real estate team building, I guess technically you can say, since early 2008 when I hired my first assistant. This was the second month of my first full year in the business. I knew that leverage was the only way to have a long term, sustainable, profitable career in real estate. And so 12 years into my real estate journey, six years into building real estate B school, and you know, the one thing that I got right out of the gate was that I had a model that it was the right model in terms of being able to have conversations with potential team members around the value that I offered as a real estate team leader. And this conversation was really the genesis of this conversation is one of our clients, one of our members for Real Estate B school, Dave Hook out of Central Penns, Carlisle, Pennsylvania. He put together a presentation that he, I think it's even online if you his is seven types. Of course, I had to one up them and add an eighth type of compensation. And I want to go through this as I think it will be helpful for real estate team leaders to have those conversations with folks that are joining your team, your vision. They see, you know, being part of a team as a better way to do real estate. And you know, on our team we talk about, you know, we want every one of our team members to be able to live, we call a life by design, not by default. And so most real estate agents are not living a great life. They're either not successful, not selling enough homes, they're stressed all the time and they're putting a lot of hours in, even if it's haphazardly, even if they're only working 30 hours a week, but it's in evenings and weekends more often than not. A successful, successful, traditionally successful, conventionally successful real estate agent is probably working 60 to 70 hours a week and their time is not their own. They may be making decent money and they're super stressed all the time. You've heard me on the podcast talk about time, money stressed over and over and over again. And our sort of bottom line conversation with potential recruits is that it's not what you make, it's what you keep. So it's not what you make, it's what you Keep. And so the first thing that folks want to talk about or focus on when it comes to, you know, being compensated as a real estate agent, it's because the industry has trained it this way that the brokerages talk about commission split. It's the only value proposition a brokerage has. If you think about brokerages on the one side of the spectrum and you think about, let's say like a Redfin on the other. Redfin is a corporate entity that has just sliced up the job of the real estate agent. Whether it's technology or, you know, their processes or their value proposition in the market, they've just decided that they're not going to play the splits game when it comes to how they compensate their agents. So Redfin is actually a really good model of a real estate team probably that's working on the highest level. Their average transactions per agent is about 38, we're about double that. So we're running a very tight model. I consider what we're doing at high performance real estate advisors on the tighter side and really, really profitable. Redfin is profit optional. They're rolling everything back legitimately into marketing to build their business. So think of a very tight, you know, every buyer and seller is treated with with their experience in mind. We have a split of 1 to 1 admin to salespeople because most of the job of a real estate agent is administrative. And so that's a value proposition for us. And so number one is commission splits. Like Mr. Potential Recruit, you want to talk about commission splits, that's only one of eight types of compensation that you could be offered as you're having these conversations with different brokerages. And if you've been in the business for any amount of time, you know that I could give you 200% of what you made last year in terms of your commissions and you still wouldn't make the kind of money that you want to make. So commission splits are really not the conversation you want to be having. There's seven other sort of value plays that you could seek out in whatever entity you join. Number two is brand and name recognition. High performance real estate advisors offers this in the market. We've been around for X number of years. We've served 4,000 families, our database, all those things. Number three is occupancy costs. We have a 3,000 square foot state of the art facility, blah blah, blah. Number four is lead generation. You know, we generate X hundreds of yard sign calls a month. We have x hundred of inbound seller calls a month. Number five is technology. And systems. You know, we have, you know, prospecting stations, we have Mojo dialers, we have boom, boom, boom, boom, boom. Number six is administrative support. You know, right now we're at about a one to one admin to salespeople salesperson ratio. There's a full 80% of what a real estate agent's job is administrative. If we could take all of that off your plate, you could take home more dollars. Number seven, training and accountability. You know, left to our own, our own ways, you know, we're not going to be as productive as if we had someone in our life sort of teaching us how to do something better and holding us accountable to our goals. So if your goal is to take home 150,000 a year or $200,000 a year, we'll be able to train you and hold you accountable to that goal and help you achieve it. And number eight, and last value driver here for our team is leadership and vision. You know, we're building something special and it's going to sustain what the industry is going through. And so that's something that you really should think about as you go to a brokerage or another real estate team. Is the vision of that entity going to sustain the shift storm that we're going through with consumers, with changing business models, with an economic shift that's sort of coming up. And really just keep in mind, it's not what you make, it's what you keep. And so that's the dialogue that we would have with a potential recruit. And a lot of times I did a podcast on self imposed limitations. There's a self imposed limitation with 90% of team leaders around compensation. The reason we're able to offer compensation that's less than most teams in our market is because of these legitimate value drivers that we offer to agents that are on our team. So if you don't have numbers two through eight, you're only offering a commission split. You better get to work on the other seven. So that's the other takeaway here, is that you better build a brand, you better offer some kind of occupancy, lead generation, technology, administrative support, training, accountability and leadership and vision if you're going to build a sustainable, profitable, systems driven, world class, service offering team that's going to be relevant in the future. So a bit of a soapbox there and hopefully the role play was helpful. You need to be able to bring people into your world that fit into the economic model that you have to have. The economic model is you need to be north of 60% on your gross margins in order to have any level of profit. And gross margins is what you pay your broker and your and your salespeople. You know, closer to 70% is closer to, it's better than closer to 60% because after your gross margin you have expenses like advertising overhead and administrative personnel. You won't be able to afford it if you can't articulate what I just went through in terms of all of the compensation types available to potential sales recruits for your team. So if you're at the point where this is like, holy cow, I don't know how to build those other value drivers, I never even heard a conversation like this. And the business that you're building is not really. You don't have your arms around it. You're building it willy nilly against no plan. You've got to reach out. You've got to go to realestatebschool.com we've got to have a conversation. That's all I can offer you is a 45 minute conversation with me. What does the business look like today? What do you want it to look like in the future? What's holding you back? And then if a conversation about real estate B school makes sense, we'll have it. We've got a pilot program which is 30 days of free training for those that qualify. And we could talk about that as well. Go to realestate B school, Tom. Realestatebschool.com We'll see you there.