Not-very-active Real Estate Broker

[Mathew A.]

Hi everyone,

I often read on this site, but this is my first post. I'm a beginner real estate investor (working on my second deal), and I'm considering becoming a part-time real estate broker for a few reasons. I've read several articles debating whether real estate investors should get their RE license/broker's license, but there's one thing that I haven't seen discussed that I'm curious about.

Can a real estate broker just hire agents and collect half of the commissions while the agents do all the work? The real estate broker acts as a manager and not a salesperson. Is this done in practice?

Thank you for reading and I look forward to many comments.

[Jon Holdman]

This question seems a lot like "Can I just create a company, be the CEO and collect a big paycheck while the employee's do all the work?" In my experience, no chance. The CEO, or the broker, is often the hardest working person. The job is different as are the expenses. If the broker is providing office space, insurance, and taking responsibility for the agents, they have very real costs. If they do their job well, they can make more money than the agents.

I think its also a myth the broker gets half the commission. That's negotiable, and varies widely. Some brokerages do very little to support their agents, and have very low fees. Some do a lot, and have higher costs.

But the basic concept is valid. If you're running a business, and your employees are generating income, then you usually take a slice of that income. So, having lots of employees makes for lots of slices and a nice payday, if things go well.