Last month, an agent I know posted joyously on her social media about securing a $2.8 million sale.

She’s a highly skilled professional with a great reputation who’s no doubt built an enviable network of contacts during her career.

So, my first move was to congratulate her on closing a sale at a great price. But I also saw the chance to engage about a very real problem in our industry. It’s how top-notch agents are getting a raw deal under our industry’s stale business model.

You see, this agent works for a big franchise and, as such, she is receiving far too little compensation for her time, skill and hard work. So, I did the numbers and included them in my reply to her post…

By my calculations, a $2.8 million sale at 2.5 per cent reflects a gross commission of $70,000. Of that amount, 10 per cent ($7000) goes straight to the franchise and 40 per cent goes to the agent’s office.

This leaves just 50 per cent for the agent who did ALL of the work – but that’s just the gross total amount. Take out superannuation and you’re down to $34,000. After tax she’s netting around $18,000. 

That means from an impressive $70,000 commission, the agent who would have attracted the listing based on her name recognition (not her agencies), did all the pitching and legwork, managed the marketing and secured the deal got to bank about a quarter of the commission paid by the client. Sound familiar to you?

The old model’s failure

It’s just so outdated. The current business blueprint is pyramid shaped with the franchisor at the top taking 8 to 10 per cent of the commission, and the business grabbing another 40 to 50 per cent. This leaves the agent at the bottom fighting for scraps.

This structure was invented 100 years ago, in an era when people physically looked in agency windows for property listings because there was no other was to access the information. In those days the agency added value.

Nowadays, buyers look online, and sellers list directly with the top agents in their area regardless of who they work for. As such the franchise and agency no longer add value to the sales process.

The exciting future for agents

By working for themselves, agents still do the same job, but they get to have complete control of how they conduct their business, build their own brand, grow their own rent roll (if they want), keep more of their commission, and use it to invest in growth assets like property/shares which will pay them back tenfold over the years – and which will create financial freedom.

For proof, look no further than Clinton Eastell of Eastell and Co. on Queensland’s Sunshine Coast.

Clinton left a franchise in 2020 to start his own agency. In the final year of working for his employer, Clinton’s take home pay was $161,000 (out of $360,000 gross commission).

But in his first year of business, he increased his GCI to $860,000, and his share of that after expenses was a whopping $700,000.

That’s not a misprint. Clinton is making more than quadruple his take-home income, simply because he stopped giving up money to an agency and a franchise.

So my challenge to you, and all agents, is to stop focusing on how much GCI you’re writing, and focus on how much your share is. Value what you do as an agent and ask why you are not being paid what you deserve. Then act on it!

I would of course love to see you join the UrbanX platform, which is helping successful agents to start their own businesses, but, to be completely honest, whether you do it with us or someone else, get out from under the pyramid scheme any way you can and work for yourself.

The risk is too high and the rewards are too great for you to miss the opportunity of achieving financial freedom and receiving what you deserve for your hard work.

After all, people list with people, not agencies, so it really is a no-brainer. Still need convincing? Write a list of all your sales over the last 12 months. Then write down next to each one where the lead came from. If 80 per cent or more called you directly (i.e. not a lead from your agency), then you’re ready to go out on your own.