Putting a Nix on Splits

Joe Moshé swears by the 100 percent commission model--and also keeping associate fees extremely low. It's a formula for attracting top sellers to his high-volume business.

November 1, 2009

Joe Moshé
Broker-Owner
Charles Rutenberg Realty Inc., Plainview, N.Y.
www.crrli.com

Years in Business: 23; started in commercial real estate sales in 1986; joined Radco Realty to work with banks on REO properties in 1996; opened Plainview, N.Y., office of Charles Rutenberg Realty in 2006; co-owner of Charles Rutenberg Realty in New York.
2008 Gross Sales: $169.5 million on 365 transaction sides
2007 Gross Sales: $67.8 million on 147 transaction sides
Number of Offices: 5
Number of Sales Associates: 500+

How he has spurred growth during the recession

As other companies were losing sales associates, we gained enormously. Our associate base has grown 40 percent since last December. People are drawn to us because of our fees. We let sales associates keep 100 percent of their commissions and require only a $39 monthly fee to cover marketing costs, plus a $330 transaction fee. There are no desk fees, which is the norm with the 100 percent model. By comparison, a top performer elsewhere working on a 70–30 split with 10 transactions in a month that produced $150,000 in gross commission income would owe the broker $45,000. The same agent would owe us only $3,300 for the same ten transactions, plus the $39 monthly fee. But not everyone can offer this kind of program to sales associates. You have to be able to afford it. We lost money for the first two years. We thought it would only take a year to make money. But we started out with ample cash reserves to get through. We became profitable when our competitors were falling apart, and we’ve stayed profitable. We have the volume now to support this model.

How the brokerage encourages productivity

We offer a variety of training and educational seminars on everything from the facts behind the Do Not Call list to social networking. And we invite sales associates from other companies to attend. It ends up being a useful recruiting tool for us. People meet our sales associates and see what we’re about. We get up to 300 people attending our breakfast seminars and have sponsors, including a mortgage company, pest control business, and local real estate lawyers to offset costs. We promote self-branding by offering personal Web sites to our sales associates for $29 per month, and we offer free broker reciprocity. This means associates can have a feed on their site showing all the MLS listings without incurring any costs. We pay the monthly fee to the MLS for them.

How he stays involved with his sales associates

We want sales associates to talk to us about any issues that come up. I personally speak with up to 10 sales associates a day. And I take a hands-on role in the business. I don’t do any selling because I want all leads to go to the sales associates. I don’t compete with them. But I will do spot checks at open houses to make sure that all the details are taken care of—everything from ensuring that there’s a sign-in sheet to seeing that the property shows as well as it can.

His greatest obstacle and how he overcame it

Although we anticipated that business would be slow for the first year, things were tougher than we expected. But our biggest obstacle was one of perception. In the beginning, sales associates would ask me all the time, "What’s the catch? This sounds too good to be true." I tell them there is none. It was initially hard to get the word out that our business model was real. After they get to know us they see there’s no catch. So, those questions are coming less often now. Our reputation is extremely important to us.

Why he has no desks at his satellite offices

These offices are used for client meetings or conferences and are each only about 600 square feet. Associates don’t need to sit at desks waiting for clients to come in. The days of the walk-in client are over. The Internet has changed all that. That’s why we don’t require floor time or desk time.

His proudest achievement

Earlier this year we were ranked as the No. 1 office in Long Island and Queens, N.Y., for both listings under contract and listings taken, and we competed against more than 1,000 brokerages in our MLS. We have gotten to this point because of our business model.


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