A Cushion to Ease a Transition

Bernie Weinbender's Canadian brokerage pays a draw against future commissions to keep agents' income streams flowing.

May 13, 2015

I was farming 2,000 acres and running 40 head of cattle in 1986 and looking to make a change. Friends got me started in the real estate business. After working for a couple of brokerages, I bought a Century 21 franchise. Then I sold it in 2007 and joined Century 21 Dome Realty as the managing broker. I'm responsible for the compliance, regulatory requirements, and administrative operations of the company.

I also oversee a program that guarantees a monthly income to qualified agents. They have the option to receive a draw against their future commissions. This gives us the flexibility to recruit promising new agents or to keep good ones we otherwise might lose.

Accountability Is Imperative

To qualify for the draw program, you have to be licensed, and we have to see the ability to pay the money back. You have to follow rules and perform tasks, which are outlined in a detailed accountability plan. Each week you meet with your manager to review the work you did that week and your plans for the following week. We look at how many hours you spent prospecting, how many leads you are working on, how many appointments you’ve got, how many contracts have been written or have the possibility of being written, and how many training classes you have attended.

The amount of the draw varies. I sit down with agents to work out how much they feel they need for both business and living expenses. It's usually between [U.S.] $2,400 and $3,200 per month. It covers their bare necessities and office expenses with very little left over, especially if they have a family.

We conduct a formal review and payout every three months. At the end of the first period, if their commissions haven’t matched the draw but they’re doing the work, we'll give it another shot. Usually that's when it starts to come together for them, and they get ahead of the game.

If an agent is running behind after two three-month periods, now we have to take a serious look. Is there a future for this person to move ahead? Sometimes there is, and we’ll take that chance.

A Cushion for Both Recruits and Veterans

I find that two types of people are the best candidates for the program: The first is the person in a single-income family who wants to change careers. It can be very hard because you need a window of four to six months until you possibly start receiving income. Offering a draw can allow that person to get in.

The second type is the experienced agent who has been successful in the past but ran into a problem or life change of some kind. The program gives that person a bit of financial support to get back on track.

The millennials haven't been as interested in the program as you might think. They are pretty entrepreneurial. Most of them have chosen to take a stab at the traditional commission structure first. We've had a couple use it, but not as many as agents from other generations.

Over the years maybe 4 percent to 5 percent of our agents have been on the program at any one time. That figure stays fairly consistent. We didn't get the market crash that the United States got around 2008 and 2009, so nothing really changed then. But about 15 years ago our province went through an economic slowdown. That was the main reason the company started the program, to help struggling agents through that time.

Be Very Selective

We don't use the program as a recruitment tool, and we don't promote it in our advertising. You get the wrong kind of people that way. We want the ones who take the effort to come in and look at real estate as a career first. Usually they have the drive to go further, and that's what we’re looking for. Then, if we see a person has an issue and a need, we bring it up.

The downside is the risk. Agents who don't succeed may not have the ability to repay, or they leave the business. We will arrange payment plans in the rare instance that happens. We have always been able to collect. It took time and perseverance, but we did not have to go to court. The program also creates extra paperwork and extra hours for the manager, but that's part of his job.

Tough Love

Agents' drive and desire must be qualified before you offer the draw. Go by their past history and how they have applied themselves. One of the key things is making sure to uphold all the requirements, rules, and accountability that come along with the program. You can't bend in any way.