Real Estate Brokerage Earnings The Role of Choice

Authors: Richard W Martin Henry J Munneke

Publish Date: 2009/05/12

Volume: 41, Issue: 4, Pages: 369-389

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Abstract

One of the more interesting characteristics about the real estate brokerage industry is that workers are presented with a choice regarding the sort of compensation scheme under which they want to work An overwhelming majority of workers choose what is referred to as a commission split scheme in which the salesperson splits any commission that they earn with a supervising broker that they generally are required to work under In this case the firm provides office support and administrative services to the salesperson and in return the salesperson must split any commissions that they earn with the firm Under the alternative compensation scheme workers pay a substantial upfront “desk” fee to the firm and then are allowed to keep 100 of any commissions that they earn In spite of the large volume of research on the determinants of real estate salesperson earnings to our knowledge there are no studies analyzing the choice of compensation scheme and its impact on the earnings of real estate salespersons This study uses data from the 2001 and 2003 Membership Surveys of the National Association of REALTORs® to analyze the impact of the real estate salespersons’ choice of compensation scheme on their earnings

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