To all the agents in the house,
The New York City company Better.com drummed up attention this week on HousingWire and our sister site RealTrends for its aggressive move into real estate. Founded by Vishal Garg, Better is a mortgage lender, or at least that's how the company became profitable. They are set to become publicly traded later this year through a special purpose acquisition company.
Other mortgage lenders including Rocket Companies are also experimenting with a real estate arm. But, agents, I thought it was worth laying out here, what Better is selling you and if you're interested in buying it.
Better, which claims to have recruited a couple hundred agents across the country, offers a yearly base salary to agents of about $70,000. Better provides discount sales commissions to a seller and, when a home sells, the agent sees none of the commission. But Better provides monthly performance-based bonuses. With those bonuses, said Christian Wallace, head of real estate services at Better, agents can earn $120,000 a year.
Better also provides agents health care and retirement benefits.
So far, none of this reinvents the wheel. In fact, it's turning back time. I recently interviewed Stephen Baird, CEO of Chicago brokerage Baird & Warner, and he was recalling how up to the 1970s many agents were employees with salaries and benefits. RE/MAX and other companies including Keller Williams changed that model, and almost all agents today are independent contractors who subsist entirely on commissions.
However, a few companies - the biggest of which is Redfin - also do provide a base salary and benefits in 2021.
What might be notable is the size of compensation. The median real estate who is a National Association of Realtors dues payer makes $49,200, per the trade group, though the experience and time spent on the job among agents greatly varies.
Now, here's where things get interesting. Maybe the most important skill of a good real estate agent is getting leads. Who in your social circle might be looking to sell? Anyone in your contact spreadsheet going through a life change? Who did you represent five years ago that you haven't been in touch with in months?
"If you don't like dinner parties, and you don't like having client parties, and you don't like taking people out to dinner, and you don't like having coffees four times a week, and you don't like to go lunches three times a week, and you don't want to go for a walk with your next door neighbor, then get an office job," Beth Fernandez of Premiere Property in Portland told me during a recent HousingWire Daily podcast.
Or, get a job as a real estate agent at Better? According to Wallace, the company finds the leads for you, with the vast majority generated through customers accessing Better's mortgage lending app.
This seems like a possibly good deal? Wallace describes being an agent for Better as 9 to 5 work. And it is work based on a salary instead of a high-sales commission, a model currently facing private lawsuits and U.S. Justice Department scrutiny.
On the other hand, I could see what Better is offering to be so different from the adventure of pursuing a lead and scoring a sale that the adrenaline and joy of being an agent could be absent.
Agents, I'd really like to hear your thoughts. Are you interested in the model of Better, and perhaps other non-real estate first companies like Rocket that may be salary-focused? Or do such work conditions take away what makes the job appealing in the first place?
Please respond anonymously at mblake@housingwire.com.
Sincerely,
Matthew Blake
Senior Real Estate Reporter
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