Real estate professionals are constantly playing a game of hurry up and wait. Throughout my 25 years in real estate, I've seen the hard work brokers and agents put into their business and, more importantly, the money it costs to be a successful real estate professional. More often than not, agents rushed to get listings, hurried to find the right buyer and then finally, after all the hard work was done, waited for their commissions. Sometimes, the process took weeks, but many times, it turned out to be months before those commission payments came in. Real estate professionals have made their living through this dated commission-based system. It hasn't been easy and it's getting harder all the time. With the realization that the Internet is here to stay, agents are required to spend more money marketing, selling and competing for listings than ever before. The level to which an agent understands this reality can truly mean the difference between success and failure. It's no wonder that agents and brokers can find a career in real estate to be a challenge because it is perhaps the only industry where the income generated is essentially unpredictable, both in terms of when and how much. The current compensation model is a trying proposition for even the best agents but several companies are using technology to bring real change to the real estate commission system, offering agents and brokers new elements of financial control, choice and flexibility.
The Catch 22 of Real Estate Commissions. The real estate commission has been traditionally based on brokers and agents providing a set of services -- acquiring listings, finding buyers and guiding them through the transaction process which is built almost entirely on paper. From loan applications to closings and commissions, real estate professionals and consumers fill out and file reams of forms in order to close a sale. Up until five years ago, it was a process virtually untouched in more than 50 years. The real estate professional needs listings to make money, it costs money to get listings and each listing means spending money to properly market the home. In order to make money the professional needs as many listings as they can afford to market. That's the catch-22 in the real estate industry, "you need money to make money." It's difficult to spend appropriately to market listings when the money doesn't come in on a regular basis.
Solving the Commission Conundrum. Web-enabled commission financing services like eCommission are working to free brokers and agents from the current compensation model in the real estate industry. It's technology designed to give sales associates the freedom and control they originally sought out when they choose a career in real estate. Software and database applications are transforming the transaction timeline making it possible for agents to receive commission payments whenever they want them, before transactions close. How is this done? Companies are taking the age-old business practice of factoring and applying it the real estate commission system. In this model, brokers and agents can sell their accounts receivable to a factor like eCommission and, in return receive immediate payment of funds. eCommission is working to provide seamless online transactions that cut through the paperwork, enabling agents to receive their commissions in hours as opposed to months. Through alliances with most of the major national real estate brands, eCommission is integrating its application process onto their respective Intranets and transaction management platforms, creating unparalleled opportunities for agents to receive timely access to their commissions.
eCommission has been leading the way in commission finance services. The company is the brainchild of Mike Whaling, who created the commission finance industry in Canada in 1989. Like many agents before and after him, Mike chose a career in real estate because of the flexible hours and the ability to have control over his schedule. However, he became increasingly frustrated by the amount of time it took to close a sale and receive payment for his hard work. Undaunted, Mike founded Agent's Equity to give an important element of control and financial freedom back to the sales associate. His company thrived and within the past five years has purchased over $100 million in real estate commissions.
The evolution of Mike's vision has brought this service to the Internet and to the United States. eCommission developed its service specifically for the real estate professional. It is unprecedented in the service it provides, as shown by the many brokers and agents who have already used eCommission as a way to build their business or plan ahead for their family. eCommission is building long-term relationships with brokers and agents by showing its commitment to providing a real value added service to the industry. Because agents are able to receive their commission payments in 24 hours or less, they have the ability to be more efficient in their business plan ahead, consistently advertise, market and promote their listings, make more money. The benefits are also personal -- pay taxes, plan a family vacation, start on that remodeling project. In many respects, eCommission is a gateway to freedom for real estate professionals, allowing them to worry less about their cash flow and concentrate more on what they do best, selling homes.
Brokers benefit from eCommission in several ways. Recruiting is always one of their primary business objectives and this technology gives brokers a way to retain and recruit top real estate sales associates to their company. It shows that they are helping their agents become successful by giving them a tool that allows them to take control of their cash flow in a cost-effective way. eCommission has value for brokers in terms of agent retention as well. The high turn over rate that the real estate industry suffers from is due in large part to its dated compensation model. Inconsistent cash-flow and unpredictable income are regularly sited as primary factors causing agents to leave real estate and pursue other careers. eCommission solves this problem for agents and positions the broker as the hero for offering the service at his or her company. This provides brokers the opportunity to spend less time worrying solely about overhead for agents, and more time mentoring agents. Most importantly, an agent's improved financial position leads to a key by-product: better customer service for the homebuyer.
At a time when technology is revolutionizing the way many consumers and professionals do business, eCommission is tackling one of the most important aspects of the real estate industry: addressing the major flaw in the commission-based compensation model and giving real estate professionals control over their income. The future will only bring even more financial freedom for the real estate professional.
John B. Bearden, CEO of eCommission, LLC, joined the company in September 1999 and spearheaded its U.S. launch by helping establish "exclusive provider" relationships with five of the top six national real estate franchises. Previously, John, with more than 25 years of industry experience, was President and CEO of Coldwell Banker Affiliates of Canada and was responsible for the greatest market growth in Coldwell Banker Canada's history, making it one of Canada's "Hundred Best" small companies in 1998. He sold Coldwell Banker Canada in 1999 to join eCommission as CEO.
