Comments on: Brokerage Models – A Mathematical Analysis, Part 1 http://www.notorious-rob.com/2009/08/23/brokerage-models-a-mathematical-analysis-part-1/?utm_source=rss&utm_medium=rss&utm_campaign=rss Conversations about the real estate industry, marketing, technology, and public policy Sat, 11 Feb 2012 02:48:33 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Rob Hahn http://www.notorious-rob.com/2009/08/23/brokerage-models-a-mathematical-analysis-part-1/#comment-1703 Rob Hahn Wed, 26 Aug 2009 23:37:00 +0000 http://www.notorious-rob.com/?p=1355#comment-1703 No -- I didn't include transaction/admin fees in the model; the next version probably will have to take that into account. Anyone playing with the spreadsheet can add such fees in of course to see the impact. :) -rsh No — I didn’t include transaction/admin fees in the model; the next version probably will have to take that into account.

Anyone playing with the spreadsheet can add such fees in of course to see the impact. :)

-rsh

]]> By: Rob Hahn http://www.notorious-rob.com/2009/08/23/brokerage-models-a-mathematical-analysis-part-1/#comment-4637 Rob Hahn Wed, 26 Aug 2009 23:37:00 +0000 http://www.notorious-rob.com/?p=1355#comment-4637 No -- I didn't include transaction/admin fees in the model; the next version probably will have to take that into account. Anyone playing with the spreadsheet can add such fees in of course to see the impact. :) -rsh No — I didn’t include transaction/admin fees in the model; the next version probably will have to take that into account.

Anyone playing with the spreadsheet can add such fees in of course to see the impact. :)

-rsh

]]> By: Jim http://www.notorious-rob.com/2009/08/23/brokerage-models-a-mathematical-analysis-part-1/#comment-1702 Jim Wed, 26 Aug 2009 17:37:54 +0000 http://www.notorious-rob.com/?p=1355#comment-1702 Great article Rob and very thought proviking. My broker charges a transaction/admin fee of $355 for each side of a file. If my math is correct, based on 3,600 transactions, that is an additional $1.3M to the bottom line. Is that included in your analysis? I apologize upfront if that is something I missed. Great article Rob and very thought proviking. My broker charges a transaction/admin fee of $355 for each side of a file. If my math is correct, based on 3,600 transactions, that is an additional $1.3M to the bottom line. Is that included in your analysis? I apologize upfront if that is something I missed.

]]> By: Jim http://www.notorious-rob.com/2009/08/23/brokerage-models-a-mathematical-analysis-part-1/#comment-4636 Jim Wed, 26 Aug 2009 17:37:00 +0000 http://www.notorious-rob.com/?p=1355#comment-4636 Great article Rob and very thought proviking. My broker charges a transaction/admin fee of $355 for each side of a file. If my math is correct, based on 3,600 transactions, that is an additional $1.3M to the bottom line. Is that included in your analysis? I apologize upfront if that is something I missed. Great article Rob and very thought proviking. My broker charges a transaction/admin fee of $355 for each side of a file. If my math is correct, based on 3,600 transactions, that is an additional $1.3M to the bottom line. Is that included in your analysis? I apologize upfront if that is something I missed.

]]> By: Rob Hahn http://www.notorious-rob.com/2009/08/23/brokerage-models-a-mathematical-analysis-part-1/#comment-1697 Rob Hahn Wed, 26 Aug 2009 04:34:43 +0000 http://www.notorious-rob.com/?p=1355#comment-1697 Hi John - thanks for the note. You're right on that you can't compare profitability of brokerage to yields on bonds. :) But I don't think that impacts whether profit should or should not be calculated as a % of GCI. What's really needed is some sort of data on actual expenses compiled from a big enough sample such that we don't have to go with % of GCI or some such, but can go with actual average costs. Sadly, that data is nearly impossible to come by... though I know a source *cough*. -rsh Hi John – thanks for the note. You’re right on that you can’t compare profitability of brokerage to yields on bonds. :) But I don’t think that impacts whether profit should or should not be calculated as a % of GCI.

What’s really needed is some sort of data on actual expenses compiled from a big enough sample such that we don’t have to go with % of GCI or some such, but can go with actual average costs.

Sadly, that data is nearly impossible to come by… though I know a source *cough*.

-rsh

]]> By: Rob Hahn http://www.notorious-rob.com/2009/08/23/brokerage-models-a-mathematical-analysis-part-1/#comment-4635 Rob Hahn Wed, 26 Aug 2009 04:34:00 +0000 http://www.notorious-rob.com/?p=1355#comment-4635 Hi John - thanks for the note. You're right on that you can't compare profitability of brokerage to yields on bonds. :) But I don't think that impacts whether profit should or should not be calculated as a % of GCI. What's really needed is some sort of data on actual expenses compiled from a big enough sample such that we don't have to go with % of GCI or some such, but can go with actual average costs. Sadly, that data is nearly impossible to come by... though I know a source *cough*. -rsh Hi John – thanks for the note. You’re right on that you can’t compare profitability of brokerage to yields on bonds. :) But I don’t think that impacts whether profit should or should not be calculated as a % of GCI.

What’s really needed is some sort of data on actual expenses compiled from a big enough sample such that we don’t have to go with % of GCI or some such, but can go with actual average costs.

Sadly, that data is nearly impossible to come by… though I know a source *cough*.

-rsh

]]> By: John Eskew http://www.notorious-rob.com/2009/08/23/brokerage-models-a-mathematical-analysis-part-1/#comment-1695 John Eskew Tue, 25 Aug 2009 21:32:47 +0000 http://www.notorious-rob.com/?p=1355#comment-1695 Great discussion but I would like to point out one danger of looking at profits as a % of GC (Gross Commicssions). While a good measure for comparing companies you can not compare profit earned as a percent of GC to savings rate. The average Broker does not have $27M just laying around to invest. Believe me, if they did they would not be in the brokerage business. Keep in mind that a smaller percentage of a bigger number can provide more profits. Great discussion but I would like to point out one danger of looking at profits as a % of GC (Gross Commicssions). While a good measure for comparing companies you can not compare profit earned as a percent of GC to savings rate. The average Broker does not have $27M just laying around to invest. Believe me, if they did they would not be in the brokerage business. Keep in mind that a smaller percentage of a bigger number can provide more profits.

]]> By: John Eskew http://www.notorious-rob.com/2009/08/23/brokerage-models-a-mathematical-analysis-part-1/#comment-4634 John Eskew Tue, 25 Aug 2009 21:32:00 +0000 http://www.notorious-rob.com/?p=1355#comment-4634 Great discussion but I would like to point out one danger of looking at profits as a % of GC (Gross Commicssions). While a good measure for comparing companies you can not compare profit earned as a percent of GC to savings rate. The average Broker does not have $27M just laying around to invest. Believe me, if they did they would not be in the brokerage business. Keep in mind that a smaller percentage of a bigger number can provide more profits. Great discussion but I would like to point out one danger of looking at profits as a % of GC (Gross Commicssions). While a good measure for comparing companies you can not compare profit earned as a percent of GC to savings rate. The average Broker does not have $27M just laying around to invest. Believe me, if they did they would not be in the brokerage business. Keep in mind that a smaller percentage of a bigger number can provide more profits.

]]> By: Brokerage Models: A Mathematical Analysis, Part 2 | Notorious R.O.B. - Conversations on Marketing, Technology, Real Estate http://www.notorious-rob.com/2009/08/23/brokerage-models-a-mathematical-analysis-part-1/#comment-1693 Brokerage Models: A Mathematical Analysis, Part 2 | Notorious R.O.B. - Conversations on Marketing, Technology, Real Estate Tue, 25 Aug 2009 17:40:33 +0000 http://www.notorious-rob.com/?p=1355#comment-1693 [...] Part 1, we explored the traditional brokerage model by the numbers and found that there are significant [...] [...] Part 1, we explored the traditional brokerage model by the numbers and found that there are significant [...]

]]> By: Sue Adler http://www.notorious-rob.com/2009/08/23/brokerage-models-a-mathematical-analysis-part-1/#comment-1690 Sue Adler Mon, 24 Aug 2009 20:26:49 +0000 http://www.notorious-rob.com/?p=1355#comment-1690 Nicolai, Its probably true that CA, WA, and CO all are way ahead of the east coast in real estate company trends. The east coast has always been the slowest to change. A model like KW is still considered new here in NJ, and is just now taking off, so the traditional offices havent had to compete w/ the Re/Max's and KW's for agents like they did in the midwest and western states. However, that is now changing as more and more agents are attracted to this model and leaving their traditional offices. I think you're right about working on the one more transaction per agent per year because that entails training and that's the value proposition for the agents where many traditional offices seem to fall short, but on the other hand, I'd be really happy if this new traditional model reduces commission splits because it will really help our recruiting at KW :) Nicolai, Its probably true that CA, WA, and CO all are way ahead of the east coast in real estate company trends. The east coast has always been the slowest to change. A model like KW is still considered new here in NJ, and is just now taking off, so the traditional offices havent had to compete w/ the Re/Max’s and KW’s for agents like they did in the midwest and western states. However, that is now changing as more and more agents are attracted to this model and leaving their traditional offices.

I think you’re right about working on the one more transaction per agent per year because that entails training and that’s the value proposition for the agents where many traditional offices seem to fall short, but on the other hand, I’d be really happy if this new traditional model reduces commission splits because it will really help our recruiting at KW :)

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