My jaded friend...

I have a good friend/client named Tom (not his real name) who sold his real estate brokerage a few years ago to focus on other areas of real estate.

His main reason for selling? He was jaded and saw no way to make money in the brokerage space. He feels the traditional model is destined for collapse because the downward pressure on profits (i.e. lower commissions and higher splits) is, in his words, "unsustainable."

In fairness, Tom's medium-sized real estate brokerage competed against a couple of very large regional players who were very aggressive recruiters offering high splits. Those companies, in addition to the discount and virtual brokers chipping away at agents, caused him to throw up his hands in frustration. He couldn't see how he would ever make any money when dealing with agents that, in his opinion, cared mostly about how high a split they could make.

To make matters worse, his partner was also one of the top-producing agents in his company and couldn't get into the 21st century. Tom was constantly battling an old-school mentality, where culture and brand loyalty were put aside in favor of an agent-centric approach. A focus at odds to his own philosophy of building a strong company brand for his real estate brokerage.

He sold his business and is now much happier, albeit, still pretty jaded about the whole state of our industry.