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Las Vegas Agents: Why Are You Paying Franchise Fees?

Las Vegas Agents: Why Are You Paying Franchise Fees?

Is it necessary to hang your Las Vegas Real Estate License with a franchise company like a Century 21?  I thought so.  When I got into the business back in 2001, I hung my license with a Century 21 franchise in Henderson, Nevada.  I really didn’t realize the cost of doing business at a franchise like Century 21 until I received my first closing check.  Being a new agent, I was on a 50/50 split but I didn’t realize I lost an additional 6% for the franchise fee.  How is that a 50/50 split?  After a few more closings, I sat down and looked at my options.  Was I really receiving a benefit hanging my license at a franchise like Century 21?  Was it really worth 6% on every transaction I closed just to hang my license at a brand name real estate company?

Maybe a few years ago it did make sense to hang your real estate license with a franchise like Century 21 but in today’s real estate market, it makes no sense.  The shift to the Internet has leveled the playing field in the real estate industry.  Buyers are using the Internet to search for homes and sellers are using it to find a real estate agent who can sell their home.  This is why I don’t understand why a Las Vegas Real Estate Agent would hang their license at a franchise that charges 6% for every transaction they close like a Century 21.

Let’s look at another example of why it doesn’t make sense.  Las Vegas home prices peaked in June 2006 with a median price of $315K and currently the median home price is $141K.  The average real estate commission in today’s real estate market is $4,230 compared to $9,450 in 2006.  Anyone that loses that kind of income is going to notice a serious hit to their pocket book.  With that kind of loss of income, why would you keep paying the same fees you were paying in 2006?  Your fees are still the same but your income isn’t.

In today’s Las Vegas Real Estate Market, if you are going to hang your real estate license at a real estate brokerage, you better be receiving something of value.  Whether it be low monthly licensing fee, real estate leads or a generous split, it needs to make financial sense.  The cost of doing business has not decreased, so every dime you can cut from your expenses is very important.

Every dollar you make from your real estate business is very important and to give away a few hundred dollars per closing just to be associated with a brand name company is not worth it.  Like I said earlier, I hung my license for over 4 years with a Century 21 Franchise that charged me a franchise fee on every transaction I closed.  I must have given away over $10K dollars during that 4 year period and for what.  Since I started my real estate brokerage, Shelter Realty, Inc., I never had a client tell me they wouldn’t work with me because I wasn’t associated with a brand name real estate company.

So back to my original question, why are you giving away a few hundred dollars in franchise fees on every transaction just to be associated with a brand name brokerage?

If you are a Las Vegas real estate agent whose interested in joining our real estate team, we have opportunities for you.  For more information, fill out the form on our Las Vegas Real Estate Career page or call us at 702.376.7379.

About the Author

Tony Sena is broker/owner of Shelter Realty in Las Vegas Nevada. For more than a decade Tony and his partners have provided residential real estate and property management services to sellers, buyers, investors, and property owners in the Las Vegas Valley. A Las Vegas native and former police officer for the City of Henderson, Tony brings to the table a unique local perspective that continues to serve his clients well.