"It's a difficult mentality to deal with," said Spencer Tenen, office manager at Prudential California Realty's San Diego central office, referring to the current battle by Realtors to keep the banking industry out of the real estate business. "The banking industry would probably be a catalyst to promote salary-paid real estate agents," he said.

Paul Yalnezian, president of Glendale-based Right Home and a former mortgage broker, has implemented the salary payment method at his real estate corporation since the beginning, with the intension of eliminating conflicts of interest for his agents while at the same time focusing more on client service.

"By limiting our compensation, regardless of who we represent, we have forced ourselves to eliminate conflict of interest," Yalnezian said, adding that the problem today is there are too many incentives to be derived from a transaction, which results in some agents doing "anything and everything" to get the highest selling price.

"I don't blame the agents, it's the system that forces them to do that," Yalnezian said. If the system has no protections in place to make sure the consumer is protected, then the agent understandably will maximize transactions, he said.

"The creed for agents regarding clients is to get the highest and best price possible for the property," Tenen said. "A commission agent has an incentive ... agents receive no money until they close an escrow."
The worry is that the concept of salary payment instead of commission could result in a lesser-motivated agent.

"My concern would be that a salary-paid individual would not have the same fervor to do the best job possible," Tenen said, because payment wouldn't be a result of closed escrows.

According to Yalnezian, Right Home presents other motivating factors to its agents, such as a bonus structure for good customer service and a quota that each agent must meet. An agent who closed escrow on a $600,000 property could receive a bonus of up to $1,000.

And, since the company offers mortgage financing and asset protection combined with escrow services and residential real estate services, it is able to charge clients lower fees. Because all these services are in-house, the task of working with other service providers becomes infrequent.

Tenen cautions that lower fees may point to the company spending less money on training their employees and marketing the company.
Yalnezian pointed out that the company runs ads on television and in magazines, and ensures that all agents are licensed and focused on client service.

Despite resistance from larger real estate companies, Yalnezian believes more companies could adopt the salary payment method in the future. "My goal is to innovate the industry," he said.

Of the real estate companies contacted, all agreed that regardless of business model, client service is always of concern.

"Our business is all about facilitating successful real estate transactions. As Realtors, our primary concern is that the consumer receive competent, knowledgeable and ethical service," said Dianne McMillan, CEO of the North San Diego Association of Realtors, in an e-mailed statement.