[Excerpt]
Right Home, a
Glendale-based residential and commercial brokerage, pays its agents a
salary rather than a commission to avoid conflicts of interest, such as
those that can arise from representation of both the buyer and seller in
the same transaction.
The company collects
a commission, but agents earn regular salaries and bonuses, not
commissions. Sellers typically pay Right Home a fee of 1.5 percent of a
residential sale and 2 percent of a commercial transaction.
When brokers earn a
salary, their motivation is to serve the client, not to earn as big a
fee as possible, according to Right Home President Paul Yalnezian.
About 45 percent of
the company's current listings are commercial properties, including
apartment buildings, industrial facilities, medical office buildings and
raw land, with asking prices from $575,000 to $7 million.
"We're seeing more
opportunities in the commercial side. We wanted to focus and perfect our
model on the residential side first," Yalnezian said.
Starting a new
commercial brokerage model is difficult, because the transactions are
much more complicated and competitive than in residential real estate,
he said.
When Right Home
agents represent the seller and the buyer, which happens 75 percent of
the time, the company collects a fee only for representing the seller,
not a double commission for also representing the buyer.
"I see daily brokers
doing whatever they can to find a buyer and then they push their client
in lieu of any other buyer that comes represented by any other agent,"
Yalnezian said.
The result is that
the seller may miss out on a higher bidder. If an outside broker brings
in a buyer, sellers working with Right Home pay the procuring broker a 2
percent to 2.5 percent commission.
"The biggest benefit
is the sellers know that, whatever happens, we're not collecting more.
In our model, every agent has a fair chance," Yalnezian said.
A dilemma often
arises in the commercial real estate industry, however, when sellers do
not pay brokers representing their buyers. Cooperation - splitting
commissions between the seller's broker and the buyer's broker - is
uncommon in a hot market when properties have no problem attracting
offers.
And at a time when
many commercial properties are selling within just one or two years,
that seems to be a good enough incentive for many brokers.
California Real Estate Journal is the only
publication devoted specifically to statewide coverage of California's
commercial real estate industry. Each week, the California Real
Estate Journal reports on issues affecting the development,
management, brokerage and financing of office, retail, industrial and
multifamily properties. http://www.carealestatejournal.com/
