There is some debate going on in some Inman News stories as to whether or not agents ought to be on salary in order to improve the industry. The author, Buz Hurley, is actually an Active Rain member and has a few blog entries.
I don't see it. It wouldn't improve the quality of service, for one thing. It would kill it. I offer as an example the failure of Foxtons here in the New York Tri-State area. Foxtons gave their agents a $35,000 salary and a smart-looking Mini Cooper to drive.
I wouldn't work for $35,000 if you gave me a Bentley, and that's why they closed up shop. The best agents, who do most of the business, remained at their companies where they would make more money.
The market has already determined how we should be paid. Agents who want the security of a salary may not truly be cut out for real estate, or should get a part-time job. I did that in 2000 when I moved back to Westchester and became a loan officer (which, by the way, is also straight commission). I bartended for a year to pay the bills while I built my business. It ended up putting me in contact with some good prospects later on when I started my company.
Commission-based compensation pays us based on our production. The better you produce, the better you'll be compensated. It ensures that you'll give your best. I love that. I don't see how anyone would hire an agent who gets paid whether the house sells or not. Where is the incentive to give your best if the paycheck comes Friday no matter what? I have dug out deck footers in rainy 40 degree weather for Certificate of Occupancy issues just to get a deal closed. Why? I had a commission on the line.
I am sure there will be more alternatively styled real estate companies with agents on salary, but they'll never grow organically from the ground up- it will always be well capitalized from venture investors and make waves while the money lasts, but they won't last because security is not why the high producing agents are in our business.
Consumers who hire an agent should want just that-production.