Deep Dive Into Fathom Realty

Fathom Realty Deep Dive Blog Post Image

 

jim gray headshotWritten by: Jim Gray, a professional real estate agent and a professional real estate agent coach for more than two decades.

I can tell you one thing consistently comes up when I’m having conversations with other real estate agents. Those conversations usually revolve around strategic options to grow that agent’s business. And what has come up increasingly lately is the question about whether I think a digital brokerage might be the right move for them.

I’ve been going through the three main digital brokerages that are out there right now and I’m trying to break down the most important things for you to know so that you are able to easily compare them and make an educated decision when it comes to where you want to hang your license.

So what I thought I would do is provide a quick review of one of the more popular digital brokerages that’s around right now. When you are picking any brokerage, especially a digital brokerage, there are five characteristics that you definitely want to look closely at.

  1. Compensation
  2. Business Tools
  3. Training
  4. Agent Support
  5. Company

 

Compensation Plancalculating money

This is very important, and it’s a powerful and attractive benefit. Fathom Realty is a 100% company, so there is no split on your commission to Fathom. You get to keep one hundred percent of the commission. Now there are fees, of course to make up for that.

First, there is what’s called a precap transaction fee of $450. There is also a post cap transaction fee of $99. In addition, there is one annual flat fee of $500.

So, back to that precap transaction – on your first 12 transactions, you keep one hundred percent of the commission and you just pay a flat fee of $450. Once you get to your 13th transaction and beyond your fee goes from $450 down to $99. And then each fiscal year, the company charges you a flat $500 that comes out of your first closing.

What I’ve come to learn is that splits can either sound really cheap or really expensive, but you never really know until you look at the fees in the context of running a projection or a scenario. Right, so  let’s do that.

Let’s say you were at Fathom and let’s say you did 12 deals, right? Let’s then assume that your average deal is $7,500 in gross commission. That would be an average sale price of about $250,000. That would be an average commission of about 3%, so those 12 transactions would produce $90,000 in gross commission.

getting a real estate licenseYou paid $450 on each of those 12 transactions. So your total fees to Fathom on the transactional side is 5,400 bucks. So there were no $99 fees and you paid your $500 flat fee. Out of the $90,000, Fathom takes $5,900 and you net $84,000, so fathom costs you 7%. It’s the same as having a 93/7 split. Does that make sense? In other words, there really is no such thing as a 100% broker, there are always fees you have to consider.

It’s still a great deal just based on the fees, right? Let’s keep going with this and say you from 12 sales to 18. Let’s just kind of watch how these numbers play out. So in this scenario those 18 deals you did produce $135,000 in gross commission income.

You paid $5,400 in your precap transaction fee, but then you capped at 12 transaction and the net fee reduced to $99 for the remaining transactions, and then you paid your $500 flat. So I think total fees for Fathom in this example were about $6,500.

You grossed $135,000, and you netted $128,000 and change. The brokerage ends up costing you about 5%. This ends up being the same as being on a 95/5 split.

This is a very, very profitable scenario to an agent. On the fees side, Fathom really is an attractive option.

Stock Programstocks fluctuating on computer screen

Just like eXp Realty, Fathom is a publicly traded company on the NASDAQ, and so they have a full stock award program as well. I’m going to explain things you should know about stock award programs with publicly traded companies, especially in the real estate spaces.

They can change right, there are nuances of them. Right now, what Fathom is incentivizing its agents to do is to invite other agents to the company. When you do that, they reward you with stock awards. So if you were to invite one agent to the company, they would give you $500 worth of stock, right? With two or three agents, you would get a thousand dollars worth of stock each. So I want you to think about something, if you invite three agents to the company, you would get $2,500 worth of stock.

The more agents you invite, the higher that price point goes. For instance, if you invite 6-10, you get $1,500 in stock awards. And then on agents 11, 12, you get $2,000. In other words, if you were to in one year, invite 12 agents who came to the company, you would get $16,000 in total stock awards.

Here’s the other thing, Fathom Realty will also give you stock when you have closings. There are really two facets to Fathom’s stock plan. There is the comp plan, which is primarily fees. And there’s the stock program, which is tied to agent recruitment. Those two things together is what can make up your full compensation package at Fathom.

Business Tools

laptop and calculatorI get a lot of questions about business tools when I bring up digital brokerages. Things like: What do you get? Is it put together for you and what does it cost?

This is really important. To break it down, what you get with Fathom is the full kvCORE CRM. CRM is just simply an acronym that stands for customer relationship management tool. Can I just say, in the post COVID world, a real estate agent without a robust CRM is like a carpenter without a hammer.

You really can’t do this business without a good CRM. kvCORE also happens to be a popular CRM. You don’t have to be with Fathom to get the CRM necessarily, but if you got kvCORE directly it would cost you about $400 a month. However, with Fathom it’s absolutely included. Now they’ll say it’s free and you can say it’s not really free, but it’s included in that $500 flat fee that you pay annually. There’s no extra fee you’ll have to pay for kvCORE, which is a really great deal.

if we look at this a little more closely, kvCORE has a number of components that are really, really powerful. The first is their website stack, which will be integrated with your MLS that could be custom branded to you. It has a live analysts feed. People can look at live listings, they can create listing alerts, they can communicate with you on the site. You can even talk to these prospects and customers through the site. So it’s very, very powerful.

Then these websites sit on top of your actual kvCORE CRM. What is really great about this is you’re able to see when people are on the website, what they were looking at, how long they were on, and you’re able to communicate with them. You’ll be able to send mass texts, mass emails, video messages, you can also create automated campaigns that will deploy automatically. What this will allow you to do is to stay in constant, valuable contact with a far larger group of prospects. This is so important right now, especially in a tight inventory market where you need to be communicating with a far larger number of people to generate the same number of closes, say, as you know, just five years ago.

If you go indicate course marketplace, right? It is very easy to generate leads to places. You can generate Google pay-per-click leads just by clicking a button, or you can go to Facebook and generate leads that way. You can also go to CORE Property Boost, which is a really great tool for when you take a listing, you can run a full social media campaign on that listing just by a single click of the button.

Even if you know nothing about how to run a campaign on social media, what it does is allows your sellers to see their listing all over Facebook. So now you’re going to sell that listing for more because you’re going to get more eyeballs on it through Facebook.

man studying for licensing examFinally, you’re going to generate a lot of extra leads because people are going to see that listing. They’re going to hop in with questions, they’re going to request showings and you’re going to sell those people something else. So that’s how you turn one transaction into two.

Another thing I like about kvCORE is that it’s an all in one solution for both your websites and your CRM, and potentially for paid marketing campaigns, if you want to run them. At Fathom  this only costs you $500 a year, so it’s a really, really good deal.

Also, Fathom has its own proprietary transactional management platform. It’s called IntelliAgent, and in a digital brokerage when you get a purchase offer taken, you have to submit that paperwork for your broker to review.  In a traditional brokerage, you can just make a copy of that paperwork and drop it off to the secretary or scan it and just email it to someone, but in a digital brokerage, there’s a little more to it.

IntelliAgent is a fairly simple to use platform that you load your documentation in, and what this allows you to do is to manage those documents more efficiently. It allows your broker to also look at and review the documents, and it also has a really nice e-signature feature so you can get your documents electronically signed, and you can run it all out of your IntelliAgent account.

The idea here is your websites, your CRM, and your transactional management platform are all tethered together inside of Fathom and IntelliAgent, which again has no additional cost to agents. It’s all covered out of your flat fee of $500 that you pay out of your first transaction each fiscal year. Again, a pretty good deal.

 

Training

couple buys homeWhen it comes to a digital brokerage like Fathom, there is no physical office space to go to. So, you need to really consider the training opportunities that are available to agents.

Fathom really breaks their training down into four categories, and I’m going to start with their mentor fast program.

Mentor Fast Program

If you are a new agent that either has done zero transactions, or only a few transactions, Fathom does have a program designed for you. You’re assigned a mentor that is going to work closely with you on the transactional piece of being a real estate agent, so there is a full program just for that.

Second thing, if you’re a more experienced agent where you don’t necessarily need a mentor, then you have several training options available. Primarily you’ve got the very robust Video Training Library.

On-Demand Video Training Library

Fathom has a vast training library where you can access literally hundreds of videos on all kinds of different subjects having to do with being a real estate agent. So the thing you just have to be geared up for is watching lots of videos. That’s going to be hours of watching lots and lots and lots of prerecorded content on all of the important subjects of being a real estate agent. So if you want classroom interaction, you’re going to get less of that.

However, the agents featured on the videos are trained, and you can watch at your own pace. The training library is quite vast and easy to consume. So that’s really, really important.

Virtual Live Trainingpexels-rodnae-productions-8293694

There are district managers and these district managers will do live training sessions from time to time. Typically these will be in a webinar style training that will be live to join.

In-Person Training 

Then there are places in the country where in-person training does go on. It is sort of at the discretion of the district manager, but those trainings do happen.

When it comes to Fathom, you just have to understand that if you’re new, you go into the Mentor Fast Program. Once you get out of the Mentor Fast Program, you’re going to spend most of your time watching these prerecorded videos.

If you’re an experienced agent, you won’t be in the Mentor Fast Program, so you’re going to spend most of your time looking through the video library to find the subjects that pertain to you and then you’ll watch those videos.

Then when the live trainings happen, you can avail yourself of them. So, that is kind of how Fathom approaches training in a nutshell.

 

Agent Support

pexels-thirdman-8470836When it comes to Fathom, there are two basic ways that you are going to get support.

Fathom has a series of district managers. These are agents and brokers that have been given territories inside of the United States where Fathom is licensed to practice and operate. That district director, that’s going to be your go-to when you have issues, right? You can direct message the district director, you can email them, and of course you can call them.

There is also a full agent services unit that you also contact the same way. So you basically have two choices: you can interact with your district director, or you reach out to agent services.

The idea is that between these two options, all of your transactional support related, real estate agent questions ought to be addressed.

You have to know and understand that you are going to get your tech support or agent support in a very, very digital way, right? Direct message, email or voice, which would be either video chat potentially, or a cell phone call.

 

Company

Here are a couple of things to know: Fathom is publicly traded on the NASDAQ and it has about 2,000 agents spread across 26 states. The thing to consider is if you take 2,000 and you divide it by 26, there’s probably 70 or 80 agents on average in each state Fathom is active in.

So if you’re the kind of agent that really likes to hang out with other agents, with Fathom you just have to think about that. There’s probably not going to be a lot of agents in your area, and if you’re in a secondary market or you’re in a rural area, there’s going to be even fewer. In the bigger markets and the bigger cities, obviously, there’s going to be more. You just have to decide if are you the kind of agent who really embraces communication technology, because the likelihood that you’re going to be physically with other agents locally is low.

pexels-karolina-grabowska-4475524Here’s something interesting though, even though Fathom is only in 26 states and they only have 2,000 agents, if you look at Real Trends in their list of the 500 largest brokerages in the United States, Fathom right now are number 22. That’s a pretty big accomplishment.

Then one of the extra goodies that you get with Fathom is healthcare. They have a great health care program, and when it comes to real estate agents, healthcare is a big deal for us, right? For many, it is nice to have that sort of option to work with.

To summarize Fathom, your compensation plan is a 100% commission split. You keep one hundred percent and then you’ve got a series of simple fees. It is likely Fathom’s going to cost you between, I would say 3-8% of your total transactions. It’s very, very simple and low cost.

You have a stock program, but the stock program is tied to recruiting. So if you’re the kind of agent that doesn’t think you’re going to recruit, then just know the likelihood that you’ll be getting stock awards is low.

stock market graphs on computers in officeThe business tools are really good. kvCORE is an excellent CRM and IntelliAgent is a very good transactional management platform, and the cost to have them is very low. It’s included with that flat $500 fee.

I think the strength of the training is in the mentor program. So it’s good to have an individual mentor too take an interest in you. Where I think the training may be weaker is if you’re an experienced agent, but you need specific training, you’re going to be either going through a library of existing training, looking for what is pertains to you, or you’re hoping that one of the live trainings, when they come up, is on that topic. If you’re experienced, you’re probably pretty used to getting training from all kinds of places, but I’m just pointing out where potentially some of the strengths and weaknesses are.

Agent support is pretty straightforward, you’ve got a district director and you’ve got agent services. Those are the places that you’re going to go if you have an issue and you need some support.

As far as the company as a whole goes, you see a lot of good comments online from Fathom agents who really like the brokerage.

At 2,000 agents in 26 states it’s still kind of small, which may make agents feel as though they’re a little alone in the world. But based on Fathom’s performance as reported by Real Trends, I think Fathom is a player.  It’ll be interesting to see if Fathom gets a lot of traction.