Types of Real Estate Brokerages: Pros, Cons and Who Each One Fits

Why so many models exist

Agents want different things. A producing agent with steady clients may want to keep more of every commission. A new agent may want training, conversations and people to ask. Brokerages built different models for different agents.

The labels below describe common patterns, not every company. Fees and services vary, so always read the fee schedule.

The six models side by side

A quick comparison. These are common patterns, not rules for every company.

Traditional or franchise

• Why it exists: a known brand, local offices and a long track record.
• Pros: name recognition, an office, and often training and a broker nearby.
• Cons: costs that can include brand or office charges, which may reach you through fees or the split. Franchise fees are often owed by the broker-owner, so ask how they reach you.
• Where agents struggle: when they pay for a brand and an office but get little hands-on help.

Discount or flat-fee

• Why it exists: to charge sellers or agents less.
• Pros: lower prices, simple pricing and often less overhead.
• Cons: less hands-on support, and fewer or no leads and training.
• Where agents struggle: when they expect leads or coaching that the model does not include.

High-split or 100 percent commission

• Why it exists: to let agents keep more of each commission.
• Pros: more of each commission stays with you.
• Cons: fees can replace the split, such as monthly, desk, transaction or technology fees, and support can be thin.
• Where agents struggle: when fees come due in slow months and there is no one to help.

Cloud or virtual

• Why it exists: lower overhead and work-from-anywhere flexibility.
• Pros: low cost, flexibility and often modern tools.
• Cons: less in-person contact and community, and support that depends on how fast you ask.
• Where agents struggle: when they need face-to-face mentoring and have no local team.

Team-based

• Why it exists: the person who runs a team brings in business and shares it with team members.
• Pros: opportunities handed to you, a ready-made system and quick learning.
• Cons: a larger share goes to the team, and your growth depends on one leader.
• Where agents struggle: when the leader is too busy or the team culture does not fit. See team or solo.

Support-first

• Why it exists: to help agents grow with real work to do, training and a team.
• Pros: opportunities provided, onboarding, tools set up and people to ask.
• Cons: you may share more of each commission or earn opportunities through performance, and nothing is guaranteed.
• Where agents struggle: when they do not follow up, update their records or put in the effort the model expects.

How to choose between them

• Ask what you need most in your first year: price, leads, training or flexibility.
• Ask what you would do in a slow month under each model.
• Compare the full year, not one line of the fee schedule. See what no desk fee really means.
• Use the printable brokerage scorecard.

What each model can cost besides the split

• Monthly or desk fees that repeat even with no closings.
• A fee on each closed deal.
• Technology or marketing fees.
• Franchise or royalty fees.
• E&O insurance, if you pay for it yourself.
• A cap that resets each year.
• An exit fee or a rule about pending deals.

One question to ask each type

• Traditional or franchise: what do the franchise and office fees pay for?
• Discount: what is not included, and what do I pay to add it?
• High-split: what do I owe each month, and when does a cap reset?
• Cloud: who do I call, and how fast do they answer?
• Team: how are opportunities shared, and what happens if the leader leaves?
• Support-first: how do I earn opportunities, and what happens if I stop following up?

Why agents change models

Moving is normal, and the reasons an agent might move are practical.

• Fees grew faster than income.
• They needed more help than the model gave.
• They outgrew a team.
• They built their own client base and wanted a larger share.

Before you move

Read your agreement first, and read how to switch brokerages in Texas before you sign anything new.

Who the support-first model fits, and who it does not

The Bauer Group is built for agents who want opportunities provided, onboarding and tools set up, and a team around them, and who will put in the effort to earn more. It may not be the right fit for an agent with a large steady client base who wants the highest possible share of each commission and little else.

How we wrote this

The Bauer Group is a brokerage, so we have a point of view. We describe models, not companies, and we show our own terms in writing. Check every claim here against each brokerage's own fee schedule before you decide.

What Texas rules say, whatever the model

Texas licensing rules do not sort brokerages into labels like franchise, cloud or discount. They work by role: a broker, and the sales agents that broker sponsors. So a few rules sit under every model. This is a plain description with citations, not legal advice. Rules change, so check the current text on the TREC site.

• You work under a sponsor. TREC cites Texas Occupations Code Section 1101.351(c) for the rule that a sales agent may not do brokerage work unless associated with, and acting for, a sponsoring broker at all times.
• Pay goes through the broker. TREC cites Section 1101.651(b) for the rule that a sales agent is paid through the sponsoring broker. Rule 535.3 covers pay you earned under a prior sponsor.
• Your scope is in writing. Under Rule 535.2(a), the broker must tell each sponsored agent in writing what the agent is authorized to do. The broker answers for those authorized acts but is not required to supervise each agent directly.
• Hands-on help for new tasks. Rule 535.2(i) calls for written broker policies, including coaching from an experienced license holder the first three times you perform a type of brokerage activity. Ask each broker how that works in practice and who does it.
• Working from home is allowed. TREC says a sales agent can work away from the broker's main office, and the sponsoring broker is still responsible for the agent's actions. That is why a cloud model can be lawful, and why you still ask who supervises you.
• Written buyer agreements. TREC says that since January 1, 2026, a license holder needs a written agreement with a residential buyer before showing property. The agreement must state the compensation and say it is fully negotiable (Section 1101.563). This applies under every model.

Teams and names under Texas rules

Teams have their own rules, so a team model is easy to check. Under Rule 535.2(e), any license holder who leads or manages a team must be delegated as a supervisor by the broker, in writing. If the delegation lasts more than three months, the broker reports it to TREC within 30 days. So ask any team to name the sponsoring broker and the delegated supervisor, and ask to see the delegation.

Rule 535.154 covers names. The broker registers a team name with TREC before anyone uses it in an ad. A team name must end in the word team or group, and it may not suggest the team offers brokerage services apart from its sponsoring broker. TREC also says a sales agent cannot have a personal assumed business name or brand. Rule 535.155 adds that an ad must show the broker's name at least half the size of the largest contact information for an agent or team.

What that means for you: a franchise brand, a cloud brand or a team brand can sit on your cards and signs, but the sponsoring broker's licensed name or registered assumed name still has to appear at the required size. Check this before you print anything.

For scale, NAR's 2026 Member Profile, which covers 2025, reports that 21 percent of REALTORS were part of a team, that a typical team had about four members, and that teams had a median of 32 transaction sides. Those are national figures for NAR members. They are not DFW numbers and not a promise about any team you join.

Break-even math for fixed fees (original)

Use this to test any model that charges a regular fee in return for a larger share of each commission. All numbers are illustrative. They are not an offer from any company.

• Step 1. Add the fees you owe in a year with zero closings. Example: $400 a month is $4,800.
• Step 2. Find how much more the fee-based model leaves you on each closing than the alternative. Example: $2,000 more.
• Step 3. Divide the yearly fee by the gain per closing. $4,800 divided by $2,000 is 2.4.
• Step 4. Read the result. In this example the fee-based model comes out ahead only from the third closing in a year. Below that, the other model keeps more.
• Step 5. Ask whether you would reach that count without help. If the honest answer is no, put a dollar value on the help before you choose.

Worksheet: which model does your situation point toward? (original)

This is a starting point, not a verdict. Pick the row that sounds most like you, then do the check in the last column before you sign anything.

Independent contractor status in one paragraph

Many brokerages, whatever their model, work with agents as independent contractors. The Internal Revenue Code (Section 3508) describes a federal tax rule for a qualified real estate agent: the agent is licensed, substantially all pay is tied to sales output rather than hours worked, and a written contract says the agent will not be treated as an employee for federal tax purposes. Whether any arrangement qualifies is a question for a tax professional. Your practical step is simple. Ask for the contract before you decide, and make sure the pay terms and the contractor language are both in it.

Check before you rely on this

This guide reflects the sources named below, read in early October 2026. Fees, rules, forms and market numbers change, and some details here may already be out of date.

Confirm anything that affects your money, your license or a contract with the source itself, such as TREC, the National Association of Realtors, your local association or your sponsoring broker. If something looks different from what you find, trust the source and let us know. This guide is general information for licensed agents and people becoming agents. It is not legal, tax or financial advice.

How The Bauer Group fits

The Bauer Group is a Frisco, Texas brokerage built on the support-first model. There are no monthly, annual, desk, franchise or inactive-license fees under the current fee schedule, and a written split and a 2% resource fee on each transaction apply when a deal closes. Opportunities come from several lead generation platforms and resources, and agents work as independent contractors. Terms are shared in writing before you decide. Nothing is guaranteed.