When a single-builder brokerage relationship goes in-house, the cost of concentration risk

The draw structure is what I'd fix first, ahead of the concentration. $4,000 a month for six months to someone with no closing history is you funding their runway with no security, and recoverable in an independent contractor agreement usually means recoverable in theory. You recovered 12.5%.

A smaller draw with a step-up tied to closings would have cost you maybe $30k for the same nine months and told you by month four which of the three was going to work.

Eleven years of relationship and no listing agreement. That's the sentence I'll remember. Did they give you any warning before the announcement, or did you find out with everyone else?

What's a draw, in this context? I've gathered it's money paid up front against commissions the agent hasn't earned yet, but who's on the hook if they never earn them, and does the agent owe it back like a debt?

Tally, the draws made the loss bigger and the concentration made the loss happen. Two different problems.

Girder, I did the renovation version of this. Eighty percent of my volume came from one investor client for three years and I told myself the relationship was the moat. He hired a project manager and the work went to zero in one phone call. Concentration risk feels like efficiency right up to the day it doesn't, and the tell is that it's the thing you'd be most embarrassed to write on a page as a percentage.

Worth asking, not to score points but out of genuine interest: was a downside case written before signing the lease? Over-modeling is common and it's still a useful habit, because a single page saying "builder goes in-house at month 9" would have pointed to the 36-month lease as the wrong instrument. A shorter term or a sublease clause turns an $18,600 exposure into something closer to $6,000.

The recruiting part is the piece I'd sit with. Two of your three agents left for the counterparty that took your business. That means they were loyal to the inventory rather than to your firm, which is what happens when the firm's only offer is access to listings. The shops I see holding people together have something the agent can't get by walking, training that's actually good or a lead flow the agent couldn't rebuild alone. Hard to build that in nine months while you're bleeding $10k a month, though.