millionsaver las vegas

I worked for Liberty Realty as an agent. I think I signed up in 2002 and worked there about two years. At that time it was one of the few 100% commission real estate companies in Las Vegas. The fees were low and Liberty allowed agents to do what they wanted do (without the corporate/franchise bullshit) and keep most of their commissions. I liked Richard Bell (broker). Quiet guy who mostly sit in the office, not really talking to agents and just doing his job.

Liberty Realty grew like crazy during the real estate boom of 2003-2005. I saw new offices opening one after another. It seemed that sky is the limit for Richard Bell. I remember when Liberty hit over 1,200 agents and we all thoughts how great business it is. There were rumors that Bell could sell it for almost hundred millions during the boom.

I moved on and didn’t really know what was happening with the company after 2005, but the recent news really hit me. Read here: Useless checks enrage agents. Commissions lost as Liberty Realty sold .

I know Liberty closed most of their offices and kept just one. The articles says that the company downsized from 1,600 agents to 800 agents. But there is something I don’t understand.

800 agents  for one office is pretty big number.

800 agents times $100 monthly rent payable by each agent = $80,000 per month of income. That’s assuming agents don’t do any deals at all. If an agent does by average one deal per month than you got another 800 times $500 = $40,000 of revenue.

Running a big office cannot cost more than $30,000 to $40,000 per month. That is rent, employees, phones, Internet and office supplies. Real estate business is not capital intensive business. All you need is an office and couple of employees to do support for agents.

So what really happened? How can a company with so much income go bankrupt?

Did most of the agents stop paying the office rent? Was there some huge and costly problem (lawsuit)? Does anyone know anything?