The 3 Best Real Estate Commission Splits Factors To Increase Your Net Income
Real estate commission splits aren't easy to analyze. These 3 factors will help you determine the best place to increase your net income. Learn how to close
Your real estate commission split is not as simple as analyzing one number.
You have to consider the quantity and quality of leads your team or brokerage is providing.
…and any technology they might be providing you.
So, today I am going to break down three items to consider when looking for the best real estate commission split.
When deciding what real estate commission split is best for you, you have to know the lay of the land.
So here is a quick overview of real estate commission splits among agents:
What you see above is that most agents earn around 68% of the commission on every transaction.
That should be a surprise because Keller Williams boasts the highest number of agents and here is their real estate commission split:
These splits between the brokerage and the individual agent (or team) exist for plenty of reasons. The broker has to provide spaces to work, technology and oversee each transaction.
The biggest takeaway from these numbers is to analyze not only your take home pay per transaction. But to see what fees your broker is paying for you. And if they are generating any leads that increase your net income.
Buyer agents, on real estate teams, are typically put around a 50/50 commission split.
You do not want to make this a static number, however.
What do you want your buyer’s agents doing?
Generating real estate buyer leads of course!
So, most teams payout 40% commission on team generated leads…
…and 60% commission on leads generated by the individual agent.
Here’s the kicker:
You can also increase commission splits as production is met.
For example – An agent could earn 50% for the first 15 transactions…
…then 60% for the next 15 transactions…
and 70% for more than 30 transactions closed.
This incentivizes your buyer agents to keep production high. And also keeps your brokerage or real estate team busy!
A listing specialist’s commission varies on whether the team uses Inside sales agents.
These inside sales agents typically receive 10-20% of the commission.
This puts the listing specialist at around 25-35% with inside agents and 35-45% without.
Here’s the deal:
Listing agents focus on generating appointments, converting them into contracts, and getting closed offers.
What’s the bottom line:
Whether you are an agent reading this or a broker, your goal should be the same.
How can I increase my net income?
And not: I want the biggest percentage.
What’s that mean?
Well, if one team is offering you a lower commission but generates 10 times more leads than the other team, you should probably take the first offer. Then, you won’t have to worry about all these real estate marketing ideas and can simply sell houses.
This is an incredibly hard game to judge.
You have to know what you want to do in real estate and what each offer entails.
Are you going to learn more, close more deals, and even earn more at 35% than you would going solo?
Probably! If you’re on the right team.
Here’s the other thing…
When you are just becoming a real estate agent, you have to pick an end destination. For example:
Are you just building a business to make $60,000 per year?
Or, are you building a business that you won’t be working in daily in 3 years that’s closing 350+ transactions per year?
With the same amount of focus, you can create systems that produce as much success.
No great entrepreneur (or Realtor) built their empire by themselves. They built teams, used great tools like Easy Agent Pro’s Leadsites, and focused on systems.
The real power in selling real estate resides in creating systems that build profit.
Not in you selling individual houses.
The Coldwell Banker commission split is typically around 3.75% that goes to the franchising office.
There are reports that commission splits are flexible through the company and not mandatory. Here’s some good information about the difference between companies.
Real Estate Salary’s and Compensation reviewed from Australia and New Zealand – This article looks at data and the competition of brokerages in Australia and New Zealand. You can find trends and commission structures for real estate agents used by these brokerages.
Ready Made Employment Contracts, Letters, and Forms for Realtors – This book gives you letters and contracts that have already been reviewed. It’s a great starting place if you don’t have the time to put your documents and such together.
The Real Estate Entrepreneur – Are you looking to start your brokerage? One of the best ways to avoid failure is to learn from those that went before you. In this book, you can easily learn the in’s and out’s of the real estate business. Owning a brokerage is no easy feat. But the rewards can be great. This book analyzes data and gives you lessons.
Thinking Salary Over Commission? – This author makes the case that Realtors should be treated like advisers instead of sales people.
10 Questions to Ask a 100% Broker – Going to a 100% broker is not always a good thing. Here are 10 great questions you should ask one before joining their ranks.
How To Earn 100% Commission at Keller Williams – Think it’s impossible to earn 100% at a standard brokerage? Think again.
Have you worked under various real estate commission splits? Do you have more questions about real estate team compensation plans?
Have you increased your net income by switching to a brokerage that charges a higher percentage but gives you more support?
Let me know in the comment section below!
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