Chris would love to see every one of our agents earn at least $100,000 in gross commissions each year. If that agent is paid on a 70/30 split, they are paid $70,000 and the brokerage retains $30,000. All agents are responsible for their annual board dues and licensing fees, MLS fees, and a monthly errors and omissions insurance fee determined by the broker.
What if this agent has a great year and hits their $100,000 sales goal at the end of September and still has several closings in the last quarter of the year? Once the brokerage is paid $30,000 the agent keeps 90% of every dollar they earn for the rest of the calendar year. This compensates the agent at, or above, the industry average and allows the brokerage to continue to grow, upgrade, and offer new services over time.
For a new agent just starting out, we offer full service and support with a 60/40 split. Sixty percent of every dollar the agent earns is paid to the agent, and 40% is retained by the brokerage. The agent is responsible for their monthly MLS(s) fees and a monthly Errors and Omissions Insurance fee. Once the agent earns gross commissions of at least $60,000 during a twelve-month period, or at the discretion of the broker owner, they move to the standard 70/30 split.
Agents regularly earning over $150,000 per year may negotiate up to a 90/10 split with the monthly Franchise and Marketing Fee, Shared Office expense, Administrative Staff fee, and Basic Agent and Technology Services Package covered with an additional monthly payment. This gives the broker the flexibility to create a package for a top producing agent or team while remaining true to the tenants of Your Pay Your Way™.
We’ll talk about property management as it relates to broker profitability in the next section of this book. Chris recommends that when a broker owner establishes a property management department that they staff it with 2 employees, including the licensed members of the team. However, there are situations where a licensed property manager with an established book of business may want to join one of our offices. If that is the case, they should be treated exactly like any other licensed agent according Your Pay Your Way™.
Next week we enter Part #3 – The Broker Owner Experience.
That’s what you came for, so I guess I’ll see you there!