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Most Common and Useful Split Commission Plans for Real Estate

By Ana Roman

When coming up with the right way for organizing and structuring brokerages in real estate, the compensation of your agents is a crucial factor you need to consider.

The commission in the real estate field is brought in by agents brokering deals. A brokerage house makes its money by retaining a certain percentage of the commissions brought in or placing a desk fee charge on agents for holding their licenses and giving them a workplace.

The manner in which brokerages structure their split plans with agents is critical, especially if it comes to recruitment and retainment of talented employees.

Top sales commission plans to configure your sales commission software for Real Estate

There are several profiles that sales companies can be derived from. They are dependent on the firm structure. There are a number of factors you have to put in mind when coming up with the desired commission plan for your brokerage firm. These are sales volume, target achievement, salary and profit margins.

Once you come up with a suitable program, you can make use of commission software to track the compensation scheme, and Blitz is the perfect and innovative commission tracking software in the market.

Understanding the Basics of Real Estate Agent Commission Structures

As someone who is considering venturing into real estate, you have to fully understand the basics of commissions in real estate as it directly determines how you get paid. The majority of brokerages today operate under commission-based systems even though most of them are moving towards salary-based systems.

Below are some of the basics you need to know.

Negotiations

You will have to negotiate your commission split with brokerage firms once you sign up with them.

Estimating agent salary with current trends

Data that was collected for the National Association of REALTORS 2017 Member Profile shows that REALTOR salaries are different from those of other real estate agents. For the salary of a typical agent, REALTOR’s earnings are reasonable estimates.

Basing commissions on the sales made 

Since the salary of a real estate agent is commission-based, the amount you will make in a year depends on the number of sales you make.

Real Estate Split Commission Structure options for a Sales Commission Software

To be able to gain motivation to work even harder, real estate agents need to be adequately compensated.

Some of the various commission structure options that may work for your brokerage include the following:

Flat Rate Plans

On their gross, these commission plans have a fixed percentage share between the agent and house. Their popularity lies in the fact of them being easy to forecast and calculate for brokerages. Their setback, however, is the levels of frustrations they cause top producers in that they always will have to give a certain percentage of the gross commissions to the brokerage no matter the amount they make.

100% Commission Plans

This is a popular compensation plan, all thanks to RE/MAX. It hands the broker all of the gross commission earned.  As enticing as it may sound, it places a limit on the brokerage house’s limit. They will collect desk costs and expenses in form of a monthly or annual fee from each and every agent but won’t take part in the sharing of commission.

Tiered Commission Plans

In order to compete favorably, brokerages have adopted sophisticated structures of the split plans they use. Tiered plans come with reset dates- usually January 1st, and throughout the year as commissions for the broker increase, they keep even more significant amounts of the gross.

These typically start with the brokerage retaining fifty to sixty percent of the gross and go up as new tires or breakpoints are reached.

The agent’s gross production or the net kept is the basis of the tiers and are both unique.

Using these plans will allow brokerages to retain large amounts of commission till desk costs are covered by the broker. As they continue creating more commission income, they will give higher payouts to the broker.

50-50 Commission Plans

The 50/50 commission’s popularity thrives on its ease to use in calculations. The agent’s gross commission is put aside, and for each dollar of this commission, $0.50 goes directly to the brokerage and to the agent, $0.50.

Using this plan means that the agent’s desk costs need not be paid by them. Their expenses, for instance, administrative assistants and marketing materials, will be covered by the brokerage.

Other Plans

Agent net and gross plans are additional ideas you may want to consider apart from the ones listed above. Using the house net plan, you will achieve different tiers depending on the net amounts you generate.

There are still a lot of options to help brokerages stay at the top of their game. For some, bonuses and manager overrides have the ability to motivate their brokers.

In Conclusion

Choosing the most suitable plan will depend on your firm’s performance. There is diversity in the real estate industry, and what proves to work for one brokerage may not do for another. Thus different strategies need to be employed for various firms.

All in all, you will require software to track the commission and monitor commission plans and also get updates on the progress. Blitz commission tracking software has various implementation in Real Estate. Take advantage of this expertise and organize and get in touch with us.

 

Tags: Commissions

About Blitz

Blitz is a global software for sales commissions. We help our clients to track and calculate sales commissions effectively and on-time.