Ready to look for the best real estate companies to work for? Letโs get into the nitty-gritty of commission splits. We know choosing the right brokerage is more than just a career move. Itโs about finding the perfect fit for your income potential and job satisfaction. But, let’s face it, if you’re not earning enough, all the professional satisfaction in the world won’t pay the bills.
So how much will you make at different brokerages? We get it. Figuring out how much you’ll make at different brokerages can be a real headache, especially if you have to interview every single one. But don’t worry, we’ve got you covered! We’ve done the legwork, researching and interviewing to gather key information on a variety of brokerages.
In this article, we’ll break down the commission splits you can expect from some of the most popular and established brokerages. Whether you’re a seasoned agent or just starting, understanding these splits can make all the difference in maximizing your earnings.
Make no mistake, how you do at a brokerage requires more financial and non-financial comparisons than just your commission split. But no worries. Weโll cover many of those other components in future blogs. However, your commission split will most likely be the biggest contributor to your bottom line and overall happiness. So we will start there. Hereโs your handy dandy index:
- How Commissions Work
- Commission Math
- Research Challenges
- Best Real Estate Companies to Work For
- Finding the Best Fit for Your Real Estate Career
- Frequently Asked Questions
How Commissions Work
Alright, now that we’ve set the stage, letโs break down how commissions work in real estate. First, it’s essential to understand the different types of commission structures and how the math plays out for each one.
Commission Split Types
Fixed Percentage Splits
This is the most straightforward model. The commission is split based on a fixed percentage agreed upon with your brokerage. Common splits include 50/50, 60/40 or 70/30. Weโll break down exactly what that means in the next section.
Graduated Splits
Graduated splits adjust based on your performance or graduation from brand new agent status. For example:
- You might start at a 50/50 split as a new agent.
- After hitting certain sales targets or gaining experience, your split could improve to 60/40 or even higher.
Cap System
In the cap system, you contribute a percentage of your commissions to the brokerage until you reach a predetermined cap. After hitting this cap, you keep 100% of your commissions for the rest of the year. This can be a significant advantage for high-producing agents.
For instance, if a brokerage sets a cap at $16,000, once you’ve paid this amount, all subsequent commissions are yours to keep each year, maximizing your earnings.
100% Commission Plan
With a 100% commission plan, you donโt split your commission with the brokerage. Instead, you pay a flat fee per transaction or monthly office fees.
Royalty Fees
While not a commission split, royalty fees are an important factor to consider. All brokerages charge some type of administrative fees, but royalty fees are often higher and can’t be ignored. These fees can eat into your earnings, so it’s crucial to factor them in when comparing different brokerages.
For example, if your split is 70/30 with your broker and thereโs a 6% royalty fee, the โreal splitโ for you is 64/36. We’ll cover brokerage fees in more detail later, but for now, we’ll include royalty fees in the commission split discussion.
Commission Math
Now that you’re familiar with the types of commission splits, let’s get into how the commission splits are calculated. This math applies to the vast majority of brokerages.
Total Commission Calculation
An agent’s commission is typically a percentage of the sale price, as specified in the listing or buyer agent agreement. This percentage can vary widely, usually ranging from 1.5% to 3.5% for each agent involvedโthe seller’s agent and the buyer’s agent. Here’s a straightforward example:
Example:
- Home Sale Price: $1,000,000
- Listing or Buyer Agent Agreement Fee: 3%
Agent Commission Calculation:
- Agent Commission = Sale Price x Commission Rate
- Agent Commission = $1,000,000 x 3% = $30,000
Splitting Agent Commission with Your Brokerage
Once you’ve earned the commission, the next step is splitting it with your brokerage based on your contract terms. Here’s how it breaks down:
Example:
- Agentโs Share: 80%
- Brokerageโs Share: 20%
Step 1: Calculate Agent Earnings:
- Agentโs Earnings = Total Commission x Agentโs Share
- Agentโs Earnings = $30,000 x 80% = $24,000
Step 2: Calculate Brokerage Earnings:
- Brokerageโs Earnings = Total Commission x Brokerageโs Share
- Brokerageโs Earnings = $30,000 x 20% = $6,000
Splitting Agent Commission with Your Team
Not all agents are part of a team, but many, especially new agents, prefer to start their careers within a team structure. Teams typically charge a percentage of an agentโs earnings in exchange for value-added services like leads, guidance, resources, and tools. Here’s how you calculate your net earnings after splitting with your team:
Example:
- Agentโs Earnings: $24,000 (after brokerage split)
- Teamโs Share: 25%
Calculate Agentโs Net After Team Split:
- Agentโs Net Earnings = Agentโs Earnings – Teamโs Share
- Agentโs Net Earnings = $24,000 x 75% = $18,000
Research Challenges
Before we dive into the list of brokerages and their typical commission splits, there are a few things we need to clear up.
Caveat 1: Traditional Brokerage Model Splits Often Vary by Office
Yep, you read that right! It’s nearly impossible to quote an exact commission split for traditional brokerages. These are your classic franchise, brick-and-mortar offices. And yes, thatโs most brokerages out there!
Why is it so tricky? Well, each franchise office is owned and operated by different broker owners who are free to set whatever commission splits they want. So, you canโt just look up the commission split on the internet for a particular traditional brokerage.
Caveat 2: Traditional Brokerage Model Splits Often Vary by Agent
To make things even more complicated, different agents within the same traditional brokerage likely have different commission splits. These variations are based on factors like agent experience, success, or even their potential for success. And guess what? The criteria for these splits are usually known only to the broker owner. So, again, no easy internet lookup here.
Caveat Resolution: Solving the Traditional Brokerage Model Problem
Given the non-transparent nature of traditional brokerage models, we’ve done a ton of research and conducted interviews to come up with a range of what most traditional brokerages seem to offer their agents.
Cloud-Based Brokerage Model Commission Splits
But hey, there’s some even better news! When it comes to cloud-based brokerages, commission split information is often transparentโyou can actually look it up online. Cloud-based models donโt sell franchise offices and typically donโt have physical offices. This setup means lower expenses, no franchise bloat, and no duplicated staff across offices, allowing them to offer higher commission splits than traditional models.
Best Real Estate Companies to Work For
Alright, letโs get down to business with our commission split comparison.
We’ll present the information starting from the lowest commission split ranges for agents to the best commission splits.
And, fyi, weโve skipped the lowest possible commission splits – those that are for brand new agents. Why? Because those donโt affect all agents and theyโre temporary.
Without further ado, here are the commission splits that most agents at these large established brokerages earn.
Redfin: 30/70 – 75/25
Redfin is a discount brokerage that charges lower fees to clients and pays lower splits to agents. However, the trade-off is that Redfin agents are salaried and can gain their own clients to reach the higher end of the split.
Corcoran: 50/50 – 70/30
A traditional brokerage with a 6% royalty fee. The splits here are fairly standard, but keep in mind that royalty fee will take a bite out of your earnings.
Douglas Elliman: 50/50 – 70/30
Another traditional brokerage, also with a 6% royalty fee. Similar to Corcoran, your splits will depend on your experience and success, but that royalty fee is something to consider.
Coldwell Banker: 55/45 – 90/10
A well-known traditional brokerage with royalty fees ranging from 5% to 6.5%. They offer higher potential splits, especially for experienced agents.
Berkshire Hathaway: 60/40 – 90/10
Berkshire Hathaway operates under a traditional model with a 6% royalty fee. They provide competitive splits that can go up to 90/10 for top-performing agents.
Better Homes & Gardens: 60/40 – 80/20
This traditional brokerage charges a 6% royalty fee. Their splits are solid, offering a good balance for most agents.
Compass: 60/40 – 92.5/7.5
A traditional hybrid brokerage with a lower 4% fee. Again, top performers earn the higher split less the 4% fee.
The Agency: 70/30 – 90/10
Operating under a traditional model with a 6% royalty fee, The Agency has been expanding a lot lately.
Sotheby’s: 70/30 – 90/10
Another traditional brokerage with a 6% royalty fee. Sothebyโs is a good choice for experienced agents looking for a prestigious brand.
RE/MAX: 60/40 – 95/5
RE/MAX is a traditional brokerage with a 5% royalty fee. They have some of the best splits in the business, potentially going up to 95/5.
Century 21: 70/30 – 92/8
This traditional brokerage has a cap of about $22.5K and charges an 8% fee. They offer good splits and a cap that can benefit high earners.
Keller Williams: 70/30 – 100/0
Keller Williams, a traditional brokerage with a cap of $21-30K, charges a 6% royalty fee until the cap is reached. They offer the potential for agents to keep 100% of their earnings after capping.
eXp Realty: 80/20 – 100/0
A cloud-based modern brokerage with a cap of $16K and no royalty fees. eXp Realty offers some of the highest potential earnings, especially appealing for agents looking for flexibility and tech-driven support.
Finding the Best Fit for Your Real Estate Career
Beyond your commission split, it’s essential to evaluate other factors like brokerage fees, support, training, resources, tools, and community. All these elements together will help you determine the best fit for you. Be sure to check out our other resources for more insights on these criteria.
Also, consider a brokerageโs potential for future growth, passive income opportunities, and longevity in a rapidly evolving industry facing legal challenges and disruptions.
And hey, if youโre at one of the brokerages mentioned and your split is different, drop us a line. Weโll update this information to keep it as accurate as possible.
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Frequently Asked Questions
- ย What are the different real estate commission split types?
- What are real estate broker royalty fees?
- How do I calculate my real estate commission?
- How does an agent pay for their team?
- What else does a real estate agent pay for besides brokerage and team splits?
- Why canโt I easily find out a brokerageโs commission split?
What are the different real estate commission split types?
Fixed Percentage Splits are based on a fixed percentage agreed upon with your brokerage. Common splits include 50/50, 60/40 or 70/30. Graduated splits adjust based on your performance or graduation from brand new agent status. Cap System – here you contribute a percentage of your commissions to the brokerage until you reach a predetermined cap. After hitting this cap, you keep 100% of your commissions for the rest of the year. 100% Commission Plan – here you donโt split your commission with the brokerage. Instead, you pay a flat fee per transaction or monthly office fees.
What are real estate broker royalty fees?
Royalty fees are paid by agents who work at brokerages that are a franchise business. These fees can eat into your earnings, so it’s crucial to factor them in when comparing different brokerages. For example, if your split is 70/30 with your broker and thereโs a 6% royalty fee, the โreal splitโ for you is 64/36.
How do I calculate my real estate commission?
An agent’s commission is typically a percentage of the sale price, as specified in the listing or buyer agent agreement. Example: Home Sale Price: $1,000,000, Listing or Buyer Agent Agreement Fee: 3%, agent commission = $1,000,000 x 3% = $30,000. Next, the agent must split their commission with their brokerage. Example, in a 80/20 split, agentโs earnings = $30,000 x 80% = $24,000 and brokerageโs earnings = $30,000 x 20% = $6,000
How does an agent pay for their team?
Not all agents are part of a team, but many, especially new agents, prefer to start their careers within a team structure. Teams typically charge a percentage of an agentโs earnings in exchange for value-added services like leads, guidance, resources, and tools. Example: agentโs earnings: $24,000 (after brokerage split), Teamโs Share: 25%. Agentโs Net Earnings = $24,000 x 75% = $18,000
What else does a real estate agent pay for besides brokerage and team splits?
They pay nearly all costs of doing business like license and association annual fees, marketing costs, support staff like editors and transaction coordinators, car expenses, office needs, all listing expenses and much more.
Why canโt I easily find out a brokerageโs commission split?
Traditional brokerages with franchises are owned and operated by different broker owners who are free to set whatever commission splits they want. To make things even more complicated, different agents within the same traditional brokerage likely have different commission splits too. Factors like agent experience, success, or even their potential for success lead the broker owner to offer different splits.
