Real Estate Commission Fees

For almost all real estate agents, newcomers and veterans alike, the majority of your money will be made through commission, so it’s important to hustle and make a name for yourself in a way that allows you close on homes with a solid price, thus allowing you the most commission possible. That said, it is important to understand your own value to the market when working with clients as a new agent. You might think it okay to lower your commission in order to attract a few new clients, but do not let your drive to perform cost you your profits for the year. Reason being, most brokers will request a portion of your commission in order to cover the expenses of their brokerage, which tend to include marketing, promotions, lead generation, as well as office space and other associated operating costs. So, if you lower the amount you take in commission from your client, you will still pay a solid chunk of it to your broker, which might end up too great a loss on your end to make your new career profitable, so do not bend too far in order to land your first few clients, let excellence in service and an awesome understanding of the local real estate market be the reason you attract clients and achieve steady growth.

Since we are already discussing commission, let’s touch on how that might get split with your broker, as well as how to find the best broker to work with. Firstly, it isn’t uncommon for a broker to command 40% or more of your commission in your early stages; this happens because many new agents don’t manage to immediately pay back the amount invested in them by the broker (by way of generating sales and covering the cost of signage, open house expenses, staging, etc). Because commission splits can be negotiated with most brokerages, it can work in the favor of a new agent to find a broker with a team of people paying to a fund that covers expenses, that way everyone has a hand in generating leads, and making sure the business prospers, since each agent at the brokerage is equally vested in its success. While it might be possible to only pay a desk fee, and retain 100% of your earned commission, it is highly unlikely any broker will take the deal unless you prove your early successes and abilities are worth the risk on their end.