COACHING TIP: How to Increase Your Net Income with Value-Based Compensation

The buyer agent splits on our team, I take 10% of the top. You start with $100 commission check. It goes down to $90 right off the top. Just margin.

The way it started honestly was the Re-Max I was at charged 5%. And in my mind, I said if they charge 5%, I can certainly charge 5%. So it was 5% that I didn’t touch, and 5% that I called Team Admin. And then I bought my own Re-Max. And the 5% went to 1%. So Re-Max corporate charged me 1%. And my old Re-Max was clearing 4%. So now I cleared 9%. That’s how it came to be.

Commission Structure

But I do think something off the top, like most agents aren’t going to figure it out. They do, but they don’t. We still talk 30-40-50-60. They don’t really get that 60 is 54.

So I think that’d be a way to transition if you have a team like this, you don’t take that off the top to do that. 

I think only if you had maybe with a shake-up in admin. Maybe we added some benefits to you guys so we’re going to have to, most brokerages do this. Most brokerages have a franchise fee. And just do it in a way where it’s legit.

So just do it in a way where it’s legit. Say, look, guys, I’m taking on more expenses. The goal is to keep you off the admin tasks. And so you’ve got to be able to position it that way anytime you take away something.

The 30-40-50-60. People want to forget the 30 like it’s some bad thing. Yeah, so 60 is agent SOI. They never had anything to do with company. 50 is I generated the lead, or it’s a yard sign call, and the agent converted it. So they picked up the lead. They were able to get the face to face. They were able to sign a loyalty agreement and close it.

40 is an ISA or Keely or someone else other than the agent going out to service that client. It’s paid at 40% or 36%, 90% of it. And then 30 is a past client or sphere of mine or Julie. So people just know that if that deal comes in, it’s generally at a decent price point.

This is just buy side.

Your average buyer agent is booked by the ISA?

I looked this morning, and I couldn’t get the number out of the tracker, because I put all my listings as scrub.

It’s your listing, also, isn’t it? On the buy side, though.

Yeah. The 30% is just a gimme. Like I promise you agent you’re overpaid at 30%, and they get that.

Highest dollar to the agent.

And just explain it. It’s not a big deal. Everyone just gets freaked out about it.

They’re a well-paid showing agent.

That’s one thing I changed, but I think for all of you, you could do it that way. I went back to my sellers, a regular seller. What did we do? We changed, we tweaked one thing. Where if they weren’t a past client of mine, they were a seller and they’re buying. But now we have some agents doing both sides and it’s paid at 30%.

It's All About Value

So it’s just in your mind whatever you commit to, I just believe the value-based thought process for commission structure, there’s nobody that doesn’t understand it. And say it’s not about splits. The first meeting with an agent is not about splits. It’s about what does your business look like right now if you’re in real estate? Or what did you do before?

Okay, you made $37K last year. Well let me show you a way to make double that, and not have much risk in it. There’s no expenses. And I’m going to show you what to do in the first 30-60-90 days to get you productive. You’ve got to have a little cash set aside. But I’m going to get you to a point where I can double your income.

And that’s what you focus on. And then when they say, man, this sounds good. I get the accountability. I can totally do this. Then you pull out the position agreement. And you just go through it with them.

It’s like a listing agreement. Don’t give it to them. I made that mistake. Don’t say, go home and read this. Cause they’re going to ask their agent friends that they know, and they’re going to be like, man, my split’s 100%. Or my split’s 110%. There’s some firms that claim to have more than 100% splits.

But just go through it with them like a listing agreement and you’re going to close them on that agreement while they’re standing there. And printing out your spreadsheet, your agent comp calculator at 24-30-36 sides for your comp structure is what you’re laying in front of them.

You’re saying, listen, if you do our minimum, which nobody in our team is doing our minimum, but if you do the minimum, you’re going to make $72K. If you do 30, which is just a little step up from that, you’re going to do $92K. And then if you do 36, which every one of my agents is doing more than 36, you’re going to do $107K. And then just sign here.

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