How to Structure a Competitive Commissions Model for Your Real Estate Business

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Transcript:

What is the "best" compensation structure? I can only tell you what I do and the rationale behind what I do.

All of this is in your OSA Position Agreement. The way we've laid it out is to have two Schedule B's: one for Buyer Outside Sales and one for Listing Outside Sales. You have access to this document in your Google Drive.

You might start to get queasy when I talk about 30% and 40% commission splits, but let me explain to you how I went through the process to get to those numbers.

My goal is to keep the blended average agent pay between 35% and 40%. You can see this compensation detail in the OSA Position Agreement.

Buyer Agent compensation depends on the source of the leads. Compensation is 30/40/50/60 percent with 10% off the top for RE/MAX (5%) and Team Admin fees (5%), so that leaves 27/36/45/54.

I started this structure when I was at another RE/MAX franchise. Then I bought my own franchise with just my team, so I can justify that 10% off the top.

Here's how I explain it. When I'm talking to an agent, I say, "Basically the splits are the same as any other team. We take RE/MAX and Team Admin fee off the top. Then it's 50% for a team lead, which mean we give you a lead and you convert it. For your sphere, we pay more, we pay 60%." My focus when talking to a recruit is on those two buckets.

There are instances where a buyer appointment is set by an ISA or I personally set the appointment and answer a yard sign call, and those are paid out at a slightly lower split (40%). There may be instances where I have a seller who's ready to buy, or a personal sphere of mine who is ready to go. In this case, we take the 10% off the top and pay 30%. Those are typically your most profitable deals.

So when you explain those two lower buckets (30-40%), we really explain them as benefits because they are literally "gimme" type deals. Most teams pay everything out at 50% or more, but if you're paying more than that you are losing big margins and sacrificing productivity on your team. 

Your agents will sell more homes because they are getting paid more for each transaction.