While some get into real estate for the joy of helping people find their dream home, (and maybe the perk of putting your face on a bench), others want to work in real estate hoping to roll in that sweet commission cash.
But if a huge payout is your goal as a real estate agent, you may be in for a rough ride — especially starting out. You can make a great living as a real estate agent, especially with more experience and if you work with high-end luxury listings, but for many, the reality looks different.
It’s easy to be lured into unrealistic expectations with popular shows like Million Dollar Listing and Selling Sunset, but the average agent only makes around $41,289 per year, varying depending on your location, with New York agents raking in the highest paycheck.
This lower-than-anticipated salary is because real estate agents don’t get to keep 100% of the commission. Rather, agents have what’s called, commission splits, where they must give a portion of their commission to their brokerage firm.
When deciding on which brokerage firm to work with and hold your license, commission splits play a major role — you want to make sure you can still put food on the table as a real estate agent.
One of the more common commission split models is 50/50 between agent and broker. For instance, if the total commission is $10,000, $5,000 goes to the agent and $5,000 goes to the broker. Depending on the brokerage firm, you may see splits like 60/40, 70/30, or even 80/20.
The 50/50 commission split is popular, especially among new real estate agents, because they don’t have to pay a ton of upfront costs that come with other commission models, like the 100% commission split model or cap split model.
100% Commission Split
With the 100% commission split, the agent receives the total commission, but, they must pay a desk fee at the brokerage firm that can range from a few hundred to thousands per month, taking a huge chunk out of your total commission.
For brokerages with the cap split model, real estate agents pay the company a fee until they reach a determined amount — a cap.
Typically, many brokerages set the cap at $23,000, meaning once the agent pays the company the set cap, they then get to keep 100% of the commission for the rest of the year. Once a new year begins, the agent must meet the cap again before receiving the 100% commission.
Which Commission Split Model Is Best?
The commission split that’s best for you depends on your level and yearly intake. For agents who see high annual salaries, the cap model or 100% commission split may make the most sense — the cap amount or desk fee may be a very minimal percentage of their overall profit.
But for agents just getting into the game, those upfront fees can be crippling. For beginners, the 50/50 commission split model is the better financial route.
Commission splits are just one factor agents should take into consideration. Think about the other services and value the brokerage firm provides — do they have room for growth, a stellar reputation, hand out great leads, or offer marketing and training?
If your company operates with a 50/50 split but provides you with amazing leads that make it easy to sell more homes, while it’s initially a lower commission, you may generate more income than with a brokerage firm that offers no leads but a higher split percentage.
Century 21’s Commission Split
Century 21 has become a household name synonymous with real estate, making it an attractive company for agents to work for. With a 90% confidence and recognition level, Century 21 makes it easy for agents to make a great first impression, coming across as reliable and experienced.
For commission splits, Century 21 offers the 50/50 split model where half the commission goes to the agent and the other half to Century 21. There are no huge desk fees for agents, only an 8% franchise fee that is paid by the agent or split between them and the broker.
Again, this model is ideal for agents just starting out where they can avoid major upfront monthly costs and also bank on the company’s golden reputation to make more sales and compensate for the 50/50 split.
While Century 21’s commission split follows the more traditional route, the company is changing to keep up with the times, marketing more towards millennials by switching up their branding, advertising, and even scoring a spot on Forbes 2019 List of Best Employers For Diversity.
As the company evolves towards even more positive branding, agents can take advantage of their forward-thinking and have an easier time winning business and securing more buyer leads from the upcoming, younger demographic.
Agents can also enjoy Century 21’s training programs to learn new skills and tools and use the company’s marketing templates to promote themselves, hopefully gaining more buyer leads and a higher profit.
Work with Clever
No matter your commission split, you won’t get paid if you don’t have any leads. And securing great leads is one of the most challenging aspects of being a real estate agent. This is where Clever steps in.
When you become a Clever Partner Agent, Clever provides you with a steady stream of high-quality, vetted buyer and seller leads with no up-front costs, saving you time and energy on marketing and client acquisition.
As a Partner Agent, you only pay Clever a referral fee if the deal goes through, meaning you waste less time and money, and see a higher ROI. If a lead doesn’t pan out, you pay nothing — there’s no financial risk to you.
Learn more on how you can grow your real estate business and contact Clever to get started as a Partner Agent.