It takes a lot of hard work and investing in your own career to be a successful real estate agent. With that in mind, the concept of splitting 50% of your commission with your broker might be simply unimaginable to you. A 100% split would be ideal, but is it possible?
You can get a 100% commission split as a real estate agent. To get this split, you might owe a flat monthly fee, have to add a certain amount to the company dollar, or owe a transaction fee on every sale. You may get a 100% commission split, but not without fees to your broker at some point.
Your negotiated commission split will precisely determine how much money you take home with each real estate deal you broke. Keep reading to learn about the importance of a commission split, types of commission structures, and the fine print of 100% splits.
What Is a Commission Split?
As a real estate agent, your sole source of income will come from your commission split.
This is a pre-negotiated ratio that you and your broker both decide on to determine how you’ll divvy up the commission each sale you make garners.
For example, if a home’s sale generates a total commission of $10,000 on your end and you’re on a 50/50 split, you and your broker would each leave with $5,000 in your pockets.
From each sale you’re a part of, what you earn will depend on the commission rate that you and your client agree to. It also depends on your split with your broker.
Here’s an example of these calculations in action:
|1. Sale Price of the Property||$500,000|
|2. Figure Out the Total Commission Rate from Sales Price (ex: 6%)||$30,000|
|3. Divide by Two to Reflect Seller/Buyer Agent Splits||$15,000 (each)|
|4. Apply Your Commission Split (ex: 50/50)||$7,500 (to you) $7,500 (to broker)|
The table above lays out how the commission will be distributed in the standard scenario.
Now, if you were on a 100% commission split with your broker, you would stop your calculations at step three. In the scenario above, your total take-home on that sale could be $15,000 instead of a measly $7,500.
Here’s a video showing how the typical commission split works in the real estate industry:
Types of 100% Commission Structures
It’s entirely possible to get a 100% commission split as a real estate agent, whether you’re a brand new agent or have decades in the industry. But if you’re in search of a broker willing to offer a 100% commission split without any catches or caveats, you’re going to be disappointed.
Let’s talk about a few ways that you can get a 100% split.
Fee-Based 100% Commission Splits
Quite a few small-brand real estate companies are now offering 100% commission splits, instead of charging agents a flat monthly or annual fee. For example, you may have to pay a $300/month fee or a discounted $3,000 annual fee to stay with the brokerage. In turn, the entire commission value on your end of every sale you make is yours to keep.
This type of 100% commission makes the most sense if you’re pulling in dozens of sales each year, as you’ll never have to pay more than the fee that your brokerage sets.
If you were to earn $100,000 in commission in a year and subtract the total annual fee (let’s say that’s $3,000), that would amount to $97,000 in your pocket or 97% of your commission.
Graduated Capped 100% Commission Splits
More and more real estate companies recognize the important roles their agents play in keeping the brokerage afloat financially. Graduated capped splits will have all agents start at a particular split at the beginning of the year, say 50/50.
As an agent’s broker deals and the company collects a commission, this will count toward that agent’s “cap.” Once this predetermined cap is met, the remaining commission for the rest of the year will go to you, the agent.
This 100% commission style can be incredibly lucrative if the thought of more money in your wallet motivates you, with the possibility of a 100% commission being possible mid-year.
If you were to generate $100,000 in commission and then met your company’s cap, any commission over that would be yours, meaning the earning potential is nearly unlimited. This can be $100 or $100,000.
Flat-Rate Transaction Fee 100% Commission Splits
There are also a few rogue real estate companies that offer a flat-rate transaction fee on any sale you successfully close as an agent. Instead of splitting the commission with your broker at a 50/50 rate, you may have to pay a flat $750 on every sale. This flat-rate fee will remain the same, regardless of the total sale price of the property.
This method of getting a 100% commission is most useful if you’re an expert at selling properties with high list prices, as the mandatory flat fee will be less monumental.
If you were to make $100,000 in commission in ten sales and had a flat transaction fee (let’s say it’s $750), you would owe $7,500 in commission and take home 92.5%. Now, if this $100,000 was split among 20 sales with that same fee, you’d be down $15,000 and take home just 85%.
Some Things to Keep in Mind Before Choosing a Brokerage
The idea of taking home 100% of the commission that you rightfully earned sure does sound enticing, but it’s not all sunshine and roses. So here are some things you’ll want to keep in mind before choosing a brokerage or this type of commission split!
- Read the fine print and check for caveats your broker might not express directly (i.e., Additional fees or minimum sales volumes).
- Consider the name recognition of the company you join, as the company you attach your name to can make or break a client’s willingness to list with you.
- Think about the tools and resources the company has in place to ensure success (i.e., A 100% split is excellent, but not if you’re left to your own devices in terms of training).
Understand that a brokerage runs on what it earns from commission splits and agent fees. If your company is offering a 100% commission split and agents are paying minimal amounts to the brokerage in the form of fees or commissions, don’t be surprised if the company is less than supportive of agent success in crucial areas (like training).
The Best Option For 100% Commission
Keller Williams is an excellent real estate company, especially for any agent looking to keep the money they earn in their own pocket. The Keller Williams commission split is as follows:
- 64% goes directly to you, the agent
- 6% goes to the KWRI royalty fee
- 30% goes right to your Market Center
Looking at that, you may be wondering, “How is this a 100% commission split?” That split is how you’ll start each year you spend with Keller Williams.
Once your commissions yield over $3,000 in that 6% KWRI fee, the rest will go to you, bringing you up to a 70/30 split. When you sell even more and meet your Market Center’s cap for that 30% fee (which usually occurs after selling 8 to 10 average homes), you’ll reach the cap there as well. At that point, you’ll be in the 100% commission split structure.
The real estate commission you accept when you join your first brokerage will determine how much ultimately ends up in your bank account. However, don’t be fooled into thinking that a 100% commission means a true 100% commission.
There’s a good chance that you’ll owe your broker money in other ways, whether that be through a monthly desk fee, a flat transaction fee, or a graduated capped commission split.
So keep that in mind when choosing a 100% commission split brokerage.
The transition into a real estate career looks pretty easy if you don't know a thing about the industry. What else is there to do besides get your license, join a brokerage, and sell houses? Truth...
The real estate industry is always on the move, whether it's a hot new marketing strategy, the latest market fluctuations, recently-passed legislation, or upcoming interior design...