As agents, we can get so caught up in the everyday tasks of running our own real estate business that hardly have time to think about the numbers.
But think about them, we must!
When an agent signs on with a brokerage, they have already discussed and agreed upon the commission split of any transactions that the agent closes. Those numbers are pretty easy to calculate, however, the percentage itself does not represent the agents actually income from the sale.
Let’s say an agent is on a 50/50 split and sells a house for $200,000 at a contracted listing of 6% with 3% going to the selling side. This means that the total commission is $12,000 if the home sales at full price. That’s divided in half automatically with $6,000 going to the co-operating broker. Now we split the remaining $6000 by half again and the agent has a gross commission of $3000.
Gross commission is what the agent takes home before any taxes, and expenses are deducted. License fees, educational fees, MLS fees, Realtor dues, taxes, marketing expenses, technology expenses, travel expenses and other miscellaneous expenses are all examples of what Realtors have to pay in order to run their real estate business which need to be calculated accordingly and deducted from the gross commission.
This explains why a lot of Realtors drop out of the business. It’s expensive to be in the real estate profession. Every time an agent turns around, there’s some new expense or even just the rise in the cost of business. Staying in the black in the real estate game means you really have to know your bottom line at all times. 
How can an agent increase their bottom line? He or she must do two things 1. Keep their sales numbers up and 2. Earn a commission rate that gives them a healthy profit margin.
When increasing their commission split in their own favor, there’s a greater chance of not only staying in the profession but of making a healthy profit. Keep in mind, that there are some brokers who increase the agent’s commission percentage as they close more sales. The split in some companies can even reach 100% (yes, you read that right) after the agent hits a certain amount of sales or gross commission income.
Went an agent first interviews a broker, the subject of commission, when it comes up, should encompass how the commission will increase once the agent hits a certain amount of sales. Every brokerage can have different sales goals to meet before an increase happens but don’t settle for a brokerage who will never increase that percentage.
Your increased sales should afford you the comfort of a higher profit margin in your business. This should continue to rise as you become better at your profession. Setting goals for yourself and rewarding yourself when you reach them is a great way to keep yourself motivated. Don’t be afraid to set your goals higher and higher each time you reach one because while real estate is one of the hardest professions to make a profitable business out of, the opposite can also be said.
Being a Realtor can afford you to live a life of prosperity and success. After all, isn’t that why you decided to become a Realtor in the first place?
