When choosing to join a brokerage, most agents focus primarily on the commission split between themselves and the brokerage as a major deciding factor. But does the commission brokerage split between yourself as an agent and your brokerage really matter? The answer is “NO”, the split itself shouldn’t be your deciding factor alone.
Wait, but if I choose to hang my license with the brokerage that gives me the largest commission split or a 100% split, I’ll make more money won’t I?
Maybe yes, maybe no. It all depends on yourself, your experience level, and your brokerage’s pay model.
Hmmm??? Tell me more.
Ok, at the end of the day, the brokerage will get paid their money one way or another. Whether that be through commission split, transaction fees, or a combination of both. Many of the high commission split brokers rely on transaction fees to earn their income to keep the lights and support their agents.
Transactional brokerages with high splits to their agents rely strictly on transaction fees from the transaction volume of their agents. Now imagine if their agents aren’t actually doing much sales volume for the overall brokerage. Then the brokerage is operating on very thin margins and is not able to provide many valuable resources, tools, software, or training to their agents, which means that the amount of support for their agent’s businesses is very minimal. Or you get what you pay for.
So depending on your experience level and the amount of support needed as an agent. If you’re an experienced agent and able to produce many transactions on your own with little to no support from your broker, then a transactional brokerage might be the perfect fit for you.
However, if you’re a newer real estate agent in the business and you don’t know a whole lot about real estate in general or being a real estate agent. And how being an agent is actually owning and operating your own business within a brokerage, you may be setting yourself up for failure by joining a transactional brokerage only that offers limited support and resources for the success of your business.
Many of the larger nationally established brokerages are commission split based vs transaction based because they require overhead and support staff in order to be able to provide their agents with the proper training, tools, and resources to support their agents. They are able to teach new agents how to market and brand their business within the brokerage. They also provide the most essential agent resources and needs such as a website, real estate tools, software, systems, marketing content, and help with lead generation. In addition, brokerages like Exp Realty actually have a cap on when commission splits stop, agents transition to 100% commission, and then on top of that they have the opportunity to earn back the 20% that they initially paid to the brokerage.
So as a brand new agent or someone still fairly new to the business. Something to really think about at the end of the day is 100% commission of ZERO sales and ZERO support is how many dollars are in your pocket?