Real Estate Agent Commission Splits with Brokers
The vast majority of agents agree to a standard commission split with their brokerage. Typically new real estate agent commission splits with brokers are 50/50, while experienced agents can often receive splits closer to 70/30 favoring the agent. For example, say the gross commission from a deal was $12,000. If an agent was on a 50/50 split contract, then the agent and broker would each receive $6,000.
Agents, especially inexperienced ones, agree to these splits because the brokerage is able to offer them assistance and support they would not receive otherwise. Brokerages directly receiving significant percentages of their agents commissions are providing services to the agent that balance the commission take. These services could include a variety of different business operation needs. Including marketing for the agent, website maintenance, technology training, and more.
In addition to the agreed upon agent commission split with the broker, there are other fees that must be paid out of an agents commission. These fees must be paid regardless of the type of commission split the agent has in place.
Referral Fees
A referral fee is an agreed upon price for a company sending a good client to a brokerage. When referral fees are established they are taken out of the commission before the broker and agent split it. The typical referral fee is about 25% of the gross commission.
Percentage Paid to Real Estate Franchise
Major franchises will charge a fee to their franchisees on every transaction they make. This is for being associated with the franchise, and the benefits that comes with that association. So, say the franchise fee was 7%, and the gross commission on a transaction was $12,000. The fee would be taken out first, totaling $840, then the agent and broker would split the remaining $11,160.
