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Different Strokes for Different Brokerages

by Chicago Agent

The Traditional Broker/Agent Commission Split
The vast majority of agents are compensated by a broker via sharing the gross commission amount that the broker collects. The client isn’t charged to pay the agent in this model; the broker and agent each agree to a percentage split that is reflective of the services and support the broker provides and the volume of business the agent brings.

The 100 Percent Commission Model
That’s right, the agent gets the entire commission with this model. This is because the agent is paying a “desk fee,” or monthly office fee. This can be a significant amount per month, but agents’ costs are capped while their income is not.

Referral Fees from One Brokerage to Another and Agent Split
Before the commission is split, referrals come “off the top” and are a negotiated percentage paid to another company for sending a client. The client can either be a seller or a buyer. When referring a client to a brokerage, a written referral agreement of a certain percentage of the final commission earned by the brokerage is stated, and they choose an appropriate split.

Percentage Paid to Real Estate Franchise for Business
Some of the major franchises charge a percentage fee “off the top” of each commission to their franchisee brokerages. This fee comes from the commission before the broker receives it and splits with the agent. Using a 7 percent franchise fee as an example, a $12,000 gross commission from the deal would pay the franchise $840, while the broker and agent would split the remaining $11,160. If this was a referral deal, the referral fee would normally come off first and the franchise percentage would come off the $9,000. The agent and broker would then split $8,370.

Buyer Agreement Fee
Clients agree to pay the agent a fee for their services. Sometimes this fee is reimbursed or included within the cost of the home or sale price. However, as in Koenig & Strey’s model, this fee can also go directly to the brokerage. The idea behind the fee is clients get a higher level of service, which helps differentiate the agent from competitors and also entitles the client to better customer service.

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