How Much Do Real Estate Brokers Pay Agents in Commissions?
Real Estate Commissions
• Oct 14, 2020
A lot goes into agent compensation. And each individual relationship is different. But we thought it was likely there were some trends and correlations we could identify if we looked at enough data. So that's what we did.
We analyzed 330,000 sides in 2019 and 2020 to develop this market commission analysis. Our discoveries and correlations between commission management and agency or brokerage size can help companies of all sizes better manage their commission payments while still attracting and retaining star performers.
Impact of Company Size on Commissions
Generally speaking, as companies grow from a handful of agents to a larger operation, their commissions grow, too.
Then, further growth tends to correlate to a drop in commissions. This happens at about 50 agents with independent brokerages, and at about 75 agents for a franchise.
At about 100 agents, both independents and franchise tend to stabilize at or near the 3.0% mark. Once stabilized, growth doesn't seem to impact commissions further.
Impact of Number of Sides on Commissions
There is more variability in the data between independents and franchises when comparing commissions based on number of sides.
Franchise businesses with less than 100 sides per year tend to discount commissions. The 100 sides a year is the point when commissions stabilize.
Then, growing past 100 sides shows a slight drop to 3% and stays essentially the same as side grow.
A Story of Business Growth and Stabilization
Innovation and creativity are definitely visible across smaller businesses with less than 75 agents or 100 sides a year. This seems to be a pivot point for businesses to mature and define a well scalable and repeatable model. Hence, the stabilizing of commissions.
If you are interested in learning about how you can build that scalable and repeatable model, Brokermint can help. Brokermint automates commission management—from recruiting and sponsor fees to referral fees, sliding scales, processing disbursements and more.