The secret to an effective commission plan for Buyer’s Agents is your ability to calculate the split arrangement from your seven key numbers. You must determine what amount of the net profit you are willing to share after all costs are paid for. The costs must also factor in your time invested to manage, coach, and train to improve performance. And the costs must reflect the amount of time you will personally have to invest in each transaction to guarantee it’s closing for the team and your Buyer’s Agent.

For example, if your average commissions check through a Buyer’s Agent was $ 6,000 gross, and you are on an 80/20 split with your Broker, the revenue you receive would be $ 4,800. Then your average cost per transaction is $ 1,500 to cover your car, cell phone, Administrative Assistants, advertising, marketing, etc. You are now down to $ 3,300 before you factor your time in as a cost. You make $ 250 an hour, and you factor in three hours of training, education, and coaching for each transaction your Buyer’s Agent does. You now have a final net profit of only $ 2,550 left to split with the Buyer’s Agent. How do you split that up? If you are too low, you can’t attract skillful Buyer’s Agents to work for you. If you aren’t going to make something, why bother?

The truth is unless your average commissions check exceeds $ 10,000, it is challenging to generate any more than a small, short-term net profit. You will usually be in the range of $ 500 to $ 1,500 per transaction after the associated costs are covered in terms of your time and cost per transaction.

You must know the performance standards that you want to achieve in net profit for the company before you enter into a transaction with a prospect. It could determine whether you service that prospect or refer them to another Agent in your office or someone on your Buyer’s Agent team.

Your ability, as a Champion Lead Agent, to set complete and compelling performance standards will create the opportunity for your team to reach the Champion Team level. Without these concrete performance standards, your team will always fall short of the mark for Champion Team status.

Dirk Zeller is a sought out speaker, celebrated author and CEO of Real Estate Champions. His company trains more than 350,000 Agents worldwide each year through live events, online training, self-study programs, and newsletters. The Real Estate community has embraced and praised his six best-selling books; Your First Year in Real Estate, Success as a Real Estate Agent for Dummies®, The Champion Real Estate Agent, The Champion Real Estate Team, Telephone Sales for Dummies®, Successful Time Management for Dummies®, and over 300 articles in print.

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