Which commission plan should a brokerage offer?

What commission plans do brokerages offer?

Four, in different mixes:

• A straight split. The same share of every commission goes to the brokerage, all year, for example 70/30. Some brokerages move agents to a better split as they produce more.
• A capped split. The split applies until the agent has paid the brokerage a set amount for the year, then they keep 100%. Caps commonly fall between $12,000 and $25,000, as Frank writes.
• A low cap. The same idea with a much lower ceiling. One posting we wrote advertises a $6,000 annual cap.
• 100% commission, with flat fees. The agent keeps every commission and pays the brokerage flat fees instead. Commonly that's no monthly fee or a small one, around $85, and a transaction fee of $250 to $495 a deal, often paid by the client at closing. One posting we wrote leads with “100% commission. Keep what you earn.”

Most plans add fees around the split. Mine was 85/15 until a $15,000 cap, $60 a deal for E&O and broker review, $250 a deal after the cap, and $85 a month. The $99 sign-up fee bought every new agent 200 business cards and a company polo: it put a small barrier in front of joining, agents needed both anyway, and they wore the polos to training.

Around all of them sit the smaller terms: transaction fees, franchise fees, what happens after the cap, and how personal deals and referrals are handled. The cap vs. split guide explains those.

How do the plans compare on one agent's year?

Move the agent's commission and watch where each plan wins:

Two things stand out. Fees count as much as the split: on my plan, an agent with $100,000 from 10 deals paid $15,000 in split, $600 in deal fees and $1,020 in monthly fees, $16,620 in all, a little more than Frank's 80/20 with its higher $16,000 cap. And above the cap, the gap between plans grows with every deal: at $300,000, Frank's 70/30 agent hands over $90,000, the capped agent $16,000.

What do brokerages advertise to recruit?

From the recruiting postings we've written for brokerages, the plans they lead with:

• “100% commission with a $6,000 annual cap. Once you hit the cap, every dollar after that is yours.”
• “Two plans, both with a hard cap, and after you cap it's a flat transaction fee for the rest of the year.”
• “A competitive split and a low annual cap. Flat fees, no tiered ramps, no quotas.”
• “No desk fees. A tier structure that rewards you as you produce more.”
• “100% commission. Keep what you earn.” with leads provided.

Notice what they pair the plan with: leads, a transaction coordinator, coaching, no monthly fees. The plan gets attention; what comes with it is what agents weigh.

Which plan should you offer?

Start from the agents you want and what you give them:

• If you give a lot, leads, coaching, a coordinator on every file, a real office, a split or a higher cap pays for it. Agents know you get what you pay for: someone joining a 100% brokerage doesn't expect the support of a 70/30 one.
• If you want producers, a cap matters, because they're the ones who reach it, and they compare caps.
• If you run lean, a low cap or a flat fee keeps your offer simple, as long as the fees cover what an agent costs you.

Two plans side by side is common, so agents pick the one that fits how they work. And whatever you choose, don't expect small changes to recruit for you: going from 80/20 to 85/15, or from a $15,000 cap to $12,000, barely moves an agent. What moves them is your value proposition.

How do you explain your plan to agents?

Put it all on one page, every fee included, and run their own year through it on the call. A fee an agent finds after joining costs more trust than it earns. Your recruiting website should show the whole plan, ideally with a calculator, as what a recruiting website needs covers.

Where does Capped fit?

Capped's virtual office works with any plan. Agents join and pay any joining fee to your own Stripe account, and the Production add-on tracks each agent's progress to cap. The office itself is priced the way a cap works: one flat monthly fee for your brokerage, however many agents you add.