How to Negotiate a Higher Commission Split | ADHI Schools



How to Negotiate a Higher Commission Split as a Real Estate Agent

Published by Kartik Subramaniam

On August 24,2020 | Reading Time : 4 minutes


While this topic might be a little more advanced, especially if you are just starting real estate school online, it’s an important topic, nonetheless. Generally speaking, the way the real estate industry typically works goes a little something like this:

A real estate agent works for a broker (think any company like Century 21, Coldwell Banker, etc.) and together, they combine their resources to help sell a home. More often than not, the company keeps some percentage of the overall commission fees that are paid out after the transaction in question has closed. As a direct result of their hard work and dedication, the real estate agent gets to keep some percentage of that commission. This process repeats itself, again and again, as each home is sold.

Over time, the real estate agent will sell more and more homes. Sometimes the average value of the homes they are selling increases. Sometimes their frequency increases. Regardless - this person continues to build experience and generate business for the broker and, as a result, the amount of money they get to keep should increase, too.

However, this doesn't necessarily happen automatically.

Typically, there will come a time when a real estate agent actually has to go into the broker’s office and negotiate to keep a higher percentage of the commission - something that can be particularly scary if you haven't been in the real estate industry for very long. But thankfully, the process itself is quite straightforward - provided that you're able to keep a few key things in mind along the way.

Most companies are going to have a published schedule wherein the commission splits are very transparent but what if you want to move up quicker? What if you have a huge deal you are working on and want a special arrangement on that transaction?

3 Negotiation Steps to Getting a Higher Commission Split

1. Analyze your Progress

What may be the most important thing to understand about this process is that before you even think about walking into the boss' office and asking for what amounts to a salary increase, you need to do your due diligence.

Decide on a period of time and pour over the data about each transaction to essentially track the trajectory of your career. Use cold, hard numbers to show not only how you've improved in your position, but how the value that you've been able to bring to the broker has increased, too. Maybe you've been selling more homes than you were when you first started. Maybe the average transaction price has increased exponentially. Maybe it's both at the same time.

Regardless, at a large company your broker might not “just know this” and they might not take your word for it. You need to be able to clearly illustrate the value that you're currently bringing to the operation and why that value is worth a higher commission split. You're not going to be able to get to that point without preparation, so this process begins here.

2. Do your Research

Likewise, you need to make sure that you're well aware of what commission split plans are in place to see exactly what you qualify for to begin with. Not only is this a great way to enter into the conversation armed with as much information as possible, but it's also a way to proceed without seeming too demanding as well.

So instead of going into someone's office and saying "I want X," start a conversation about your current split and why you have earned more. See which ones you qualify for and ask if there is one that will promote your growth within the company faster than the one you're currently on.

3. Review your Goals

Finally, you always want to make sure you know where you're headed before asking for your next commission split increase. Essentially, you need to know what your goals are for your career in the next five years to determine what you should be asking for to begin with.

If you know what the next "level" is and what you need to do to achieve it, suddenly something that was once overwhelming doesn't seem so insurmountable anymore. You've broken the process down into a series of smaller and more manageable steps, which will absolutely help you stay motivated at the same time.

If you can find time to do this between managing your client expectations and meeting your broker’s, you can be sure that you’re on the right track to taking your career to the next level.

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