Whether you’re thinking about building a team, or researching joining a team, compensation is a major factor in the recruitment process. It’s also a major factor in keeping agents motivated and happy. It’s simple: The right compensation structure fuels the right type of performance for any team.
But that’s where the simplicity ends. Compensation models and salaries are as varied as the teams they fuel. Performance needs to be rewarded, business costs need to be covered, some agents may fall under a team but have their license with a brokerage, and things can get complicated in a hurry. And these are just a few factors.
Successful Teams and the Structures they Use
Recently, Real Trends and BoomTown conducted a survey of team leaders and team members across the country. The results are compiled in the Real Estate Teams Playbook: Aligning Structures and Strategies with Goals and Growth. An informative and insightful read for anyone building a team or considering joining one. Among many key findings about the rise of teams and what fuels their success, was an honest look at compensation, and what is working. This included various compensation structures, how teams divide brokerage costs, and a look at salary differences for some of the more common team positions.
Based on the respondents, the average monthly compensation for team members ranged from $2,000 to $12,700 depending on their position.
Team Compensation and Brokerage Costs
There are 2 main approaches to compensation based on covering brokerage costs:
Sales agents cover the full brokerage costs
Teams that use this method have agents absorb the brokerage fees. On the plus side, these are typically the teams that offer considerably higher commission splits to the agents (which can be beneficial to an agent’s bottom line in the long run).
Commission splits are adjusted case-by-case
Other teams take a “full-service approach” to the brokerage fees, and adjust commission splits accordingly. Mike Brown, team leader of the Mike Brown Group, Silvercreek Realty Group in Boise, ID goes as far as covering any office expenses incurred by the team including liability insurance and continuing education.
A look at Commission Splits
There was a significant variation in commission splits for sales agents based on the team leads who responded to the survey. Commission splits with sales agents were anywhere from 40% to 80%, but the most common situation was a 50/50 split. This was overwhelmingly the case with buyer’s agents. Larger splits, at the 75% to 80% level were usually designated to sales agents who generated their own leads or who primarily worked with sellers.
Splits were sometimes based on tenure in the team. Some teams even used a “sliding scale” model to base commission split percentage on an agent’s total production for the year. Some even reported not splitting commissions at all, but instead paying a pre-determined fee to their agents.
Compensation for Real Estate Team Roles
As every team structure is unique, it’s no surprise that there are a variety of compensation methods and models. Some teams employ a more organic outlook that gives sales agents the freedom to service any type of client and receive compensation based on each unique transaction. Other teams are more stringent in their structure with a clearer divide in responsibilities. For example, if someone is designated as a buyer’s agent, they will only work with buyers and receive the predetermined buyer’s agent rate of compensation.
Similar to brokerages, and the various models within, different arrangements suit different work styles, so it’s important to pay close attention to the attitude of a team, and get a clear picture on the different types of compensation and incentives available.
As Joe Bogar of the Bogar Pilkington Group explained, “joining a team has to be fair-fair, not necessarily win-win.”
A look at Income for Buyers Agent and Listing Agents
The average monthly income of buyers agents who participated in the survey was $5,800.
The average monthly income of listing agents was $13,000.
This is clearly a substantial difference in compensation for the two. The difference is because there are often much fewer listing agents on a team. Since this role brings in the most money for the team, they often have the higher commission splits.
Average Compensation for a Non-Sales position in Real Estate
Most teams have several members who are not in a sales position. These are administrative assistants, marketing specialists, transaction coordinators and other “support” positions. Team members who aren’t in a sales position almost always are paid a salary or hourly, with hourly pay ranging from $12 to $20.
Out of the support positions, administrative assistants and transaction coordinators typically receive bonus compensation that’s based off of the number of closed transactions.
Compensation Structures for ISAs
Compensation for the ISA role, or lead management director, had the most varied compensation methods. For the most part, half of the teams pay ISAs a salary, and half compensate them off of commission. Due to this difference, the average monthly income can vary greatly.
ISAs reported an average monthly income anywhere from $1,500 to $18,000.
The average monthly income for the position as a whole, however, was $6,400 per month.
ISAs often receive bonus compensation as well, from setting appointments and closing transactions from the lead pool they manage.
Real Estate Team Leader Contribution
The team leader respondents reported between 0% and 100% when asked how much they contributed individually to the team’s production. Quite a range! On average, however, team leaders directly serviced 40% of team sales and averaged 145 transactions, with an average sales price of $315,000. Many team leaders also reported that they received a salary that included the potential for bonuses based on the team’s profitability.
Cracking the Team Compensation Code
As with any successful business, building a team takes great strategy, patience, and discipline. It’s difficult to nail the compensation structure right out of the gate, and many times the model shifts and grows right along with the team. There’s no hard and fast “right way” to grow and compensate your team, but there are some clear trends that are helpful when researching how to compensate your own team, or when you’re thinking about joining a team. That being said, every team that is seeing success has clearly defined expectations, a motivating compensation structure, and the tools to keep team members engaged and accountable.