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How much do Brokerages charge Agents on Average?

ArcticS

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I'm being told that Keller Williams has a 60 / 40 split with their agents, where their agents pay KW 40% brokerage fees. Does this sound possible/practical?

I later heard that Remax currently has the highest brokerage fees, and they are only 20%. Is that correct?
 
This is not exactly a question that one can really provide a clear-cut answer to. Honestly, it really depends on both the brokerage.

Some brokerages offer something as low as a 50/50 split with their agents (Brad J. Lamb Realty comes to mind). While this, at first, does seem to unreasonably favor the brokerage, one must take into account the services in which said brokerage provides. For example, Brad J. Lamb Realty spends a great deal of money on marketing itself, which in turn provides a constant stream of business leads for their agents. The idea is to have agents entirely focused on selling real estate instead of spending a great deal of time (and money!) on prospecting for clients.

There are also brokerages with multiple offices throughout Toronto, providing their agents with comprehensive administrative support and facilities to enjoy (conference rooms, private offices, etc.). Also, while agents can expect to pay a monthly franchise fee for most brokerages, there are certain ones with exceptional clout behind their names (eg. Sotheby's International Realty), in which agents will be charged a premium to use.

On the other end, you have some brokerages which pretty much leave agents to their own devices, offering very little in terms of support of facilities. These brokerages tend to offer higher commission splits (95/5), or a standard administrative fee per deal, and desk fees that average roughly $50 a month.

In the end, it really depends on what services a particular agent wants from his or her respective brokerage. Clearly, the services that each respective brokerage provides are not free; in order to recoup such costs, brokerages offer agents less favorable commission splits and/or higher monthly desk fees. The more services offered, the more agents pay.

I certainly hope this cleared things up a bit. Cheers!
 
Wow, thanks for that very detailed explanation. It really does clear up a lot, and based on your description, I can see how KW might charge a premium. Thanks!
 
I vaguely remember my agent telling me that his brokerage (homelife) takes 30% of the commission. I thought that sounded very reasonable considering all of the marketing, support, offices that need to be run. If brokerages are charging more than that they better be offering something fantastic in exchange!
 
It should also be noted that agents often have a say in what fees they pay their brokerages when negotiating their contracts. An agent that expects a large volume of deals will certainly push for higher desk fees so that he/she can enjoy a more favorable commission split, whereas a more novice agent will probably opt for a more even split with the brokerage.

Also, the more an agent produces, the greater say he/she has when negotiating contracts. Just like any other firm, real estate brokerages want to keep their top talent. Generally, they will be more than willing to offer excellent commission splits to keep their top agents happy, allowing the brokerage to recoup operating costs through the sheer volume of business they bring in.
 

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