One of the most common questions people interested in a real estate career at KW ask is, “What is the Keller Williams commission structure?”
Personally, I think the most important thing a broker can provide you with is the best real estate training, second is a generous split. Remember, 100% of zero is still zero. If you don’t know what you’re doing or how to run a business the right way, people will see that and choose not to work with you.
That said, in most traditional real estate brokerages, the commission structure means that the more you earn, the more you give away. At Keller Williams, we believe that the harder you work, the more you should be rewarded. Keller Williams has an agent commission cap, which means that after you hit the cap, everything else you earn is yours!
The Keller Williams commission split is very competitive compared to other real estate firms.
Every agent at Keller Williams is treated exactly the same. There are no prima donna’s running around yelling at new agents for doing something wrong or parking in their coveted reserved parking space. Every agent is on a 64/30/6% split. That’s 64% to the agent and 30% to the broker. And since KW is a franchise, there is a franchise fee of 6% (on each transaction up to $3,000).
The 30% is CAPPED by your LOCAL MARKET CENTER per anniversary year of the agent. The cap amount varies from Market Center to Market Center. (Our Local Guides/Team Leaders can give you the specifics on the cap amount in your area.
The 6% is CAPPED at $3,000 per anniversary year of the agent.
Once an agent pays the entire cap amount, then the ENTIRE 100% of the commissions earned goes entirely to the Agent.
What’s with the Caps?
The best part about the Keller Williams commission structure is the ‘cap’. Each office has a cap on commissions based on economic conditions and operating expenses for that specific market center. Also contributing to the cap amount is the average median home price in your area. It usually amounts to selling 8-10 houses per year. Once an agent reaches the set amount of production (cap), they are no longer required to pay the office a split, meaning the agent is at a 100% commission until their anniversary year starts again. How amazing is that?
If a KW agent does not reach either cap in a year, they DO NOT have to make up the difference…the cap is simply a max payout per anniversary year.
Lets look at an example…
In this particular market, the average home price is $500,000 and the agent cap to the office is $28,000. If an agent does $300,000 in Gross Commission, they will net $269,000.
- $300,000 Commissions in 12-month anniversary year
- $28,000 goes to the Market Center
- $3,000 goes to KWRI
- $269,000 NET TO AGENT!!
The Math
- $500,000 (avg. home price) x 2.5% (avg. commission)= $12,500
- $12,500 x 24 houses = $300,000 Gross Commission Income
- $300,000 (GCI) – $28,000 (MC)- $3,000 (KWRI)= $269,000
Interdependent Real Estate Business Model
At Keller Williams Realty, we teach you how to generate your own leads and take ownership in your real estate business. It’s like the old saying, “Give a man a fish, feed him for a day. Teach a man to fish, feed him for a lifetime.” The KW business model is interdependent, meaning you are independent in running it, but are not just thrown out there to fend for yourself. We provide the tools, resources, strategies and empowerment for you to run and manage your own real estate business.
That’s probably one of the reasons you are getting into this business, right? To take control of your life, your schedule and build a legacy for your family. KW promises to teach you to be independent in your business and also give you the leverage to balance your business and personal life.
Not only does Keller Williams Realty offer the best real estate career training, support and commission structure, there is a true incentive at KW for our associates to share ideas and teach classes. With the addition of KW Profit-Share, many of our associates actually NET more than a 100% of their commissions, as their annual profit share exceeds their commission cap every year! To learn more about the KW Profit-Share program click here.
Other Real Estate Companies Commission Structure
Dependent Model
The most common type of brokerage in the industry. Their commission split usually starts at the traditional 50-50 split. This split can continue for as long as you are selling or it can operate with a sliding scale. Based on your production, it can move to 60-40, 70-30, 80-20 and so on.
The most important thing to notice here is you will always be paying your broker a fee. There is no cap or end in sight. Most franchises do not cap their franchise fee, so even if you work your way up to a 100% commission split, the broker is still getting paid. Dependent brokers also generate leads for their agents. Sounds good, right? Think again.
Example
A common referral fee for referring business to an agent is 25% of the gross commission. Let’s say the dependent broker gets a buyer lead and refers it to Sally. The gross commission ends up being $10,000. Sally is on a 50-50 split and owes the broker a 25% referral fee. The broker nets $7,500 and Sally gets $2,500.
Doesn’t sound too fair since Sally did all the work, spent hundreds of dollars in gas, numerous hours showing property and still has to pay taxes on this commission. This model is designed for agents that want a job, not a career. You will learn how to sell real estate, but will not learn how to run a real estate business. You are basically an employee for the dependent real estate broker.
Independent Model
“Good luck, I hope you make it” is a good way to sum up this model. You’ll see the independent type of commission structure with discount brokerages or 100% commission companies.
The main focus is the success of the broker, not the agent. This type of broker-centric model is one-sided and is not designed for agents that need training, technology or support.
Example
This is pretty simple example. Gross commission is $10,000. Sally keeps all $10K. She will have to pay her broker either a monthly desk fee or a transaction fee. These fees vary, but can range from a couple hundred dollars per deal or up to a couple thousand per month.
It’s not just about business at Keller Williams. It’s about the quality of life of our agents. Bottom line, if you don’t succeed, Keller Williams doesn’t succeed. By offering a cap on commissions, KW gives agents the best opportunity to take home more money than any other real estate business model. This type of real estate business model is paramount for entrepreneurs and is one of the main reasons Keller Williams is the best real estate company to work for.
Is The KW Commission Split Right For You?
In the end, you need to find the best fit for you. If you can handle an ever-changing market without any support or guidance, go with the independent company. Just looking for a job, a dependent broker will be the best fit. If you’re looking to run your own real estate business and learn how to balance your business/life, there’s no better place than Keller Williams. At KW you will receive the best platform to run your real estate business and with the benefits of the Keller Williams commission split, take home more money in the long run.
