Sunday, November 4, 2007

Commission Distribution-Personal

In an effort to promote open discussion and hopefully eliminate misunderstandings I am writing a brief explanation for my commission distribution. I am pretty sure most people are curious and while some people do ask not many do. Maybe you are thinking about getting into real estate or maybe you are a consumer who is curious-read on!

Last month I wrote trying to explain the split between Listing and Selling portions and I went into a little bit of detail for the individual. My example was not complete though and was on the high side.

This example will not apply to every situation because services and fees selected can be different depending on the needs of the client. One generic package is not my style in fact I am very flexible about your needs and try to tailor services to be appropriate to you. Also, I am pretty sure that other sales people have different splits, likely better, with their brokerages but you would have to ask them. I am a pretty open person so I don't mind sharing the information- mine is 60/40 to start.

Here are the numbers for my gross earnings for $1000:

Gross Income $1000
Less Brokerage Portion ($400)
Less Taxes ($300)
Less Expenses ($150)
For Adam ($150)

Obviously that looks pretty poor when you see 85% going away. Makes you want to cry, haha. The idea to improve that is to minimize your taxes (by deductions) to help offset a low take home pay. Self employment is taxed pretty hard so you really need to have a good accountant. By the way I am still looking for one :D

In order to survive in any business you need to manage your expenses. There are a considerable number of fixed expenses for a licensed Realtor that have to be managed. Overhead for us includes things like desk fees, liability insurance, licensing fees with CREA/RECO/OREA and London & ST. Thomas Association of Realtors.

Ongoing education is mandatory as well in order to maintain the quality of the industry-it is a requirement to keep your license.

Advertising is always a massive drain on resources particularily in print campaigns. Online advertising has a much lower dollar cost per advertisement then print; However, there is more time involved finding and maintaining the ads placed on sites.

On the plus side you don't need to worry about home advertisement if you are representing a buyer client. A buyer client has different needs. To represent a buyer you need a healthy time commitment to them as a buyer generally is 7 to 10 times the personal time commitment. I enjoy helping buyers but you certainly want to make sure you get along since you are spending a lot of time together.
I am getting a bit off topic here but I hope you were not too bored with the number crunching blog and found it useful information. Please don't hesitate to ask if you would like me to clarify anything for you- email is the easiest or you can visit for other useful information.
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