One of the reasons why cloud-based brokerages are so attractive to real estate agents is because they can offer far more favorable commission splits and caps to agents and charge much lower fees than typical franchise-based real estate brokerages can.
The reason for this is because cloud brokerages don’t have as many of the same expenses like franchise fees, office space, office equipment, staff, electric bills, ect. and this allows cloud brokerages to pass those savings on to their agents or re-invest those savings into providing more value to their agents.
So the goal of this article is to fully break down all the caps, commission splits, and fees agents at REAL Broker pay.
Note: All numbers in this article are taken from this page and the REAL Broker Independent Contractor Agreement (ICA) from September 2021. For a copy of my REAL Broker ICA, email me at [email protected]
REAL Broker Commission Splits
All agents at REAL Broker LLC have an 85/15 commission split. So the agent keeps 85% of their commission and pays 15% to REAL until they reach their cap. This split applies whether you are on a team or a solo agent. This is far lower than many franchise brokerages which often will take 30% or more of your commission until you cap.
If you are a producing agent who typically does cap, then the splits really just determine if you pay all of your caps quickly in a few months or if you spread it out over a longer period of time. At my last broker, I always knew that the first few months after my cap resets was going to be financially difficult because I would have to give up 36% of every commission until I finally did cap. By having a more favorable split like REAL offers, personally, it is not as much of a hit to my monthly income the months immediately after my cap resets and I love that I am able to spread the cap over a longer period of time rather than having to pay it all in a shorter period.
For newer agents, part-time agents or even referral agents who may never actually pay their full cap during the year, having a more favorable split like this will mean you will keep more of your money for the year. Let’s say you only close 4 deals a year and earn a $9,000 commission each. You would have to give REAL 15% of each of those and by the end of the year, you would have paid real $5,400 out of your $12,000 cap. But, you are not on the hook for paying the rest of your $12,000 cap, instead, your cap resets every 12 months and you start over again. If you had a 70/30 split instead, which is what I had when I was with Keller Williams, you would have to pay $10,800 out of your $12,000 cap before it resets. So for any agent who does not fully reach their cap every year, they are simply going to save more money with a more favorable split like what REAL offers.
REAL Broker Caps
REAL Broker has a $12,000-year cap for all solo agents and a $6,000 cap for any agent on a team. After you pay your full cap, agents receive 100% of their commissions minus a $225 transaction fee. No transaction fee is applied while agents are paying their caps.
These commissions are across the board in every city and state which is a small detail I appreciate. For most franchise brokerages, the franchise own (typically the broker) get’s to set the cap for their brokerage. For example, I started off at one Keller Williams brokerage which charged me a $21,000 a year cap, and then switched to another Keller Williams brokerage which had a $28,000 a cap. So many franchise real estate companies have very little consistency with how much their caps are for their agents.
Even within a brokerage, it’s common to see agents paying different caps. We call these “sweetheart deals“. Maybe the broker really wants to retain some top agents, so he charges them less than most of the other agents in the office or offers them free office space to stay. It’s not uncommon to see brokers lower an agent’s caps or their team members’ caps if the team leader promises to provide XX amount of training to the brokerage or grow their team to a certain size, ect.
At my first brokerage, there was an agent who did less production than me but my broker gave him a free office room while he charged me $500 a month for my office. He did not get a free office because he was more of an asset to the brokerage, he was simply more aggressive and had a better relationship to my broker…At REAL, you don’t find any of this kind of favoritism and sweetheart deals. Every agent in every state pays the exact same cap to the company.
REAL Broker Fees
REAL Broker LLC only has 3 main fees that its agents pay. A one-time $149 start-up fee, $225 transaction fee or $125 lease transaction fee after you cap, and a $500 a year annual fee taken out of your first two transactions for the year at $250 each.
In addition to this, you have the option to sign up for Chime at a reduced rate of $25 a month.
There are no monthly fees, no “technology fees”, no hidden fees.
Someone could make the argument that if you were to divide the $500 annual fee over 12 months, then it is the equivalent to a $41.67 monthly fee. But there are some advantages to having an annual fee rather than a monthly fee, especially for new agents. One being you only pay this fee if you are producing and earning money. If you are brand new and don’t close a transaction for your first 6 months, you don’t have the overhead cost of a monthly fee eating away at your savings. The second advantage to this structure is if you don’t close any transactions during those 12 months, then you simply don’t have to pay that $500 annual fee at all. This would not be the case with a monthly fee.
Next Steps With REAL
For your free REAL Broker informational packet breaking down in more detail the fees, stock program, revenue share, Elite Agent program, and more OR to schedule a 1-on-1 zoom call with myself to see if REAL would be a good fit for you, email me at [email protected]
If you are ready to join and don’t have a sponsor yet, I would love to be your sponsor in the company at no additional cost to you and I will then have a vested interest in your success at REAL. When you sign your Independent Contractor Agreement (ICA), just put my name, Malcolm Lawson, down as your “Sponsoring Agent” and I will officially be in your upline!
You can join here https://www.joinreal.com/malcolm-lawson/refer
Or check out these other REAL Broker articles I wrote: