The Ultimate Guide to Revenue Share For Real Estate Agents
In this article, we will go into detail about revenue share for real estate agents. We’ll go into topics with shorter posts you can check out, like:
- Make an Extra $3,000, $5,000, or $11,000 a Month While Selling Real Estate with eXp Realty Revenue Share
- Three Ways Revenue Share Helps Agents Retire Early
- eXp Realty Revenue Share Calculator demo!
- How to Grow Revenue Share and attract agents for massive cash flow
- More About eXp Realty and how it can explode your real estate business
- Free tools for building your revenue share when you Partner with Us
Introduction: What is Revenue share?
You might have heard of the term revenue share before. Although it is a relatively new concept in business, many companies have already taken advantage of this powerful new concept.
For starters, revenue share is when a company distributes their revenue amongst partners and/or associates within the company for contributing to the growth and success of the company. Most of the time, revenue share is used as an incentive program for company associates to refer new customers or clients.
For real estate agents, Revenue share is where a brokerage shares its earnings with their agents for helping to grow the company.
This is a win-win because the broker can pay agents rather than spending money on advertising to grow the business. This is a great way to retain and reward agents!
Many real estate agents are unfamiliar with the concept of revenue share and may be intimidated by it at first glance. There are also very few brokerages out there that offer their agents the revenue share business opportunity. But if leveraged correctly, the power of revenue share for real estate agents can be revolutionary to the industry. That is why we created this guide: to educate all real estate agents on how revenue share can benefit them.
We broke our guide down into 6 different sections to better organize everything there is to know about revenue share for real estate agents. Here are the 6 sections:
- Profitability: How Revenue Share works in Practice
- Building your Team: Revenue Share Strategies
- Tools: Essentials to grow a revenue share team
- Agent attraction: How and Where to Find Agents
- Team Management: Why Revenue Share can be considered Passive Income
- Financial Freedom: How to Retire with Revenue Share
Profitability: How Revenue Share works in Practice
Before we begin let’s take a look at how revenue share works in practice for real estate agents and brokers.
Generally, revenue share is paid from the brokerage to the agents based on the gross commission income or GCI earned by agents you introduce to the company. Here’s a quick example:
Let’s say you earn 3.5% of gross commission income for agents you introduce to the brokerage. Joe joins the company after you showed him the benefits and brings in $80,000 in gross commission each year. To thank you, your broker pays you 3.5% of $80,000 = $2,800 each year.
As you can see, the revenue share that you would earn as a sponsoring agent, is calculated from the total revenue Joe brought into the brokerage. This way, the company stays sustainable and the agent is guaranteed to receive revenue share as long as the agents you refer are productive. Which bring us to the next point.
Revenue sharing is not the same as profit sharing. Although similar in concept, there is one major difference that separates the two. As we’ve mentioned earlier, revenue share is when the broker pays their agent based on the gross commission income earned by the agent you sponsor. Profit share is when the broker pays their agents based on the net profit the broker is able to earn after deducting all of the expenses.
In a profit sharing model, you may not earn any money for referring agents to the brokerage. Even if the agents you sponsor are productive, for profit share to work, the broker must be profitable first.
Setting Up Your Revenue Share Business
In order for real estate agents to fully take advantage of the revenue share model, they need to understand the potential that it holds. The agents that treat the revenue share opportunity like a serious aspect of their business can see an exponential and even international growth.
Revenue share for real estate agents can be grown exponentially with the right models and we’re here to show you how.
Usually, revenue sharing models in real estate are tiered. Since you are referring fellow real estate agents into the company, the agents that you sponsor into the brokerage can also participate in revenue share and receive the same incentives that you did. And since you played a role in bringing those agents into the brokerage, you will also be rewarded for any agents that they bring into the company as well.
In a tiered model, revenue share can be grown exponentially. For easy math, we’ll assume that all agents that join the brokerage due to your efforts, directly or indirectly, reach $80,000 in gross commission income each year and the company pays you 3.5% of GCI for all agents. If you directly sponsor 5 agents into the brokerage and they each sponsor 5 agents into the brokerage, based on the hypothetical numbers we mentioned earlier, that’s $70,000 earned each year in revenue share!
Brokerages that offer revenue share will most likely have more than just 2 tiers and will pay you different percentages of the agents’ GCI for each tier. Check out our eXp revenue share calculator demo to get a more in depth look at how revenue share can be grown exponentially.
Remember that revenue share is paid to real estate agents indefinitely. Which means that you will be paid each year for your efforts based off of the annual productivity of the agents you introduced. That’s what makes revenue share so powerful, it is a recurring passive income stream that rewards you continuously for your efforts.
Building your Team: Revenue Share Strategies
Just like your sales business, if you want to scale revenue share into a national business you will need a business plan.
Like any business, you should set goals for yourself in regards to revenue share. Start by setting a long term goal 3-5 years down the line, then work backwards and set your goals for the year, the month, the week, and even a goal for every day. Some agents might want to build a national business with revenue share while others are just looking to use revenue share to supplement their income. It all depends on the personal goals you set.
Determining your Personal Strategy
Generally there are 3 types of agents at brokerages that offer revenue share.
- Agents that focus on sales and use revenue share only as supplement
- Agents who focus on building a revenue share organization to completely replace their income
- Agents who build both streams of income at the same time
Before you begin setting your personal goals you first have to determine which type of agent you want to be. If you already run a successful sales business as an agent you might want to focus on sales and build your revenue share team as only a supplement. If you’re looking to retire soon or replace your commission income with something more passive then you will probably focus more on revenue share. It’s completely up to you how you want to balance your time and how much effort you want to put into growing revenue share.
Understanding the different mindsets of real estate agents can also be important for when you do begin attracting them to your brokerage. You have to understand what each specific agent wants to be able to present your brokerage model to them correctly and determine if they will be a good fit.
Learn how to grow revenue share with 11 simple strategies.
Build Personal Relationships
Each agent has a different style when it comes to marketing to their clients. Why not take that same strategy to growing your revenue share business?
If you want to be able to stand out from the crowd you have to offer agents value. Understand that in order to successfully build out your revenue share, you have to build personal relationships with other agents. You all know that buyers and sellers like to work with agents that they know, like, and trust, why should your fellow real estate agents be any different?
Get to know your agent prospects first, ask them questions about their business, how they like to do things, what issues they might be running into at their current brokerage. Avoid sending mass or impersonal messages. For some agents changing brokerages can be a huge career and even personal decision, make sure to treat it as such and give it the same amount of importance and care on your end as well.
A lot of agents might not know this, but large national brokerages in the US are starting to scale to the international level. Real estate brokerages aren’t just the small local brick and mortar offices anymore, they’ve evolved international corporations. There are even international brokerages that are publicly traded on NASDAQ and operates in foreign countries like Canada and Australia.
This can be huge plus if your brokerage also offers revenue share. That means that you can grow your revenue share team in not just every corner of the US, but of the world! In today’s age, there are so many ways for you to connect and build relationships with agents all around the world in Facebook groups and online forums. The only thing that can limit your growth is your own imagination.
Tools: Essentials to grow a revenue share team
If you want to grow your revenue share, you have to treat it like a serious business, and that means having the right tools and systems in place.
As a real estate agent, you are already familiar with CRM softwares for your clients. You can also use CRM for your revenue share prospects too. You know that converting a lead into a client can take a lot of follow up and cultivation, the same can be said for agents who might be considering a brokerage change. Using a CRM to help grow your revenue share can help you keep up with follow ups and make it easier for you to keep track of your agent prospects. You don’t even need a whole different CRM if you have a CRM system that allows you to tag and categorize your prospects.
Another tool that a lot of real estate agents are beginning to use are instant chat bots. It lets you reply to your leads instantly and give them more information based on what they are looking for specifically. You can easily use this tool to build your revenue share as well, just simply add a new section that is only for other real estate agents if you’re already using a chat bot. This way, interested agents can get more information about your brokerage before they decided whether or not it’s a good fit for them.
You can also use your sponsors, the agents that introduced you to the brokerage, for resources on how to build revenue share. It is usually your sponsors’ job to provide guidance and resources to help you grow revenue share. Some sponsors even have entire trainings and mastermind coaching sessions for their agents to help them with their efforts to grow revenue share.
Best Practices to build credibility
You can grow revenue share as fast or as slow as you want to, but if you’re looking to make a business out of revenue share, you have to build credibility amongst your fellow real estate agents.
A good way to do that is by having your own content that provides value to other real estate agents. A lot of real estate agents have their own blogs, YouTube channel, or even books to build credibility with their clients, but those tools can also be used to grow revenue share.
Having your own content demonstrates that you are a knowledgable professional in your area of expertise, when other real estate agents see that, they will gravitate towards you as an industry leader. It is a great way for you to build the credibility you need within the real estate agent community.
A great tool that agents around the world are already using for their sales business is social media. It’s a great source of content and a fast way to spread information and connect with people.
Instead of just using your social media to inform your customers and clients, you can also use your social media page for revenue share. Use it as a platform to connect with other real estate agents and start building relationships with agents around the world. You can also share information about your brokerage model on there if you feel like it’s not getting enough exposure.
Agent attraction: How and Where to Find Agents
There are plenty of ways to grow your revenue share. We talked about the tools you need earlier, now let’s take a look at how to implement them for attracting agents to your brokerage.
As a real estate agent you probably already have a network of referral and business partners that you have worked with in the past or are looking to work with in the future. We know that a transaction usually takes 2 agents, so you’re constantly working with other real estate agents. A great way to meet agents for revenue share is by simply doing what you’re already doing!
If you’re really focused on building revenue share and want to grow it as fast as possible, you can implement more ways to meet and network with agents. Local agent meet ups, MLS events, open houses, and real estate networking events are all great ways for you to meet new agents. You can also leverage your social media and online forums to network with agents that are not in your area.
Things to Remember
When you’re talking with other real estate agents to grow your revenue share, you might want to remember a few things about your brokerage so that if an interested agent asks, you will be ready to answer all their questions.
A few important ones might be:
- Commission split
- Commission Cap
- Any and all Fees
- Tools and Support provided
- Healthcare benefits
- Incentive/Recognition programs
Also, remember to always be compliant and following the rules of your broker and the laws of your state. If your broker has a handbook on how you should go about attracting agents, make sure you familiarize yourself with it. And always make sure that you aren’t breaking any local or state real estate laws. If you’re unsure about something, the best thing to do is always to ask your broker first!
Team Management: Why Revenue Share can be considered Passive Income
A lot of agents dream of becoming their the owners of their own brokerage one day so they can take a more passive role. But being a broker is no simple task, it’s a lot of work. Being your own broker means that you are responsible for your agents and on top of that you have to carry all of the legal and financial risk.
With revenue share you don’t need a broker’s license to essentially “be your own broker”. You can build a team of real estate agents around the world without having to carry the massive burden of being a real estate broker!
But that doesn’t mean you can just leave all of your agents to fend for themselves with no support. As a sponsor you are still responsible for making sure the agents you introduce to the company have a smooth on-boarding experience and have the right resources to be successful.
A lot of brokers will provide on-boarding agents with their own on-boarding concierge, so you don’t have to personally take them through every step. But having resources for your agents can help make the process smoother and more efficient. Consider providing your new agents with on-boarding training videos, or a guide/brochure of the company so they know where to turn to if they have issues with accounting, compliance, tech, marketing, etc.
You should also be ready to answer any questions your agents may have and know where to point them to so they can get their issues resolved. Since revenue share teams can expand out of state and even out of country, your sponsors don’t have to know everything, they just have to know where to point you to so you can get your questions answered.
Although your sponsors should have sufficient trainings to help you get started with growing revenue share such as training courses and maybe even coaching sessions, it is not their job to manage your every need. That’s what your brokers are here to do.
As a sponsor, consider providing your team of agents with collaboration channels and groups such as Slack or Workplace. This way you can create a collaborative environment with your team and provide them with a means to ask questions and mastermind with colleagues.
Use the Systems your Brokerage Provides
The true power of revenue share lies in it’s ability to grow exponentially without you having to put forth exponential effort. You would obviously need to put forth effort in order to grow your revenue share into a full time business, but you would be leveraging your time and effort now for a more passive income in the future.
Brokerages that offer revenue share will usually have systems in place to help their agents with their daily business dealings. With revenue share, you can leverage the systems and employees of your brokerage to grow a team of agents. That’s what makes revenue share so lucrative, your broker provides your agent with support, carries their legal risk, and pays for the employees that helps run the company!
Recently we have seen a lot of independent and franchise broker owners move their entire brokerages over to national brokerages that offers revenue share. Why? Because it makes financial sense to partner with a national brokerage that offers support for you and your agents for free.
Financial Freedom: How to Retire with Revenue Share
Now that we’ve gone over the details of how revenue share works in practice and how you can leverage this model to grow a business. Let’s dig into the last section of revenue share. How you can retire using revenue share.
Comparing it to a Traditional Real Estate Agent Retirement Plan
Let’s say that you want to have $900,000 in savings before you retire. Conservatively speaking, you will likely have a 4% output per year which amounts to around $36,000 per year or $3,000 a month. In order for you to get to $900,000 in savings in the first place you would first have to make $100,000 a year in commissions at a 28% tax rate which means you net $72,000/year. If your monthly expenses are no more than $4,000 you will have $24,000 left over each year to put towards retirement. Which means it will likely take you over 37 years (900,000/24,000=37.5) to retire netting $100,000 in commissions before taxes each year.
And that’s not taking into account any emergencies you might have where you will have to take money out of your savings. As you can see, a traditional retirement for real estate agents is no easy task. But let’s take a look at how you can retire with revenue share.
Revenue Share Retirement
Using the example from the beginning of the article let’s say you earn 3.5% of gross commission income for agents you introduce to the brokerage. Joe joins the company after you showed him the benefits and brings in $80,000 in gross commission each year. To thank you, your broker pays you 3.5% of $80,000 = $2,800 each year. Joe then brings on Sally who also makes $80,000 in gross commission each year. Since revenue share is tiered, your broker pays you 4% of gross commission income for agents in your second tier of revenue share, in this case that would be Sally, which means you earned an extra $3,200 in revenue share.
Check out the Three Ways Revenue Share Helps Agents Retire Early
Now a total of $6,000 earned each year for revenue share might not seem like a lot, but what if you directly introduce 6 agents to the company that all make $80,000 or more in gross commission income every year. That’s an extra $16,800 made from revenue share ($2,800 x 6= $16,800). And now let’s say hypothetically the 6 agents you directly sponsor each introduce one agent that brings in $80,000 in GCI each year. Now thats an extra $19,200 ($3,200 x 6= $19,200) earned from revenue share each year. Add that to the $16,800 you’re making from your front line agents, that’s an extra $36,000 each year earned from revenue share that you can put towards retirement!
Why Agents Love Revenue Share
Now that you’ve seen the potential that revenue share has, you can understand why real estate agents around the world are moving to brokerages where they can leverage this model to build wealth and passive income.
In the example from above, imagine if those 6 agents that you directly sponsor each sponsored 6 more agents who brings in the same $80,000 in GCI. You can do the math yourself for how much extra income that would bring in.
Revenue share is truly a revolutionary model for real estate agents. It has been around for a few years, but only recently been implemented in the real estate industry and it has already proven to be a powerful model. Real estate agents love this model because it is a stream of income that can be grown simultaneously with our sales businesses. We interact with fellow agents as a part of our job, it would be almost irresponsible for us to not share with them a brokerage model that can help agents make more money.
Revenue share is a game changing model for real estate agents and brokers. Now that you’ve learned how revenue share works for real estate agents, follow our guide and get started today!
It might be intimidating at first trying to leverage and scale a new model in real estate, but if you partner with the right team and follow our best practices, you will see that growing your revenue share can be both rewarding and fun.
If you want to get started today, the first step you would need to take is to join on with a brokerage that offers revenue share. Check out eXp Realty, the international brokerage that first implemented this model and changed the real estate industry forever.