How Much Money Does a Real Estate Agent Have to Pay to their Broker?

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When starting out as a real estate agent, you must work under a broker for a certain amount of time. The time you have to work under a broker varies depending on what state you do business in. While working under a broker, you also have to pay that broker. Working as a real estate agent is not a job where you get paid hourly for the work you do. You are self-employed and must sell houses to make money. The broker of the office does not make any money unless you sell houses as well. The broker makes money by taking a percentage of the commissions you make or a flat fee for houses you sell. The broker may also charge monthly fees for office space, marketing, signs, etc.. The amount you pay to the broker varies widely based on the training, the office, the broker, and the work you do.

How important is choosing the right broker?

Real estate agents can make a great living if they work hard and smart. The average salary is not very high when you look at employment statistics, but those numbers can be very deceiving. Many agents only work part-time, some people are not able to motivate themselves without a boss, and most agents do not get proper training. If you want to be one of the agents who makes an awesome living, you will have to work for the right broker. The right broker will have a great training program, lead generation sources, and teach you the best ways to make money in your market.

Too many agents start out in the business by choosing the broker who charges the lowest fees and forget about training. Learning how to sell houses is vitally important to actually selling houses. Many brokers will not offer much in the way of training, especially the low or flat fee brokerages who are simply trying to get as many agents as possible, and hoping a few sell houses.

What do real estate brokers offer agents?

Real estate brokerages charge different amounts based on the training and services they offer. Here are a few of the services that some brokerages provide:

  • Office space
  • Administrative staff
  • Floor duty
  • Lead generation
  • Mentor programs
  • Marketing materials
  • Signs
  • Office meetings and networking
  • Training classes
  • Advertising

Some offices and brokers will offer all of these services, other offices will have a few, and some will offer nothing. Many of these services are vitally important to being a successful real estate agent. Most agents fail in their first year because they have no idea how to sell houses. Real estate classes do not teach you how to sell, they teach you how to avoid breaking the law and be ethical. Once you take real estate classes and pass the exam, most are very unprepared for how to actually find clients and sell houses. The agents who I see do the best in the industry, get intensive training, work in successful offices, and are in the office a lot.

If you are interested in getting your real estate license, I recommend Real Estate Express. The newest agent on our team just passed his exam on the first try using them. We have had multiple agents use Real Estate Express and successfully get through their education quickly.

How much do real estate brokers charge their agents?

The rates that brokers charge their agents can range from 50 percent or more of the commissions the agent earns plus monthly fees,to a flat fee of $200 or less per closing and no monthly fees. As you can see there is a huge difference in what brokers charge and some brokers have different programs in their office depending on the agent. You can see why many agents choose the cheap broker. On a $100,000 sale of a house, the agent might earn a $3,000 commission (all commissions are negotiable). Here is what the agent may earn after paying their broker in a high-split scenario:

  • $3,000 times 50 percent = $1,500
  • $1,500 minus $300 a month in desk fees = $1,200

Keep in mind this is a very high commission split and desk fee scenario. On my team, we take 50 percent of our agent’s commissions, but we pay their desk fees and many of their other costs. For brokers that offer very little training or services, they may only charge $200 per closing, which means the agent takes home $2,800 instead of $1,200.

Some offices will work on a 70/30 split with their agents. Some offices will work on a 90/10 split, but usually the better the agent is, the better split they can get. If you start working with a broker who will only offer a 50/50 split when you are a brand new agent, they may offer you a much better split when you prove you can sell houses and bring in money to the broker.

However, I like to use the saying 100 percent of nothing is still nothing. Many agents who choose the broker that charges low fees fail because they never sell any houses. We have multiple agents on my team making over $100,000 a year on low commission splits because they sell a lot of houses. We taught them how to find their own clients and we give them leads that convert into sales. A couple of those agents were working with other offices before they joined our team and doing much worse because they had no idea what they were doing.

The best thing you can do is interview multiple brokers, break down what they offer, and choose the broker with the best training.

How To Find A Real Estate Broker To Work For?

Becoming a real estate agent can be difficult, but can also be a great way to make a living. Getting a real estate license is only part of becoming a real estate agent. Before you sell any houses, you will have to find a broker to work with.  Real estate brokers all have different commission splits and offer varying amounts of service for their agents. The type of broker a new real estate agent wants will vary based on that agent’s needs and goals. An investor who only wants to get a license to help them buy their own houses, will not need the same type of broker as an agent looking to make a career out of real estate. It is not easy finding the perfect broker for your needs, but it is extremely important you to do so.

Why do real estate agents have to work under a broker?

When a real estate agent gets their license, they have to start working with a broker before they can sell any houses according to licensing state laws. I discuss the process in more detail in this article. Purchasing a house will be most people’s biggest purchase in their life and agents should take it very seriously. When a real estate agent works for a broker that broker takes on responsibility for that agent. A new real estate agent will have to work under a broker for a certain amount of time before they can start their own office.

What will a real estate broker offer new agents?

Depending on the brokerage, there will be intensive training for new agents, some training or no training at all. Brokers will also offer varying commission splits for new agents. Usually, the less training and services offered to a real estate agent, the smaller the portion of the commission the broker keeps.

Brokers also may offer office space to agents, administrative assistants, advertising and some brokers even pay for agents to get their license. Other brokers will pay for nothing, offer no office space, no office administration or help at all. The less services a broker offers, usually the less commission split they will keep.

How does a real estate agent know what broker is best for them?

Every new agent has different goals and aspirations. Those goals will determine what type of broker will work best for them. A real estate agent who only wants to use their license for their own investments may want to work with a broker that offers no services or training and leaves the agent with the highest commission split. Some brokers only charge a small transaction fee on each closing, which leaves the investor agent with the most money. However these brokers offer almost no support, and it will be up to the real estate agent to create all of their own business and to train themselves.

A real estate agent who is looking to start a career out of real estate will want a broker that will offer training and accountability. The agent might make less money on each deal with a higher commission split going to the broker, but they will probably sell many more houses and make more money with training and accountability. Many new agents will choose a brokerage based on the best split they can get, but it is not easy to sell real estate without help. If you do not sell any houses, it won’t matter what your commission split is with the broker.

If a real estate agent has a team or is planning to create a team at some point, make sure you ask potential brokers how they structure teams. Some offices are very team friendly and others are not.   

Real Estate Express is a great real estate school that three of my agents have gotten their license from.

You can check out Real Estate Express pricing here.

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How do you find the best real estate broker?

Once you decide what type of broker you want to work with, you have to find them. I think it is best to work with the brokers that are selling the most houses. If brokerages are selling many houses, the community will recognize the company name. Buyers and sellers want to make sure the agent or company they are working with does business and knows what they are doing. Even if an agent is brand new and has never sold a home, the company they work for may have a great reputation for selling houses and the buyers or sellers will assume that agent does as well. Another advantage of offices that sell many houses or have many leads is they provide leads to their agents. Some offices offer floor time or other lead services, which can be a huge boost to a new agent’s business.

To find the offices of brokers that do the most business, look on Zillow or another house listing site. Look for what offices list the most houses in your area and start calling the offices. Most brokers are actively looking for new agents and will be excited to talk to you.

You should be able to set up a meeting with a couple of brokers to see if they are a good fit. If they aren’t what you are looking for, ask the broker what office they would suggest you work with. Don’t be shy to ask for help or suggestions. If you are having trouble finding brokers to talk to try these techniques as well.

  • Ask friends and family what real estate offices they have worked with
  • Check Facebook for real estate agent or office posts; they are all over the place!
  • Do a simple web search for real estate in your area and many offices will pop up
  • Ask title companies or lenders what agents or offices they work with
  • Ask the real estate school you took your training with who they recommend

After enough calls and meetings you should be able to find a few brokers to talk with.

What should you ask a potential real estate broker?

When you start talking to brokers to see if they are a good fit, you need to know what questions to ask. Before you ask these questions, it is important you know what you want their answers to be.

  • What commission splits do you offer real estate agents? This can vary from 50/50 or less, to 100% with a transaction fee. Commission splits can also vary based on how much business you do.
  • What services do you offer your real estate agents? Do they offer administrative assistants, a showing service to set up appointments on your listings, advertising, do they pay for signs, do they have a website for their agents, do they provide email addresses, office space, phone service, printers and paper, computers etc.
  • Do you charge buyers or sellers a transaction fee on top of the commission? Some offices do this and it is a surprise to the clients meaning the agent sometimes pays it.
  • Do you offer lead generation for the real estate agents? Is there floor time available, does the office work with Zillow or another lead generation source, how is it determined who gets these leads and floor time?
  • How much office time is an agent expected to put in? Is there an at home or part-time agent option (not suggested)?
  • What kind of training does the real estate broker offer? Do they have mentors, accountability, courses or other training for new agents and is it mandatory?
  • How many agents are in the office and is the office losing or gaining agents?

I cannot give you the answers to these questions. However, I can tell you it is much more important to choose a broker with the best training, rather than the broker with the lowest fees. It is much better to sell 20 houses your first year and pay 50 percent of your commission to the broker, than to sell 1 house in your first year and pay only 10 percent to your broker.

What if you choose the wrong broker to work with?

If you are already with a broker you do not like or choose a broker that is a bad fit; move! The longer you stay with a broker that doesn’t fit you, the worse off you will be. Depending on the broker, you may lose some listings or some deals you have under contract, but you need to move to a broker that fits you. The longer you stay with a broker that does not fit you, the harder it will be to leave and move on.

Conclusion

Becoming a real estate agent is not rocket science, but many people fail because they have no idea how to get clients and sell houses. Choosing the right broker is one of the biggest decisions any agent will make. Remember that superior training beats a higher commission split every time.

14 thoughts on “How Much Money Does a Real Estate Agent Have to Pay to their Broker?”

  1. Nice Article, I am planning to take the course. This helps a lot.

    • Thank you

  2. My question is: if your not planning to be a full time real estate agent and just want access to the MLS and to be your own realtor (buying and selling your own house frequently) and possibly occasional work for family and friends, is it still worth going with a broker for higher fees to get the training? What we those brokers be teaching someone who isn’t looking for a large clientele?

    • You need to make sure you are getting some training if you are helping friends and family so that you know what you are doing.

  3. Can I get my Real Estate License without being signed up through a Broker before taking the Course?

    Question coming from PA.

    Thanks

    • No

  4. Amber
    MY question is – If you don’t want to be a full time real estate agent but you want to educate yourself on the ins and outs of the real estate market, with an access to MLS number since you want to buy properties only for investment purposes, is it worth it to do a real estate course and work for a broker who can train you in this field. not sure if without getting the training and working for a broker you can get access to the MLS numbers. Are there other courses that can educate you on the real estate market with some training to manage your own properties? What would your advice be to those investors who buy properties solely for investments and want to work by themselves without having to hire a realtor?

    • You can’t have the best of both worlds. You either need to be an agent or hire one to help. Why don’t you want to hire one as a buyer?

  5. What would you say was the typical monthly fee paid by agents to the broker.

    • It all depends on splits and if you have an office. it could be $500 a month for an office in some areas, or much more in other areas.

  6. Nice Article! Currently, I have my leasing agent license working on site for a property management company …. but I start my brokers license class on Monday. I plan to switch from working for a property management company to working with real estate company. They pay leasing agent, split of 50/50. However I will not be coming in as a leasing agent … I will have my Broker’s license. What should I be negotiating, as they are a new company without a structure for brokers as of yet.

    • That all depends on what they offer, their training, their lead sources, desk fees, etc.

  7. Mark do you think it’s a better idea to go with a real-estate company that is really great but does charge fees .or go cheaper with a company that does not charge Any fees but makes up for it with taking more of your commission?

    • Depends on the training!

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