Compensation Plans for Real Estate Agents

Quick Takeaways

  • Agents can be compensated several ways, including
  • 100 % Commission Split Model
  • Referral Fees From One Brokerage to Another and Agent Split

Source: How Real Estate Agents Are Compensated (The Balance, Nov. 30, 2022)

Real estate has long been a compensation-based industry. While many REALTORS® are compensated using traditional split broker-agent compensation structures, there are many ways that REALTORS® earn a commission for their services in a real estate transaction.

Agent compensation depends on commissions that can be split in a variety of ways with the broker or other agents. In 2022, 42 percent of REALTORS® were compensated under a fixed commission split (under 100%), 19 percent with a graduated commission split (increases with productivity), and 15 percent with a capped commission split (rises to 100% after a predetermined threshold). Sales agents were more likely to use a fixed commission split (44 percent) and a graduated commission split (20 percent) than brokers, who were more likely to use a 100% commission (17 percent). Those with less experience more often had a graduated commission. The median gross income of REALTORS®—income earned from real estate activities—was $56,400 in 2022, an increase from $54,300 in 2021.

Freddie Mac has updated their Short Sale Transaction and Processing Requirements as of 2023 and covers brokers’ sales commissions.

See References for more information.