Common Commission Options

Offering a competitive commission is key to hiring and keeping top performers.

According to the 2012 NATIONAL ASSOCIATION OF REALTORS® Member Profile, 69 percent of REALTORS® work on a split commission basis and 17 percent work on a 100 percent commission.

Split Commissions

Often expressed as a percentage (50/50 or 60/40), split commissions give both the company and the salesperson a portion of the monies earned when a property is sold. Generally, as salespeople earn more, their share of the commission split rises.


  • Your gains can be greater when salespeople are successful.
  • Your sales force has unlimited earning potential.
  • Most sales associates are accustomed to, and thus more comfortable with, this option.


  • You may not make much money if the market is slow, or salespeople don't produce.
  • Desk costs are generally low, so you don't have a set level of guaranteed income to cover costs.
  • You must often absorb some office costs, such as stationary or technology, without directly recouping costs from salespeople.

100 percent commissions

The salesperson pays the company a higher desk cost and usually pays for most or all business expenses.


  • You have a high potential for earning profits if the salespeople are successful.
  • "It attracts entrepreneurial salespeople who are motivated by the challenge of the 'all or nothing' compensation." —Richard A. Rector, "The E-Myth Real Estate Brokerage."
  • Such a program is often particularly attractive to experienced, high-production salespeople.
  • You are guaranteed a more predictable monthly income from predetermined desk costs.
  • Your advertising costs and services are probably lower since salespeople bear more of these expenses.


  • The program is not well suited to inexperienced salespeople.
  • You have less control over salespeople, which makes it more difficult to run your business.
  • The sales force is likely to place their own interest over those of the company.

Salary or salary plus commission

Although representing only 5 percent of all real estate salespeople, salaried positions give brokers more control over salespersons' activities.


  • Such a plan is good for recruiting inexperienced salespeople, who need an income while learning the business.
  • You can supervise and direct salespeople more closely, making it easier to operate the company as a team.
  • The ability to exercise more supervision may help reduce errors.
  • Having a salary may help an experienced salesperson in a slump from leaving the business.


  • Commissioned salespeople have an incentive to work harder and thus earn more.
  • You have fixed salary costs even if salespeople are not producing.
  • You will be responsible for paying portions of Social Security and other withholding taxes when associates work as employees.
  • This plan would probably appeal more to low producers than to top performers.
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