Real estate agent commission vs agency commission
To understand the final commission paid to real estate sales agents it’s good to understand the revenue and expense models of a real estate agency office.
Real estate agencies provide much of the lead generation of “vendors” who want to sell their homes because of their client databases. Most of these clients have transacted with that real estate agency in the past so there is an element of trust between the vendor and the real estate agency.
In a scenario with an established agency a sales person may earn a low base salary but get 25-35% of the commission for a sale where they get the listing.
Some newer or smaller agencies may increase the share of the commission, particularly if the agent is doing a lot of cold calling to get new listings.
At the other end of the sales agency model there are master agents who only take 20% of the total commission and give the rest to the agents who work under their brand – Dotcom Property Sales is one such agency.
Real estate agents that are employees
When someone is paid a wage for doing their work they are paid the base salary based on the hours that they work and a commission based on sales performance.
As a result the real estate office manager or sales manager is required to maintain pressure on each real estate agent to ensure they perform well consistently.
If an employee doesn’t bring in more than they are earning they are a liability and a cost centre and they won’t last long in their job. Because the real estate agents role is primarily about sales success many agencies opt for a debit credit system.
Real estate agents on Debit/Credit
The debit/credit system is aimed at shifting the financial reward towards getting listings and sales success.
The agent is paid a salary every month, usually a relatively low one, and when a sale is made these wages are deducted from their commission.
If a real estate agent on this system performs consistently well they won’t be adversely affected. If they don’t perform well the agent will pretty much be earning a relatively low but consistent wage.
Independent real estate agents
An independent or commission only agent is completely dependent on commissions from sales so they are driven to perform well and provide great customer service.
The selling of properties earns them their commission income and the great customer service gives them leads, referrals and recommendations (testimonials) that results in future sales.
There are aspects of every property sale process that needs to be managed by administration staff and many independent real estate agents still want to work under a recognised brand name to give them extra credibility.
When these real estate agents are successful in bringing in new clients AND selling properties they are able to negotiate a better commission split between themselves and the real estate agency office they work with.
Becoming an Independent Real Estate Agent
There’s less reliance on big brands these days because most of the work can be done by a diligent individual using online Internet based technologies.
A big reason more and more good real estate agents are going independent is because they don’t have to pay a franchise fee, plus they earn a bigger share of the total agents commission that’s paid.
Learn more about becoming an independent real estate agent

Whether selling through an agent or directly
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