How to reconcile commission at closing

The order to check one side of a closing so the statement the agent reads matches the figures the title company was given.

Reconciling a closing means proving that one side's commission, from the gross down to the agent, is the same story in three places: the closing sheet, the commission disbursement authorization that went to title, and the statement the agent will read. Do it before anyone is paid. After the checks are cut, you are explaining a difference, not preventing one.

Start from the gross, not from memory

Take the final sale price and the commission for this side from the closing figures, not from the listing price and not from the rate everyone usually charges. The commission is a percent of that price or a flat amount. Write down which. On a file where one agent represents both sides, reconcile the listing side and the buyer side separately. They are two commissions. A referral fee owed to another brokerage comes off the gross first. What is left is the only number the split is allowed to see.

If title's commission figure and yours differ, stop. Find out whether the price changed, whether a credit was netted inside the commission, or whether the wrong side's rate was used. Do not average them.

Then the split, the cap and the fees

Apply the agent's plan to the amount after the referral. The brokerage's percentage is the plan's, including a zero on a fee-only plan where the agent keeps the commission. If a cap applies, the brokerage takes the plan's share or whatever cap is left, whichever is smaller. Record the uncapped amount when the cap cut it. The next person to read the file cannot see a cap from a single net number.

Take the team fee from the agent's side, after the split, if the plan has one. Take the transaction fee as a flat amount, and do not fold it into the cap unless the plan says it counts. The agent's take-home is what remains. Add the lines back up to the gross commission. They have to meet, to the cent. A $1 gap is a wrong statement, not a rounding philosophy.

The free commission split calculator does this arithmetic for one side, including a cap and a referral. Use it to check a spreadsheet. It does not store the closing. The transaction timeline calculator is the date side of the same file: contract, inspection, financing and closing. Reconciling the money does not tell you whether the inspection deadline was missed. Check both.

The CDA and the statement have to tell the same story

On the CDA, every payee has a name and an amount, and the payees add up to the commission. A line with an amount and no name, or a name and no amount, is not ready for title. The brokerage's line, the agent's line, a referral brokerage and a team line, if those exist, are the payees. The statement is the agent's explanation of their own line: gross, referral, split, cap, fees, net. If the agent's line on the CDA is not the net on the statement, one of them is wrong. Fix it before title and the agent both have a copy.

The page on how to write an agent commission statement is the statement side of this check in more detail. The CDA template on this site checks that payees add up. Neither one remembers the file after you print.

Who signs off, and what gets kept

The office manager can prepare the figures. The broker-owner is who closes the file when the office treats closing as the broker's act. In Deskwork the file moves through review, and at final review the broker-owner closes it on the closing sheet. Pay & archive works the figures again, asks first, and issues the statement. The closing keeps the plan it was paid on. Changing the plan next month does not reopen this reconciliation.

Keep on the file: the price and the commission you used, the referral, the cap left before this closing and after it, the fees, the CDA, and the statement. When a figure later turns out to be wrong, keep the statement that already went out and issue another the agent can tell from the first. How the cap itself is tracked across the year, so this closing's remaining cap was not a guess, is covered in how to track agent commission caps.

A reconciliation that failed quietly

The usual misses are a referral taken after the split instead of before, a cap left over from last year's anniversary, a transaction fee counted twice on a both-sides file that should have charged it once per side, and a statement emailed from an old copy of the sheet. Any one of those can be found by adding the lines back to the gross and by reading the cap year off the agent's anniversary rather than off January. If the lines add up and the cap year is the right year, the closing is reconciled. If they do not, it is not, however neat the PDF looks.

Questions brokers ask

Is the referral fee taken before the split?

Almost always. A referral fee is owed on the gross commission, so it comes off first and the split is worked out on what remains. If your agreement says otherwise, follow the agreement and write the order on the closing so the next statement uses it.

What has to match between the CDA and the statement?

The agent's net. The CDA's payees must add up to the commission, and the agent's line on that form must be the take-home on the statement. The statement also shows the split, the cap and the fees that produced that line.

Who is the statement for?

The agent on that side of the file. The CDA is for the title or escrow company. The brokerage pays the agent the way it already does. Issuing the statement does not move the money.

Try it on your own office

Set up a plan, file a deal and close it before you decide. A desk you set up yourself through the signup page is free. If we set up your desk with you, what your brokerage pays is set out in our written agreement with you. Read about pricing.