How to set agent commission plans

Write the split, the fees, and the cap before the first file is priced, and leave a plan that already priced a closing alone.

A commission plan is the rule that turns one side of a closing into what the agent takes home and what the office keeps. The work is writing that rule in one place, in the same words the statement will use, before anyone is put on a file. Three shapes cover what most offices actually charge: a split until a cap, a fee-only plan, and tiers. The other back-office guides are on the guides page.

A split until a cap

A standard split is one percentage on every closing until the cap is met. You enter the agent's share. The office keeps the rest. Agent 70 percent, office 30 percent, is the whole rule until the cap stops the office's share.

The cap is the most the office takes from that agent during one cap year. The year starts on that agent's own anniversary, never on January 1, and the date belongs to the person, not to the plan. Once the agent has contributed that amount in the cap year, the office split stops. The next closing in that year pays the office no split. The per-transaction fee can still be charged. That is a separate line, below.

A standard split can also have no cap. Then the same percentage applies on every closing, and there is nothing to count. Write "no cap." A blank cell is how the next person reads the sheet as zero, or as whatever default the office used last year.

Take a plan that pays the agent 70 percent and the office 30 percent until a $14,000 cap. The agent has already paid $12,000 toward the cap this year, and this closing would pay the office $3,000. The office takes the $2,000 that is left, not $3,000. The agent keeps the $1,000 the cap stopped. Write both numbers down: what the split would have been, and what was actually taken. How to keep the year, and how to record the closing that uses up the last of the cap, is how to track agent commission caps.

A fee-only plan

A fee-only plan takes no percentage at all. The agent keeps the whole commission. The office is paid by the fees. There is no split and no cap to run down. A fee-only plan with no fees charges nothing, so enter a per-transaction fee or a group fee before you save it and before you put anyone on it.

Flat monthly fees, for people who keep their whole commission, sit on the same screen and apart from the plan. They are not a fourth plan type. When a plan sends no split to the office, look at who is on it and whether a monthly charge is recorded for them. The plan's own fee and a monthly charge are two different ways the office is paid. Write both down, or the first statement will be the first time anyone sees that one of them is missing.

Tiers

A tiered plan changes the agent's split as what they have already paid toward the cap climbs. It is not a stack of rates inside one closing. One rate applies to the whole closing. The rate is chosen by what the agent had already paid toward the cap before this closing, and it stays that rate for every dollar of this closing.

Write the tiers so the limits climb, and leave the last tier open so every dollar above the tier before it is covered. An example, not a recommendation: agent 70 percent below $4,000 of cap contribution, then agent 80 percent below $8,000, then agent 90 percent at or above that, until a $14,000 cap. An agent who has already paid $3,000 toward the cap is on 70 percent for this entire closing. An agent who has already paid $4,000 is on 80 percent for this entire closing. The closing itself does not climb from 70 to 80 halfway through. That is why one dollar of what was already paid can change the rate on the whole next closing.

A tiered plan needs a cap. The tiers move with cap contribution, and a plan with no cap never contributes anything, so every closing would be priced by the first tier and no later tier could ever be reached. If you do not want a cap, write a standard split at the first tier's rate instead. A tiered plan with no tiers set up prices nothing. Add the tiers before anyone is put on it.

The fees on a closing

On a plan that has a cap, the per-transaction fee is charged on every closing until the agent caps. After that, the after-cap fee applies instead. It replaces the per-transaction fee. It is not added to it. Zero there means a capped agent is charged no transaction fee at all. If the after-cap amount is the same as the fee before the cap, the fee simply carries on, and the plan should say so.

A group fee is shared among the agents on this plan who are on that closing. It is split equally. An agent closing alone pays all of it. It is charged on top of the per-transaction fee, not instead of it.

Fees count toward the cap only when the plan says they do. Most plans count the office's share of the split and do not count the fee. If yours counts the fee, what has already been paid has to include it, or the cap will look further away than it is. A plan with no cap cannot count fees toward one. An after-cap fee on a plan with no cap could never be charged, so leave it at zero or give the plan a cap.

Write it before the first file

Put the plan on the list first. Then put the person on that plan from the roster, on their own card, under Change plan. The plan list does not assign anyone. Each person is on one plan. Two people on the same file can be on different plans, and each side is priced from its own plan.

Putting a person on a plan is also where that person's cap year is set. The year starts on the date you enter for them. Use their own anniversary, not January 1 for the whole office. If they already have a cap year, the form offers that anniversary carried into the current year. You can record what they had already paid toward the cap in that year. Leave it blank and the previous balance is not carried across. A person with no cap year on file cannot have a file priced, on any plan, capped or not. There is no closing date that fixes an empty year.

Before you save, price one invented closing against the plan: a sale price, a commission rate, and how much of the cap is already paid. Read what the agent takes home and what the office receives. If that is not the conversation you had when they joined, fix the plan before a real file uses it.

The commission split calculator prices one closing the same way, for a split with or without a cap, a fee-only plan, or tiers. It runs in the browser, sends nothing, and keeps nothing after you close the page. The dates on the file are a separate job. The transaction timeline calculator turns a contract date and a closing date into the inspection and financing dates to watch, still in the browser, with nothing stored.

When the plan has to change

A plan that has already priced a closing is locked. You do not edit it. Copy it, change the copy, and put people on the copy from the roster when the new terms should apply. Open files still on the old plan are priced by the old plan when they close. The figures already paid stay as they were. Archive the old plan if you do not want anyone new put on it. Archiving takes it out of the picker. It stays on the list so it can still explain the closings it priced.

A plan that has not priced a closing yet can still be changed. Open files on it will be priced by whatever the plan says when they close. If that is not what you meant, move those files before you edit. Do not delete a plan someone is on. Move them first. Do not delete a plan a closing was priced on. Archive it.

The statement the agent reads should be able to name the plan it was priced on. How to write that page, and how it differs from the form you send to the title company, is how to write an agent commission statement.

What Deskwork keeps

Plans holds the three shapes: a standard split until the cap, a fee-only plan where the agent keeps the commission, and a tiered plan whose one rate for a closing is chosen from what that agent had already paid toward the cap. Flat monthly fees sit on the same screen, apart from the plans. The editor shows a worked example beside the form, from a sale price, a commission rate, and the cap already paid, so you can read the agent's take-home and the office's share before anyone is put on the plan.

The cap year is measured from each agent's own anniversary, never from January. Once a closing has been priced on a plan, that plan is locked, and a change goes on a copy. The original stays and goes on explaining the closings it already priced. Each agent's own plan is on Pay. The plan book is the office's.

A plan is finished when a second person can read it and price the next closing the same way, without asking what the handshake was.

Questions brokers ask

Can one office use more than one commission plan?

Yes. A standard split, a fee-only plan, and a tiered plan can all sit on the same list. Each person is on one plan. Two people on the same file can be on different plans, and each side is priced from its own.

Does a fee-only plan have a cap?

No. A fee-only plan takes no percentage. The agent keeps the commission, and the office is paid by the fees. There is no split and no cap to run down. A monthly charge, if the office uses one, is written apart from the plan.

What if the terms change after a closing was paid?

A plan that has already priced a closing is locked. Copy it and change the copy. The original stays so it still explains the closings it priced, and you can archive it so nobody new is put on it. The figures on those closings stay as they were.

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.