Congratulations! You’re a licensed agent! Your first major decision will be to choose which brokerage you will associate with. Here are some of the numbers you’ll have to take into account when deciding which brokerage you should go with:

1) How many transactions will you do this year? If this is a new full-time career for you, you may be able close a lot more transactions in a year than if you were doing it part-time. You should figure out realistically how much you plan to make. Let’s say you will be doing this full time and you plan to close 6 transactions that have a sales price of \$150,000 each. Your total sales volume would be 6 x \$150,000 = \$900,000.

2) Commission splits – Most brokerages have some type of commission split, where a percentage of your commission is split between your broker and yourself. For example, if you closed a transaction that provided your brokerage with \$5000 and had a 75/25 commission split, you would receive \$5000 * 0.75 = \$3750 from the sale.

3) Desk fees – Some brokerages require a monthly desk fee to cover the overhead costs of running the office.

4) Other expenses (e.g., marketing, lead generation, office expenses, etc…) – You should also take into account what the brokerage will provide you in terms of getting your transactions done. Some brokerages provide business cards, websites, marketing materials, signs, etc. If your brokerage does not provide these materials, you’ll have to pay for it yourself.

5) Intangibles – Although this post is about the numbers, you should also take into account the intangibles, such as brand recognition, mentoring, training, and corporate culture.

### Example: Part-Time Patty versus Full-Time Fred

Let’s say you have two brokerages that offer different fee structures:

Brokerage 1 has a desk fee of \$300/month, \$0 annual fee, and a 90/10 commission split

Brokerage 2 has a desk fee of \$0/month, a \$100 annual fee, and a 70/30 commission split

Let’s assume that the brokerage commission is 3% and that all other fees and expenses are equal. Now let’s take two different new real estate agents:

### Part-time Patty plans to do 2 transactions this year of \$200,000 each for a total volume of \$400,000.

With Brokerage 1

Expenses = \$ 300×12 months = \$3600

Total commission = \$400,000 x 3% brokerage commission x 90% commission split = \$10,800

Total profit = \$10,800 – \$3,600 = \$7,200

With brokerage 2

Expenses = \$55 annual fee

Total commission = \$400,000 x 3% brokerage commission x 70% commission split = \$8400

Total profit = \$8,400 – \$55 = \$8,435

### Full-time Fred plans to do 6 transactions this year of \$150,000 each for a total volume of \$900,000.

With Brokerage 1

Expenses = \$300×12 = \$3,600

Total commission = \$900,000 x 3% brokerage commission x 90% commission split = \$24,300

Total profit = \$24,300 – \$3,600 = \$20,700

With Brokerage 2

Expenses = \$55 annual fee

Total commission = \$900,000 x 3% brokerage commission x 70% commission split = \$18,900

Total profit = \$18,900 – \$55 = \$18,845