Revenue Sharing Models Revolutionize Real Estate Brokerages and Agent Engagement

Real estate brokerages are evolving as profit-sharing and revenue-sharing models, like those from eXp Realty and Keller Williams, reshape agent engagement and recruitment.

In recent years, profit-sharing and revenue-sharing models have significantly transformed the real estate landscape, showcasing remarkable growth from companies like eXp Realty and The Real Brokerage.

Many industry experts trace the roots of the profit-sharing concept back to Keller Williams, which pioneered its approach in 1987.

Empowerment and Profit Sharing

Gary Keller, the founder of Keller Williams, aimed to empower real estate associates by treating them as vital partners within the firm.

This model allows associates to build their businesses with a sense of ownership in the Keller Williams framework.

In Keller Williams, the owners of Market Centers distribute around 50% of their monthly profits to the agents in that center, but only if the center turns a profit for the month.

Since introducing this initiative, Keller Williams has paid out over $2 billion in profit-sharing rewards.

Benton emphasizes that when agents understand the brokerage’s financials and share in its profitability, it fosters accountability and drives them to pursue successful transactions more vigorously.

Growth and Recruitment Strategies

Kelly Cote, Keller Williams’ director of operations and services, notes that while profit-sharing aligns agents with the company’s financial success, revenue-sharing models focus more on agents’ recruitment efforts.

eXp Realty has excelled in recruiting, growing its network to over 85,000 agents by March 2024.

CEO Leo Pareja highlights the company’s top position in transaction sides, according to RealTrends Verified Rankings.

However, eXp team leader Parker Pemberton points out that only 14% of agents have recruited new members, leaving a significant 86% who have yet to engage in this area.

Jeff Chubb, a former eXp agent, observes that prioritizing recruitment can create a competitive atmosphere, but he acknowledges the benefits of eXp’s model, which encourages agents to take on the recruitment responsibility themselves.

Considerations for Agents

In 2023, eXp allocated $198 million to about 20% of its agents as part of its revenue-sharing program.

The Real Brokerage, a newer player in the field, has also adopted the revenue-sharing approach, with founder Tamir Poleg citing the need to address inefficiencies in their earlier recruitment strategies.

While the popularity of profit-sharing and revenue-sharing models is growing, Benton advises that these strategies might not be the right fit for every real estate agent, especially those who prefer to focus on selling a limited number of properties rather than broadening their business reach.

Source: Housingwire