All real estate brokerages want to attract top performing real estate agents. Offering lucrative commission spilt terms is just one strategy brokerages use to lure these agents. However, varying the commission’s split from agent to agent or deal to deal complicates tracking. Accuracy is essential to building trust among your team. Tracking these splits is just one accounting challenge facing a real estate brokerage. At the same time, firms juggle:
1. Number of transactions
A thriving real estate firm can handle dozens of closings in a month, and that’s not counting transactions where the seller or buyer backs out at the last-minute. Brokerages must stay on top of the deal pipeline during every step of the process. Pushing a deal to close ensures keeps revenue flowing to the brokerage and their hardworking agents.
2. Employee grouping
When talking about real estate brokerages, we often only thinking about their team of real estate agents and associates. Yet, it’s the back office support that makes it possible for the team to work efficiently. Larger brokerages may have in-house marketing teams, IT staff, or receptionists. A full-service brokerage could include property management or a consulting division. Accountants must keep this grouping separate from real estate agents.
Accounting systems often must integrate with other services, like back-office software. When two or more systems talk to each other, this increases the potential for errors. Hiccups occur when data fails to sync, or if one service goes down unexpectedly. Systems must work smoothly together to keep the brokerage up and running.
4. Variable commission splits
It’s worth noting again the challenges brokerages can face with commission split. A variable model can make tracking commissions even more challenging. For instance, if the first earned $50,000 is a 60/40 split, followed by a 70/30 until $75,000, and an 80/20 split for all monies thereafter, your accounting team has to stay on top of the changing calculations. As your teams expand, this tracking can become even more complicated, especially if you’re using something outdated like Excel.
All of these challenges can be overcome with the right tools. CommissionTrac makes handling variable splits easy regardless of the number of transactions or the terms. With systems that automate commission tracking and integrate with software like Quickbooks, real estate accounting is simplified for everyone involved.