Keller Williams Realty: The Profit Sharing Model
Keller Williams Realty: The Profit Sharing Model
COMPENSATION STRUCTURE
How It Works:
Keller Williams Realty’s Profit Share provides a financial plan for agents to continue to receive money long after they retire.
The Keller Williams Realty Profit Share Tree is the pool that is distributed each month among market centers and associates within them. Each associate’s share is determined by his or her contribution that month – for example, if an associate contributes 10% of the market center’s income, that associates profit share pool would be 10% of the market center’s pool.
Here is a sample scenario to explain how profit share works.
Office closes: $5M
Joe closes: $500,000 Profit Share pool for market: $5,000
Joe’s contribution: 10% Joe’s portion: $500
Profit Share Tree
Level 1 – 50% Joe’s direct sponsor, Sue, gets $250
Level 2 – 10% Sue’s sponsor, Mary, gets $50 an on
Level 3 – 5%
Level 4 – 5%
Level 5 – 7.5%
Level 6 – 10%
Level 7 – 12.5%
**With the addition of profit sharing money, many Keller Williams Realty agents make more than 100% of their commission.
By: Twitter Buttons
October 20th, 2009 at 2:06 pm
If i bring in an agent and they want to work for a team do i still get my pofit share?
October 20th, 2009 at 3:49 pm
The only thing that matters is who the agent chooses as their sponsor. Sponsorship is not mentorship nor a promise to provide that agent with business. Sponsorship is simply the person who is most responsible for that agent joining Keller Williams Realty. The team that brings that agent on should not expect to receive sponsorship unless there was a previous relationship prior to your involvement. Since ‘Communication’ is such a big part of our company, I would suggest speaking with your team leader about the subject. Good luck!
November 18th, 2009 at 3:14 pm
So if you’ve been with KW for a few years and have recruited a few people, does your monthly profit sharing statement show how much you’ve earned from your different levels–or do you just see one bottom line figure for that month?
November 19th, 2009 at 1:00 pm
Linda, thanks for your comment. My monthly profit share statements breakdown each level and who was responsible on each level for contributing to my profit share. Your team leader should be passing out a print out every month of your full profit share statement.
May 18th, 2010 at 3:47 am
Aaron I believe Kw is a great company however the profit sharing has several flaws. profit is controlled by management at a franchise level and affected by the local fluctuating martket, and last, when an agent reaches certain level his commission goes up to 100% so his contribution to profit sharing is 0.
May 18th, 2010 at 6:48 pm
Dave,
Thanks for your comment. You are missing a couple of pieces of the puzzle. First of all, KW is an open book company, so profit is not controlled by management. Each office has an agent leadership council, comprised of the top agents in the office. This ALC, meets every month with the broker. They review the financials of the office, and they are the ones that make the decisions on what new training, support and technology the agents need in the office to be more successful. There is an ALC for every office, one for every region and what for the whole company. You see, the sharing of profits is just a small piece of the pie. Profit sharing is not just about sharing the profits…we are the shareholders of the company. As shareholders, we share in the profits, we make the decisions and we teach the classes.
You are absolutely right about the commission cap here, when an agent pays out their cap, they do go to 100% of their commisson and they are not contributing any money to the profits of the office until their years starts over. But what you are not considering, is that this is the best model for real estate agents to run THEIR business at, so consequently, we do not lose agents, and as a result, our offices become more and more profitable as we continue to add more quality agents. Another factor to consider, is that traditional companies spend the majority of their revenue on marketing THEIR brand, paying THEIR shareholders and supporting a much larger operating budeget. The traditional model consists of a lot of offices, with less agents per office. At KW, we run profit centers, so our offices have 100, 200, even 400 agents in each office. Our marketing as a company, is our agents putting THEIR signs in sellers yards. As a result of this innovative model, while the other top companies are losing agents and money, our agent count grew by 3% last year and we still profit shared with the agents $32 million dollars in 2009, one of the worst years in our economy in 50 years. We are projecting 300,000 agents and a $100 million in profit share to the agents in 2020.
The bottom line is that real estate agents drive the business….not real estate companies. If you offer your agents one of the best commission splits, provide them with the best training and support, create a culture where agents share ideas, share the profits with them, open the books and empower them to have a say in the direction of the office and the company, why would they every leave your company? The numbers don’t lie…we are now the #3 real estate company in the U.S.(only 2 agents behind C-21), we will pass them next month and pass Coldwell Banker by the end of the year…without running one commercial on TV or sponsoring a sporting event. All we have to be is the best place for the agents to run THEIR business, and as an effect of their success and their loyalty, the KW Brand continues to grow. Not sure where you see a flaw in the model. Either way, you either get it..or you don’t.