Real estate team leaders should track gross margins, not just revenue. Aim for 60% on buyer deals and 75% on listings. Before raising agent splits, ask top performers two things: what's your gross margin after paying agents, and what's your net profit.
Questions this video answers
60% gross margin after paying agents.
Target ≈75% gross (speaker notes listing side running at ~73% gross from 27% cost).
About 65–67% blended gross margin (speaker: "67 right now 65, 66").
And now. Alright, so this is probably the most, what do I want to call it, not the toughest because it's really not difficult. But this is where it's going to come together. You know, your ability to enlist people into this thing that you're building and to be able to transfer your skills to people. So as far as selling skills and whatnot, but then to bring the proper leverage in on the admin side is super, super, super important. So we already covered make sure your ladder is against the right building to start, you know, unwinding something like a little bit John, experience a little bit cj. It's really painful. A little bit Stacy and Tyler it's real painful to kind of tilt the ladder over, you know, when everyone's standing on the ladder and hope that they don't fall off. So kind of knowing what you're getting into. Org structures we'll go into that a little bit more tomorrow when we do people and systems but kind of knowing what you want your thing to look like. The whole splits thing I think is an important conversation that we can have tomorrow. And I don't think I answered your question. Our goal on the buyer side is a 60% gross margin. So after we pay our agents 60% gross margin and the listing side it's running at 27% cost, so 73% growth. So the goal is 75% on that side. And that's what ends up happening with the 25, 35 with 10% off the top and the 30, 40, 50, 60 with 10% off the top. So whatever that looks like for your market, those are kind of, I think those are targets that are worth going after. And some people mentioned I met a person selling 680 homes. The one thing. And someone else sent me an email, man, we came back from EGS and I talk to people selling 900 homes and 700 homes and I know nothing about these people so I can't speak to it. But just ask someone like that two questions, just two simple questions like what's your gross margin after you pay your agents, like what's left over percentage wise? Most of them probably won't know the answer, but if they do, it may not be what you think it is. So what's your gross margin then? What's your net? And just see if they can have a logical, I mean sort of a good conversation around that. Because if that person gives you the right answers on those two, I promise you you're going to want to spend more time with that person and just kind of Pick their brain and get to know them. But most are mini brokerages with splits that are a 30 plus percent delta versus what the model should be.
So your blended is like 65, 7.
67 right now 65, 66. So our goal is.
And that includes your transaction fees, right? That's all the income. You put vendor income up there too?
Yeah, so I could strip out vendor income and make it higher, but it's in there. So I think everyone has to know their margin especially. So who's like not working with buyers but still doing listings and ultimately going to step out of listings. So especially for. And that's like 12, 15 people. So especially, you know, when you take yourself out of. You know when you chop off 30% of your gross commission and you're paying someone. Rerun the numbers. The business tracker lets you do that pretty easy. In fact, for all your deal, you could filter yourself on all your deals and just put yourself in at that split and see what your business would look like, what your margins would look like. And if they're not north of 60%, you really have to rethink what you're paying your agents and if they're really adding value to the process. So if an agent, a buyer, agent makes 100 grand on my team, I'm making 150. And they're happy with 100, but they're making 60. It's not because I don't have what it. I don't have the tools necessary for them to make 100. It's because they're not making shit happen to get to 100.
