The 100% commission split, new agent Ignite training, and excellent company culture will likely be enough to convince you to join the largest real estate company, Keller Williams. Yet, there’s another golden nugget that very few other real estate companies will offer: an additional way to help you secure passive income in your real estate career. We’re talking about the Keller Williams Profit Share System.
Keller Williams Profit Share redistributes about 48% of the Market Center’s profit. You’ll earn a cut for each agent you sponsor, earning 50% of the profit they bring to KW. When your agents become sponsors, they’ll be on level 2, and you’ll earn 10% of their profits. This creates a tree.
What would you say if we told you it was possible to pad your pockets with extra bills purely by getting other agents to join Keller Williams just like you did? Read on to learn about the Keller Williams Profit Share System, its benefits, and how it works.
THE INSPIRATION BEHIND THE KELLER WILLIAMS PROFIT SHARE TREE
The concept of Keller Williams profit share came from Gary Keller himself around 1986. Upon overhauling this new real estate company that saw plenty of skilled agents come and go, Keller set his eyes on programs that would incentivize staying with the company.
These programs would focus on what many good agents desperately searched for in a real estate company: A better deal and more significant revenue. Thus, 1987 brought a revenue-sharing system, transitioning to a Keller Williams profit share change just two years later as approved by the first Associate Leadership Council.
The WI4C2TES ideology and Keller Williams Profit Share were officially born.
This concept made the company a whirlwind of success, especially since it emphasized the “W” in WI4C2TES—Win-Win or No Deal. Hardworking agents began to appreciate having their broker reinvest in their business, adopting the unofficial role of “business partner” with their brokers. After all, a successful agent means a successful broker, and vice versa.
A profit share income within real estate companies isn’t unique.
Yet, no other company has been able to create a profit share and growth share system that stands the test of time, encourages agents to pledge their loyalty to the company, and refers a massive number of new agents to the brokerage, as Gary Keller & KW has. Many companies who have tried (and failed) ended up missing out on profits or shutting their doors entirely.
Over three decades later, this Keller Williams Profit Share is still a significant point with new agents searching for a great company.
The Keller Williams Profit Share System is simple to understand in concept. Still, the fine details can only be clear if you’ve done your research. So in this section, we’ll walk you step-by-step through the system, including a look at the big picture—your Market Center—and a more narrow scope—the role you potentially play.
A KELLER WILLIAMS MARKET CENTER CRUNCHES THE NUMBERS
With the profit share, the financial folks at your Market Center will crunch the numbers regarding your Center’s performance each month. Your Center will then take the gross closed commission for the month and subtract the following:
Keller Williams Realty Royalty Fees (will yield the Market Center’s net gross commission)
Associate Commissions (brings you to your company dollar)
Office Expenses (results in your office Keller Williams profit)
Your Market Center’s total profit will vary from month to month. But the crucial benefit is that these numbers are crunched monthly, so you’ll receive income more consistently.
For example, let’s say your office’s monthly company dollar is $150,000.
THE PROFITS WILL BE SPLIT BETWEEN MARKET CENTER & PROFIT SHARE
Next, your Market Center will divvy up the profit so that 52% goes to your Center’s owner, with the remaining 48% going back into the real estate agents’ pockets via profit share. How this overhead is distributed is broken into three levels:
- Level 1 (Up to $2,990): 25% goes to profit share, 75% goes to owners
- Level 2 (The Next $8,250): 35% goes to profit share, 65% goes to owners
- Level 3 (Over $11,240): 50% goes to profit share, 50% goes to owners
Once your Market Center’s profit exceeds the maximum for level 1, the level 2 percentages kick in, and so on. The first $2,990 brings $747.50 to the pool, level 2 accounts for an extra $2,887.50, and everything above that will account for an additional 50% of the overhead. This calculates the 48% to the profit share pool and 52% to the Keller Williams office owner.
Now let’s say that the profit is $75,000. Using the levels above, here’s how much would be added to the profit share pool in this case:
|Level||To the Pool||To the Owner|
|1||25% ($747.50)||75% ($2,242.50)|
|2||35% ($2,887.50)||65% ($5,362.50)|
|3||50% ($31,880)||50% ($31,880)|
THE MARKET CENTER’S PROFIT SHARE FACTOR IS APPLIED
“Company dollar” is a term used to describe the total amount of money that the Market Center – Office received in the form of a commission split (this is 30% unless a real estate agent has reached their cap for the year). Your Profit Share Factor is then calculated by dividing the total amount in the profit share pool by the total company dollar for the month.
This usually yields a decimal around 0.25, though it depends on how well the office does during the month.
Based on our hypothetical values from the previous two points, we would divide the $35,515 profit share pool by the $150,000 company dollar. Bringing us to a profit share factor of 0.24.
YOUR MARKET CENTER DISTRIBUTES THE PROFIT
The next step in the calculation is multiplying your contributions toward your Market Center’s company dollar by the profit share factor. The number you get will determine how much money goes back into your monthly account as a part of the profit share.
However, there’s a strong possibility that you’ve sponsored another real estate agent in your time with Keller Williams Realty, meaning you now have branches in your Keller Williams profit share tree. With one Keller Williams associate immediately beneath you, this brings you to “level one” of the profit share tree, yielding you 50% of the profit share of your agents.
Here are the seven levels of the tree and how levels distribute these funds.
- 1st Level: 50%
- 2nd Level: 10%
- 3rd Level: 5%
- 4th Level: 5%
- 5th Level: 7.5%
- 6th Level: 10%
- 7th Level: 12.5%
These funds are distributed on the 21st of the following month.
The more agents you refer to Keller Williams Realty and the more new agents they sponsor, the larger your direct deposit will be each month.
If you paid $2,000 in company dollars during the month, that would be multiplied by the 0.24 profit share factor to yield a total of $480. Now, here’s how that would be distributed amongst the branches of your profit share tree:
IN OTHER WORDS
This program is complicated, given all the numbers, calculations, and levels. Take a look at this Keller Williams profit share video that explains in pictures and graphs exactly how this program works:
The Role the Keller Williams Realty Commission Structure Plays
All Keller Williams Realty agents are on a 70/30 split. But more precisely, it’s a 64/30/6 split:
64% will go to the agent in the form of a commission
30% will go to the agent’s office
6% will go to KWRI in the form of royalty fees
What’s unique about the Keller Williams commission structure is that your earning potential suddenly increases once you reach your “caps.” Once you pay $3,000 in KWRI fees during the year, you won’t owe anything over that until the following year starts. There’s also a cap on what you owe your Market Center—the 30%—but the exact value depends on your area or office.
Once you reach the cap for both the office and the KWRI royalty fees, you’ll earn a whopping 100% commission on all sales you make for the rest of the year.
But this also plays a crucial role in your Profit Sharing earnings.
This stresses the importance of widening your tree and adding additional levels.
A FEW SIDE NOTES ON THIS PROGRAM
Keller Williams Profit Share is an excellent passive income source and has perks for all KW real estate agents. However, there are a few scenarios where your total passive income will vary or be non-existent for a particular month.
Let’s review some things you need to know about this program.
PROFIT SHARE DEPENDS ON COMPANY DOLLAR
Remember that profit share depends on how much the office profits from a particular agent in the form of company dollars. Once a real estate agent reaches their cap during the year, no profit will be distributed for the remaining months.
SPONSORS & ASSOCIATES DON’T HAVE TO WORK OUT OF THE SAME OFFICE
Profit sharing is not dependent on the agent’s sponsor being in the same office. They just have to be with Keller Williams Realty.
YOU CAN EARN PERMANENT PASSIVE INCOME
Like teachers receive “tenure,” real estate agents with Keller Williams can achieve “vested” status after three years and one day with the company. That means you can leave Keller Williams after this period and still receive your profit share.
YOU CAN ADD IT TO YOUR WILL
Your success as a real estate agent won’t become family folklore once you pass. Instead, assuming you stay with the company for at least three years (7 years for agents that recently joined KW) and expand the branches of your tree, you can include this passive income in your will to benefit the next generation of your family.
WHAT MAKES THIS PROFIT SHARE PROGRAM EXCELLENT
Keller Williams has a lot to offer both new and tenured real estate agents. Just looking at the numbers and calculations above, you can see that there’s earning potential. But what about this program makes Keller Williams stand out among the other companies attempting to do the same thing (or something similar)?
IT’S NOT A PYRAMID SCHEME
Look at the shape of a profit share tree. You might experience a sense of nervousness—it kind of looks like a pyramid, and nothing good ever comes out of pyramid schemes. While the profit share tree mimics the shape of a pyramid scheme, the structure differs significantly.
Unlike a pyramid scheme, the Profit Share System doesn’t force you to pay any fees to join or remain with the program (or company). You’ll profit a bit when those you sponsor make monthly sales, but the money that goes into your pocket doesn’t come out of their pockets. It comes from the profit of your office Center instead.
So you don’t have to worry about potential consequences if you or those below you in your tree need to produce more company dollars in their offices to create profit sharing during the month.
IT COMES WITH NEAR-UNLIMITED EARNING POTENTIAL
Sponsoring agents with Keller Williams won’t suddenly make you a millionaire or help you pay off your mortgage in just a year. After all, there are Market Center caps for each agent, so your reward system earning potential is also somewhat limited for each sponsored agent. Only productive agents that are KW associates can create an income opportunity for the agent’s sponsor.
However, you can ensure near-unlimited earning potential by dedicating yourself to expanding the branches of your tree. Remember, the more you widen your tree by sponsoring more agents, the more twigs you can build off those branches.
You may sponsor five agents, they may sponsor three each of their own, and each of those may bring on one new agent themselves. Now instead of just earning a commission on your sales, you’re also earning from a profit sharing pool of 35 agents.
So it should be no surprise that, after less than a decade, some Keller Williams agents earn over $200,000 a year on the profit share program alone.
YOU RECEIVE REAL FREQUENT PAYOUTS
Many companies promise more money back in their employees’ pockets through a revenue-share program. Revenue share has yet to be proven to provide the lasting company culture that Keller Williams has enjoyed for nearly 30 years.
The best part about this profit share program through Keller Williams is its consistent income source. You’ll receive a check on the 21st of every month, reflecting the profits that your tree yielded in the month prior. So even if you don’t sell any homes in that particular month, you’re still guaranteed a check when your tree makes deals.
IT PROMOTES A CULTURE OF SHARING
The real estate industry is a dog-eat-dog world. You’ll often find yourself competing against fellow agents in your office for the same listings. The Keller Williams Profit Share System helps to promote a culture of sharing where all agents and brokers benefit in the long run.
Knowing that more money will end up in your pocket when the office earns more company dollars, you go out of your way to aid your fellow agents. You might bring one of your peers a buyer to make an offer on their listing, help them perfect their marketing strategy, or send a referral to a lead that fits outside your busy schedule.
Unlike a revenue share model, where you’re more concerned about how your revenue share tree is fairing, you focus on the entire office as a whole. This helps fend off a culture of selfishness in revenue-sharing models.
A TON OF MONEY HAS ALREADY BEEN REDISTRIBUTED
The Keller Williams Profit Share Program makes great sense, but how much money goes back into the pockets of its most successful agents? The company had catapulted its profit share distribution from $38.3 million in 2011 to $154.4 million in 2016.
The company eventually exceeded over $1 billion returned to agents by 2017. So, you shouldn’t ask, “Will I profit from this program?” but rather, “How much will I profit from this program?”
IT MAKES FINANCIAL & LOGICAL SENSE
Another vital benefit of this profit share program is that it makes both financial and logical sense. It’s tied to profits instead of revenue. Here’s a look at what that means:
- It’s tied to profits instead of revenue.
- Keller Williams profit share not ending.
- It’s not tied to stock prices.
- There are no fees or costs.
- It’s an honest program:
Fortunately, this program leaves you in a position where you have nothing to lose and just about everything to gain.
THE TRUE EARNING POTENTIAL OF KELLER WILLIAMS PROFIT SHARE
So now, you might be wondering how much you can earn from this profit share program, especially as you continue to recruit new agents and as they sponsor their new agents. Now, we’re going to break this down in hypotheticals so you can see each referral’s difference in numbers.
Let’s assume that, each month, all real estate agents in your tree contribute $1,000 toward the company dollar on a 0.24 profit share factor for a total of $240 left to be redistributed among their profit share tree.
Here’s how that breaks down in terms of your takeaway at each level of your profit share tree.
|Level||% Take-Home||Total Take-Home|
If you only had one agent, you’re the direct sponsor of your tree at this rate. You would only bring home an extra $120 a month. You might need more than that to pay your electric bill. But look at how that take-home changes as you expand your tree and add more levels.
Ten agents you sponsor at this rate bring that total to an extra $1,200 a month or an extra $14,400 in your account by year’s end. If each of those agents brought on two sponsored agents, one new and one seasoned agent, that would bring you to level two of the tree, generating 10% on their profits, or an extra $24 a month per agent.
Now you’re cashing in on an extra $480 a month or $5,760 more a year.
If you sponsor two agents, they sponsor two more, and so on down the tree, do you know how much you’ll end up profiting at this rate? With 258 agents in your tree, here’s what you’d bring home at each level:
- Level 1 (2 agents at 50%): $240
- Level 2 (4 agents at 10%): $96
- Level 3 (8 agents at 5%): $96
- Level 4 (16 agents at 5%): $192
- Level 5 (32 agents at 7.5%): $576
- Level 6 (64 agents at 10%): $1,536
- Level 7 (128 agents at 12.5%): $3,840
Now, you can see how some agents with a lot of pull generate hundreds of thousands in financial rewards each year, sometimes even exceeding their GCI.
That ought to motivate you to encourage new agents to join Keller Williams. And it’s an excellent sticking point when bringing new agents on board.
The Keller Williams Profit Share can be highly profitable, especially if you encourage successful real estate agents from other real estate companies to join Keller Williams Realty.
With that, you must dedicate your time toward recruiting new Keller Williams Realty agents and nurturing their skills and fundamentals in the business. The better you guide them toward a successful career in real estate, the more you and your whole tree win.