It's time to Negotiate my Split with my Rainmaker, What do I do?

Commission as found in the dictionary

I received a question from a buyer’s agent who was in the process of renegotiating with her team lead.  She had some great questions that a lot of team members wonder but rarely ever speak about.  I thought it would help others to post our dialogue (personal information removed). 

Question: I have been a realtor for 18 months.  I sold 10 homes and closed 4 rentals before joining a team.  My team consists of two people.  I am the buyers agent and my team leader is the listing agent, who generates the bulk of the business. 

My deal was simple, I work with buyers and take it from contract to close.  I can take listings of friends and family on a case by case basis and all the closed deals and therefore people remain the “property" of the team.  My starting split was 50/50 and my percentage would increase 5% for each million dollars in sales I surpassed.  I would cap at 75%.  My anniversary is in two days and I have sold $3,500,000 worth of property which represents 24 sales.  Of the 24 sales, 9 of them were from my own advertising and referrals.  

I wanted a better split so I requested a 65/35 split for the first three million and 75/25 thereafter.  My team leader countered at 60/40 for the first two million and then 65/35, 70/30, 75/25 for the next three tiers. capping at the 75/25. Is this fair?

The other issue relates to who keeps the leads.  I want to request that the language be changed to say that if I leave the team and do business with previous clients, the team will get a 25% referral. My plan for now isn’t to leave the team, but I want to make sure I am protecting my future.  Is this fair?

- Sincerely, Unsure Agent

Response from Brett @ Nekst:  When it comes to the split, it will vary by market and what your "rainmaker" is bringing to the table to help you develop.  If you're working for the top agent in the market, you should be happy to accept a lower split since you will learn so much. With you being two years into the business and receiving 63% of your sales from your team leader, I'd say it makes a lot of sense to stay with your team for at least another year.  During this time, however, make sure you are taking the necessary steps to allow for an easy exit as an independent agent, should that be your goal.   

Based on the two splits above, should you sell $5,000,000 (assuming 3% commission) you would make $103,500 with your split and $99,000 on your rainmaker's proposed split.  Either way, you're arguing over $4500 which could easily be made up for through 1 additional sale.  I wouldn't care so much about the split in this case.  I recommend you focus on what coaching or activities your team can offer that will lead to one or two additional sales.

As for protecting your database... I am much different than most team owners.  I personally run my own sphere and any leads I help generate for my team stays with the buyer's agent.  I try to develop my buyers agents so that they will do their own marketing and become rainmakers themselves.  This is completely counter intuitive to what most coaches teach, but my goal is to get them as successful as possible and earn their loyalty.  Every great buyer's agent will one day go off on their own.  If I can still earn a smaller portion of income by housing them within my brokerage, fantastic.  So unfortunately I can't respond in a manner where I have a "shared mindset" with your boss.

Here is the best advice I can give when it comes to leads.  Keep your own database outside of your rainmaker.  If you want to offer a 25% referral fee should a past customer use you, that's great.  But who is going to track your sales to make sure you're following through on your promise?  At the same time, after you've worked your butt off for a client who wanted to see 100 homes over 24 months, are you still going to be forthright in offering that fee?  Rarely do I see these kind of referral relationships lasting more than a year.  On top of all this, what the team wants to maintain in the shortterm are the referrals from these folks, since it's the friends and family of recent client who are more likely to buy/sell over the next 5 years.  

I would suggest that you negotiate this:

  • Every lead/client you generate through one of your own resources belongs to you
  • Every lead/client who came to you through one of the team's marketing efforts belongs to the team
  • If you leave the team, you promise not to market your business to any clients that belong to the team
  • But - should you no longer be with the team and a past client reaches out, you are permitted to work with the client since the "team" failed to properly market to and retain that client for themselves  

Spend this year building your own list of clients in your personal database.  Build yourself a personal website and start putting out blog content so you can easily be found when someone googles you.  Pretend you're an independent agent who accepts leads from the team so that when you finally shed your team for good, it will be seamless. 

Would you have answered this question differently?  Let me know in the comments below.

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