However, Keller Williams is considered by many to be the originator of the profit/revenue share model, launching its profit share model in 1987.
Keller William starts it all
“We created a program that would treat our real estate sales associates like legitimate partners in the business,” Gary Keller, the founder and executive chairman of Keller Williams, wrote in an email. “We created a program that allows associates to build a business inside a real estate company that is as powerful as if they owned the company themselves.”
Under Keller Williams’ model, KW Market Center owners share roughly 50% of their office’s monthly profit with associates in the market center. The market center must be profitable that month for a profit share to be paid out. When an agent joins KW, they name a sponsor and each month part of their commission split is paid to their market center. Since its inception, KW says over $2 billion has been paid out in profit share.
“The profit share puts the agents on the same page as the owners. Rather than have two separate businesses going on, we all have one focus of making sure the business is profitable, but inside of that, then we all have our own individual responsibilities,” Marian Benton, who owns three KW Market Centers, said. “The agents all know what our finances are and they see our balance sheet each month.”
According to Benton, this deep knowledge of the brokerage’s profit and loss statements, as well as the common goal of profitability, creates a strong sense of responsibility among the company’s agents and a keener focus on successfully closing deals.
“I absolutely think there is no better place for an agent who wants to grow a business to be,” Benton said.
KW’s director of operations and services, Kelly Cote, is not surprised that others have embraced similar models.
“On the surface, I’d think EVERYONE would want a profit-sharing model for their company, but I think it takes a pretty special individual to start a brokerage and commit to sharing in their profits at a high level,” Cote wrote in an email. “Not only that, but they also have to commit to actively making profit share successful with a robust training curriculum for all agents and leadership and coaching.”
Like Benton, Cote believes the profit share model creates a sense of partnership between agents and market center owners, in contrast to the “adversarial” relationship she believes a revenue share model could garner.
“The key difference lies in the incentive structure: profit-sharing aligns agents with the company’s financial health, while revenue-sharing requires an agent to devote a substantial amount of time and effort to recruiting,” Cote wrote.
eXp Realty explores revenue share
There is no doubt eXp has been quite successful in its recruiting efforts, growing into an organization of over 85,000 agents as of end of March 2024, and CEO Leo Pareja is quick to point out that the eXp tops the RealTrends Verified Rankings for transaction sides.
In 2023, eXp Realty agents closed 355,052 transaction sides, over 100,000 more than the No. 2 brokerage Anywhere Advisors, in the 2024 RealTrends Rankings.
“We are the most productive company in the U.S.,” Pareja said. “If you take my top 250 teams, alone, they sold in excess of 69,000 homes in 2023, which would have made them the sixth largest independent brokerage. Our model is production first, it is operationally excellent and it is built for scale.”
Additionally, Parker Pemberton, a top eXp team leader who heads the Pemberton Homes Team in Minnesota, the third-ranked mega team in the state in the 2024 RealTrends Rankings, noted that just 14% of eXp agents have attracted one or more agents, while 86% of the brokerage’s agents have attracted zero agents.
“Although it seems on the surface that there’s a lot of recruiting or attraction, it is really being led by a very small group of people that are doing it at the highest of levels,” Pemberton said. “As a team, we have always led by production and we continue to hammer that in because people want to be around others that are selling a lot of houses and that can teach them how to sell a lot of houses.”
Jeff Chubb, a former eXp Realty agent who moved over to Real, which also operates a revenue share model, said agents focused on recruiting at eXp end up competing with one another to build downlines to generate revenue from.
“At Real you have more of a true communal company without the fractured downlines that are fighting one another,” Chubb said. “But at eXp, you have all these organizations that are offering different resources or trainings to agents and it is great because the agents are getting more value and more resources, but at the same time you have factions competing against one another within the same company. Ultimately I think that is what is going to end up eating eXp alive.”
Despite his misgivings about the model, Chubb still enjoyed his time at eXp and sees the benefits of the company’s decision to put much of the onus of recruiting on agents.
“The hardest, most expensive and painful thing that you can do in a real estate operation is recruiting, and the genius of the revenue share model is that it takes the whole hassle, as well as the expense, out of the brokerage’s hands and puts it on the agents, allowing the brokerage to focus on other things,” Chubb said.
As Chubb pointed out, eXp’s model turns its agents into the recruiting engine of the brokerage, and Pareja said that this not only helps eXp maintain its more streamlined model, it also helps agents out who had previously been helping new recruits frequently for no compensation.
“When I was the No. 1 team leader in the world at Keller Williams, at least three times a week I would get a call from an agent asking me to teach them what I do, and because of how my team worked and how coaching works, I never had an aligned incentive to do that because if I were to spend an hour on the phone helping them, no matter how much I charged I would have had a more productive use of my time,” Pareja said. “But in our world, we have top producers who are also top attractors and it is because they let people into their world to do skill based training and they get compensated for that time. It is a self-enforced flywheel effect in the most positive way possible.”
According to Pareja, in 2023, eXp paid out $198 million to its roughly 20% of its agents through revenue share, and an additional 2.22 million EXPI shares to its agents and brokers, valued at $34.7 million through its agent growth incentive program.
“In total, eXp reinvested over $230 million in cash and stock back into the agents who drive our growth — above and beyond the $3.6 billion in commissions paid in the same calendar year. This model ensures that agents directly benefit from the expansion they help create,” Pareja said.
The Real Brokerage
The Real Brokerage is one of the larger industry players to more recently adopt the revenue share model.
Founder Tamir Poleg said Real decided to try a revenue share model after realizing the brokerage’s recruiting efforts, which consisted of a lot of Google and Facebook advertisements, were costly and ineffective.
“We only had about 1,000 agents, but we asked ourselves ‘how can we leverage those people to go and attract their friends to Real?’” Poleg said. “We launched the model in 2020 and we were fortunate back in the summer of 2020 to attract some agents who knew exactly how to leverage the opportunity of revenue share in order to have discussions with agents they know in their local markets and just create flywheel effects in different markets.”
While Real has adopted a revenue share model that’s similar to eXp, Poleg is cognizant of the criticisms eXp and its agents have received for what many in the industry feel is too big of a focus on recruiting. Due to this, Real’s version of the revenue share model has what Poleg calls “guardrails.”
“We wanted to make sure that the perception in the market is that the brokerage is focused on production,” Poleg said. “So, we have rules in place, like that you cannot participate in revenue share if you are not closing at least one deal every six months, and that agents cannot cold call or do things like lunch and learns, which can feel too salesy.”
Additionally, if a recruiting agent offers a service or tool to an agent they recruit, they have to offer it to all agents within Real, and recruited agents are allowed to name up to two sponsors when joining the company, helping to curb any competition for recruits.
Although profit share and revenue share models are becoming more popular, Benton, a longtime KW market center owner, does not believe they are for everyone.
“There are some agents who don’t want to grow a business — they just want to sell a few houses here and there and that is ok,” Benton said. “But our model shines brightest for people who are truly stepping into the business world, people who want to learn how to expand a business, build a team and build a company underneath them.”
