By: Justin Kim
Great article. Revenue is so important. But many would argue that net income is more important ? If you were to gross a million dollars but net only $10,000 that’s a problem right ? So many agents actually spend more than they make. Or don’t net enough to make a great living.
By: Chris Linsell
In reply to <a href="https://theclose.com/what-is-gci/comment-page-1/#comment-315406">Jessica A</a>.
Hi Jessica -
Thanks for the question. Unfortunately, no, that isn't a tax-deductible amount. That being said, you're not actually being taxed on this amount (it isn't actually considered income).
Chris
By: Jessica A
Are you allowed to deducted your broker fee and the royalty fee's on your taxes?
By: Chris Linsell
In reply to <a href="https://theclose.com/what-is-gci/comment-page-1/#comment-278576">Jack Girvan</a>.
Hi Jack -
Thanks for the comment. It's true, franchise and / or royalty fees are sometimes a part of an agent's commission obligations, as well as other misc fees. Since these are not universal, we didn't include them in our calculations for NCI, but every agent should abolutely be running their own fees through the formula to come up with their personal numbers. Thanks for the reminder!
Chris
By: Jack Girvan
Two other consideration that were not mentioned. Franchise or Royalty Fees. Many of the large National Franchises and regional firms deduct a franchise fee from the total commission of 5-8%. Thus using your example of a $250,000 sale with a 3% commission and an 8% franchise or royalty fee an additional deduction would be $300.
After considering the impact of the Broker deducting the franchise or royalty fee the "true split" is reduced to 65%.
The second consideration is that many Brokers have miscellaneous junk fees to further take money that agents have worked so hard for. They may include so called administrative fees, compliance fees, marketing fees, advertising fees, technology fees, training fees, support fees, etc. These fees can easily add up to a few hundred dollars per transaction.
Lastly some firms also charge an annual fee(s) to be associated with the firm. One of the top firms charges an annual fee of over $425.
Unfortunately I am finding that there is a lack of transparency or full disclosure of the costs associated with working for many firms.