The Best Compensation Strategy to Retain Real Estate Agents for a Long-Term

According to the National Association of Realtors (NAR), 88% of home purchases in 2024 were made via real estate agents. Only 5% of people purchased directly from the previous owner. In other words, the real estate value chain cannot do without agents. And what happens if these high-producing agents are fairly compensated? They gravitate towards your brokerage in droves.

The REAL Brokerage, for instance, added approximately 10,000 agents by Q4 2024, bringing its total to 24,140 agents. The cloud brokerage's long-term agent retention and stellar agent growth led to improvement in nearly every business metric of the cloud brokerage firm.

The good thing is that you can replicate this model at your brokerage as well. All you need is a great compensation strategy for real estate agents. Growth and superior long-term agent retention will follow.

So, without further ado, let's get your real estate agent retention on track.

What Real Estate Agents Value in a Compensation Plan?

Since you have to develop an agent-centric compensation plan, it's best to first understand what drives agent loyalty. After all, recent changes have fundamentally altered what agents prioritize in their compensation packages.

1. Transparency and Adaptability in a Post-NAR World

The August 2024 implementation of new NAR settlement rules has tightened the agent compensation structure. One of the most impactful changes is the mandatory requirement for written buyer agreements, which has altered how agents engage with prospects.

Additionally, the ban on Multiple Listing Service (MLS) commission offers means agents now operate with even tighter margins. Industry projections suggest that commissions could drop by 25–50% in the aftermath of the NAR settlement.

In this backdrop, agents are prioritizing compensation plans that offer clarity and flexibility across varying transaction types.

2. Income Stability in an Uncertain Market

It's not as if everything was pink before the NAR settlement. The traditional feast-or-famine nature of real estate commissions drove much of the industry's retention problems. Many of the tribulations come from the lack of financial security.

To put things into perspective, the median gross income from real estate activities fell from $56,400 in 2022 to $55,800 in 2023. This drop becomes more pronounced when you consider that the agents are living paycheck to paycheck with stretched credit card bills. Often, they have to settle for a sub-optimal deal just to make ends meet.

So, compensation models that provide reliable income streams with performance incentives are valued more by high-producing agents.

Data reveals that 35% of agents operate under fixed commission splits, 20% use graduated structures, and another 20% follow capped commission models. However, the most successful retention strategies integrate base compensation elements (health insurance, technology stipends, or guaranteed minimums) with traditional commission structures.

3. Long-Term Wealth Building Opportunities

Top-performing agents no longer view real estate as just a job. They want career-building opportunities that create lasting wealth. This includes equity participation, revenue sharing from recruitment activities, and ownership pathways within their brokerages.

The success of revenue-sharing models demonstrates this trend clearly. eXp Realty has distributed over $889 million in revenue share earnings since 2015, highlighting the growing appeal of alternative compensation structures.

In 2023 alone, approximately $198 million paid out in 2023 alone. These programs create passive income streams that bind agents to their brokerages while rewarding them for contributing to company growth.

Core Components of Long-Term Agent Retention Strategies

Now, let's understand what elements can help you build your real estate agent compensation plan around the wants and needs of agents.

Here are a few factors that a successful real estate agent pay structure often combines:

1. Multi-Tiered Revenue Sharing Systems

Revenue sharing model is one of the most powerful retention tools available to modern brokerages. REAL's five-tier system exemplifies this approach, paying Tier 1 sponsors 5% of their recruit's commission up to $4,000 annually, with differential commission slabs for subsequent tiers.

This solves a lot of problems for the agents. Firstly, they are no longer dependent exclusively on their sales, as a productive downline helps them during their "in-between" period of deals. Secondly, it creates a meaningful incentive to hire and train agents, thereby eliminating the associated risk of operating on their own.

However, successful revenue sharing requires strategic guardrails to ensure sustainability. For instance, REAL necessitates its agents to stay active and close a minimum brokerage revenue of $450 over six months (rolling period) to be considered productive. This policy is a prerequisite for agents to earn revenue-sharing benefits. It also helps prevent pyramid-style schemes and rewards active contributors. This approach also creates a healthy ecosystem where revenue sharing enhances rather than replaces primary commission income.

eXp Realty further demonstrates the scalability of this model, with the company sharing 50% of its total company dollars through revenue-sharing programs. The key lies in creating transparent calculation methods and sustainable percentages that support long-term payouts without compromising brokerage profitability.

2. Progressive Commission Structures

The most effective compensation plans reward performance, experience, and loyalty. You can have competitive starting splits of 70/30 to 80/20, comprehensive mentorship programs, and reduced fees during the initial learning period. This helps them to get much-needed time to know the ropes.

Then, for developing professionals, a graduated commission increase works well. For instance, if an agent hits some milestone like a $12,000 cap, they can enjoy 95% to 100% commission splits. Case in point is eXp Realty's capped commission model. Agents pay an 80/20 split up to a $16,000 cap, after which they retain 100% of commissions. Such qualifications can be based on production milestones, access to advanced training, and the ability to bring in more agents.

Lastly, for the top-tier agents, you can have premium commission splits or capped models, stock participation opportunities, and leadership roles.

Overall, your commission structure should provide clear financial incentives for agents to increase their production while building long-term loyalty.

3. Equity and Ownership Opportunities

Modern agents increasingly demand ownership stakes in the brokerage's success. eXp Realty's ICON Agent Program offers up to $16,000 in stock awards for achievement milestones, creating tangible wealth-building opportunities beyond traditional commissions.

Profit-sharing arrangements, like Keller Williams' model of distributing market center profits monthly, align agent success with brokerage performance. These programs transform agents from service providers into true business partners, fostering the deep loyalty necessary for long-term retention.

4. Comprehensive Support Ecosystems

Compensation alone doesn't drive retention. The supporting infrastructure matters equally. Successful retention strategies integrate financial incentives with comprehensive support systems, including advanced CRM platforms, transaction management tools, marketing automation, and virtual training programs. This holistic approach addresses the professional development needs that drive long-term career satisfaction.

How to Build a Compensation Strategy that Helps Retain Real Estate Agents Long Term?

Creating an effective retention strategy requires systematic planning and continuous adaptation to changing market conditions. The following framework provides a roadmap for building sustainable compensation programs:

Step 1: Conduct Comprehensive Market Analysis

Before designing compensation structures, analyze your competitive landscape thoroughly. Research local and national commission split averages, study revenue-sharing programs offered by competitors, and understand your regional agent density.

Benchmark against industry leaders like eXp Realty and REAL Broker to understand how innovative compensation structures can drive your growth. However, avoid copying models wholesale. Instead, identify principles that align with your brokerage's unique market position and growth objectives.

You can even take the help of our experts on a free 15-minute interaction. They've helped scale multiple brokerages across the states with a revenue share model and will point you in the right direction.

Step 2: Design Performance-Based Progressive Frameworks

Implement compensation structures that reward both immediate performance and long-term commitment. Start with competitive base splits that match or exceed local standards, then layer in graduated systems providing clear pathways to 90%+ commission retention.

Consider REAL Broker's approach of limiting revenue sharing to actively producing agents ($450+ in brokerage revenue over six months) while offering a six-month grace period for recruits. This balance ensures participants contribute value while supporting new agent development.

Step 3: Integrate Technology and Automation

Leverage commission management software to automate calculations, reduce disputes, and provide real-time earnings tracking. Platforms that integrate with existing CRM systems streamline operations while improving transparency, a critical factor in agent satisfaction.

Automated systems also enable more sophisticated compensation models. Real-time tracking of production milestones, revenue sharing calculations, and equity award eligibility removes administrative friction that often undermines complex compensation programs.

Step 4: Establish Continuous Feedback Mechanisms

Regular communication prevents small issues from becoming departure triggers. Implement monthly one-on-one meetings, quarterly performance reviews, and annual compensation assessments. Acquiring new agents costs you more than retaining existing ones. Retaining existing agents, on the other hand, has other added benefits like retaining institutional knowledge and improved customer relationships.

Create agent advisory committees for compensation structure input. Also, conduct exit interviews for departing agents to identify improvement opportunities. This feedback loop ensures your compensation strategy evolves with changing agent needs and market conditions.

Step 5: Monitor and Optimize Performance

Track key performance indicators, including agent tenure (aiming to exceed the six-year industry average), revenue per agent, turnover rates, and agent satisfaction scores. Use this data to make informed adjustments to compensation structures and support systems.

Quarterly compensation structure reviews and annual competitive analysis ensure your programs remain competitive. Remember that brokerages promoting work-life balance and flexible schedules show significantly improved retention rates. Compensation strategies must address cultural factors alongside financial incentives.

Conclusion

The brokerages that thrive in today's challenging market understand a fundamental truth: exceptional agent retention requires more than competitive commission splits. It demands a comprehensive compensation strategy that addresses the diverse needs and aspirations of modern real estate professionals.

The future belongs to brokerages that align agent success with company growth, creating sustainable ecosystems where shared prosperity drives mutual success.

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