My sponsor made thousands of dollars because of me last year. And no, I wasn't "lured" to KW by "smokeand mirrors" at all. I went here because of a lot of reasons, and the recruiting bonus was literally at the bottom of the list.

That is not how it works at all. The money you get comes not from your split, but rather the profitability of the office where the person you recruited works. I hope that you'll refrain from telling people that in the future.

Tanya,

If I were you I'd be careful about describing KWs program without fully understanding it. From what you described, it's not an accurate portrayal of how their system works.

Also, what split do you offer people that is higher then KWs?

graysqwrl,
Just a question for you.
What makes you the expert on the KW profit sharing pyramid? As you are a loan officer and not an agent let alone a KW agent how do you know with 100% certainty how they plan is worked?

This subject creates lots of heat. Something we all can agree on. Now some "facts".

We must admit that all income generated for the brokerage is from agents "splits" (well, there are a few other things, and the broker may sell, but the splits are the main income). If a brokerage is profitable, it's because the splits coming in were more than the expenses going out. To be profitable, the brokerage "over collected" vs the expenses.

So, Tanya isn't wrong in the sense profitablily is created by the income splits. Having said that, it appears to me that KW offers very few expenses for the agents, but instead makes agents pay for office space, printing, advertising, etc.... So the expenses should be low. By offering 70/30 split, but covering space, ads, signs, boxes, Virtual Tours, web space, etc, my profitablity would be lower, but the services higher. So if I were to adopt a profit sharing where I were to keep 50% profit, and share the rest on contribution, it would be lower.

My beef with KW is 2 fold.
a. Here, there is a very poor understanding of the profit sharing. An agent told me she would get $10,000 if an agent she recruits sells 1 mil. When KW caps at 18K, and the owner gets 50%, even with max profitability, how can she collect 10K? I think that each KW is different, but it seems smoke and mirrors here.

b. Claim of superior training. In Williams book about Millionaire Realtors, only 4 of the 16 highlighted Realtors in his book currently work for KW. If the plan were so superior, why wouldn't they be working for KW? And, with all the classes here, the $'s and units produced are about 1/3 of my company, and below average for the MLS.

This is what I consider smoke and mirrors.

Keller Willaims agents:
What are your caps like? 18K, 21K, 23K?
I am curious cause I signed up with Keller Williams.

A few years ago I wrote a business plan for them for a mortgage division. I had to understand how they calculated profit sharing. Also, I use a similar one for my loan agents because it's just so darn effective.

I also had to work with a few different Market Centers on various projects and really went out of my way to learn more about how KW runs.

As a Mortgage guy I used to spend a lot of time at various RE offices and KWs were always my favorites. They always seemed to have the best environments. Not a fact...just my opinion. Now when I'm not doing admin for my company, KW agents are the majority of agents that refer me business.

I'm not "the" expert, but I have a handle on how it works.

Sorry if I've been out of line in anything that I've said, but a lot of people talk about it without understanding it. In my opinion they tend to give it far too much of a bad rep.

The money paid out is the owners' profits. In your traditional brokerage anything left over after the bills are paid, the owner keeps...or possibly re-invests in his company in some way shape or form. Under the KW plan, the owner shares, what would be owners' money under a traditional brokerage, with the Agents as a "thank you" for helping to build the company. How many brokers give out bonus checks as thank yous?

KW also offers the "cap" at 18 or 20K or whatever the market dictates for that center. I think it's a pretty solid setup. I'm not pleased when people talk bad about it without understanding it...that's all.

In my experience, most of the KW agents don't understand completely how profit sharing works. In fact they usually offer a class on how profit sharing is calculated (yet it seems to be poorly attended). Maybe the agent did intend to deceive you with smoke an mirrors, but I'd imagine she probably doesn't understand how it works. You're right, there's no way she'd collect 10K from profit sharing given 1 agent doing a million dollar deal.

My beef with the system is that in KWs effort to create a bonus system, they successfully confused a lot of people including their own agents. I have, on a few occasions, explained to KW agents how their own system works.

I think, if your intention is to recruit an agent, you shouldn't be allowed to explain to the agent off the top of your head how you think it works. Maybe if they handed out a packet with a worksheet about profit sharing a lot of the confusion would be eliminated.

Well I'm a KW Broker, I was a REMAX Agent for years, When you add up how much you pay in Office fee's at REMAX ($1600/mo) vs. the KW 70-30 split until the 30% adds up to a $20k Cap, the numbers are close to the same, the difference is that KW also offer the Profit Sharing. I've sponsored several TOP Brokers to KW and I adv about $2,000-$4,000 a month in Profit sharing. REMAX Never offered me a DIME of thier profit!!!!

Thank you Chris for letting us know. I have been trying to decide between KW and Remax.