Here’s what real estate agents need to understand about GCI.
We mentioned the term ‘GCI’ (Gross Commission Income) before. Let’s quickly break it down.
Your Gross Commission Income is the total amount listed on your settlement statement. It’s usually not the exact amount you receive as an agent; there are typically deductions before it reaches your bank account. So when people say, ‘My GCI was $1,000,000’ or ‘My GCI was 1.5,’ they are referring to the total amount on the settlement statement, not the final amount in their bank account after broker deductions.
Is there a point where you see agents transition from focusing on growth to aiming for a fixed expense structure? It varies depending on your market, as GCI can vary significantly. You could complete 100 transactions and have $500,000 of GCI, or you could have $2 million or $3 million of GCI with the same transaction count. It should be based on your capacity and unit count. Many agents can handle 20 to 30 units by themselves, but if you consistently manage that many, you’ll likely want more leverage.
Regarding leverage, there’s no better way than getting excellent administrative assistance. It can be an administrative transaction coordinator (ATC) paid per transaction or a capable virtual assistant who manages your email and assists with administrative tasks.
Now, let’s discuss expenses. Should we consider taxes as expenses, or should they come out of the profit? Taxes are not typically included in the budget model for a standard team, but you should always factor them into your personal financial calculations. After calculating your operating expenses, such as salaries, admin costs, lead generation, DOS (Director of Sales), and office space, you’ll arrive at your profit. However, remember that you need to set aside a portion of that profit for taxes.
We’ve provided a high-level overview of these basic terms. If you have questions, please call or email us. We’re always willing to help.