Imagine a real estate company where there is a true incentive for agents to share ideas. Where agents are being trained to brand and market their own businesses as opposed to that of their company. Where those same agents don’t have to directly compete with each other over their company’s business. And where every agent is valued the same because no agent is worth more than their CAP. Now imagine how that might have an impact on your real estate business and life.
This, of course, was paraphrased from Aaron Kaufman’s 20-second elevator speech on the virtues of Keller Williams. A speech which he jokingly tells us that he’s never recited in an elevator.
What IS profit share?
To steal a line from The Breakfast Club… “In the simplest terms, and the most convenient definition, Keller Williams profit share adds a remarkable layer of value to an already outstanding organization. The core idea behind profit sharing being that we treat our associates as shareholders – partners in growth alongside the market center owners.
Every associate has the chance to actively engage in the profit sharing program. Those who do are financially rewarded for introducing producing agents to our company. When those agents join the company, their ‘sponsors’ receive a portion of the profits generated by the entire office. It’s passive, will-able income on a global scale, with ZERO financial commitment required.
Since it’s inception in 1997, Keller Williams has shared out over $1.5 BILLION with its associates through the profit sharing program. This is money, that in any other business, would have gone directly to the business owners but instead is shared with the associates that have helped to grow the company.
How does profit sharing work?
Real estate agents meet people every single day. It’s ingrained into their business to constantly be adding people to their databases. And often times, we meet people that have ‘thought about’ getting into the real estate industry or even experienced agents that are simply looking for a change. Sometimes they’re not even looking.
Simply by introducing them to Keller Williams, you’ve helped grow the company. If and when these new people join Keller Williams and start closing transactions, those sales contribute to the profitability of the market center. And in turn, the market center shares profits back to the agents who helped the market center to grow. The more new people you bring into the company, the more profits that you share in.
And they don’t even have to join YOUR market center. They can join any office in the United States or Canada. If you’re named as their sponsor, and their market center is profitable, you as the referring agent get to participate in profit sharing. And just as with business – it builds slowly and then quickly. Top profit share earners in the company earn over $1 Million per year in passive income.
How is profit share calculated?
1. On a monthly basis, the market center calculates its profit:
|Market Center GCI||$756,280.34|
|– KW Royalty Fee||$28,516.38|
|= Net Gross Commission||$727,796.96|
|– Associate Commissions||$606,821.59|
|= Company Dollar||$120,942.37|
|– KW Approved Expenses||$56,941.12|
2. The Market Center then splits the profit between the Profit Share Pool and the owners:
|Profit Share Pool||Owner Profit|
|Level 1: First $2,990 of Profit||25%||$747.50||75%||$2,242.50|
|Level 2: Next $8,250 of Profit||35%||$2,887.50||65%||$5,362.50|
|Level 3: Any profit over $11,240||50%||$26,380.63||50%||$26,380.63|
3. The Profit Share Factor is calculated.
On a monthly basis, the Market Center’s Profit Share Factor is determined by dividing the Market Center’s Total Profit Share Pool by its Company Dollar amount. This gives us how much Profit Share Pool there is per Company Dollar paid.
In our example, if we divide the Market Center’s $30,015.63 Profit Share Pool by its $120,942.37 Company Dollar, we find a Profit Share Factor of .2482.
4. The Profit Share is dispersed through the branches of the Profit Share Tree.
Once we know how much of the Profit Share Pool there is per Company Dollar paid, we can multiply what each associate paid in Company Dollar by the Profit Share Factor to find the amount of Profit Share that will be distributed to that associate’s branch in the Profit Share Tree on the 21st of the following month.
In our example, if an associate paid $1,800 in Company Dollar that month, we multiply that $1,800 by .2482 to find that $446.76 of profit will be distributed to this associate’s branch.
How the money grows on this Tree
Remember how the roots of the tree grow? You named someone as your sponsor, they named someone as their sponsor, and so on for seven levels. The disbursement of profit through the associate’s branch is on a tiered system. The first ALC determined these percentages. Subsequent International ALCs have considered changing them, but have ultimately agreed these numbers work best.
If you were the associate in our example above, your sponsor would get $223.38 of Profit Share deposited into their account on the 21st of the month following these calculations. The remainder would be distributed as follows:
|Rate x Total Profit Share = Disbursement per Level|
|To Your 1st Level||50%||$446.76||$223.38|
|To Your 2nd Level||10%||$446.76||$44.68|
|To Your 3rd Level||5%||$446.76||$22.34|
|To Your 4th Level||5%||$446.76||$22.34|
|To Your 5th Level||7.5%||$446.76||$33.51|
|To Your 6th Level||10%||$446.76||$44.67|
|To Your 7th Level||12.5%||$446.76||$55.85|
They call it the 401KW
Keller Williams associates that participate in the gift of profit share and stay with the company for at least three years and one day, become vested in the system and will continue to receive Profit Share for the remainder of their lives. It is a will-able asset that our agents can leave to their heirs so that they can continue to receive it for the rest of theirs. It truly is the gift that keeps on giving.
2023 Update – the International ALC recently voted to make changes to the vesting program. Previously, if vested associates left Keller Williams for any reason, their profit share would follow them for life. The recent changes reduce profit sharing distributions to 5% for associates that leave Keller Williams to work for a competing brokerage. It does not affect associates that retire, pass away, or simply leave the business altogether. For more information, please contact your local market center.
Keller Williams Growth Share
Keller Williams is expanding its reach around the globe through Keller Williams Worldwide. Because of the differences in laws and monetary policies adopted in other countries, Keller Williams offers Growth Share instead of Profit Share.
Rather than local market center owners sharing a portion of their profits under the profit sharing system, the growth share model is funded from a portion of the companies revenue by the master franchise owners in each country. Keller Williams associates around the world can share in the profits from both models, providing them a powerful one-two punch of passive income.
Are you ready to get your UNFAIR share of profit and growth share? Join Keller Williams today to get started building your passive income stream and leave a legacy for your family.