Broker Salary Structure
I’m not sure if this has been posted/discussed in here before or if it’s one of those common “just depends” topics. 

I’ve been working as a licensed broker for a Landlord/Developer for two and half years now while finishing up a real estate finance degree. Since starting I’ve been commission only and have done a handful of deals (which isn’t much to brag about, but school has been taking up a lot of my time) that brought a few of our retail centers to 100% occupancy. 

I’m graduating this coming December which is when I’ll start my salary negotiations and I’m not quite sure how a salary for this type of job is typically structured. 

I’ve heard about brokerages that do a “draw system,” I’ve also heard of brokerages that do a base salary plus whatever commission you would earn from deals. 

Anyway, to get to my question. In your guys’ and gals’ experience, how have you gone about negotiating a salary/pay structure other than commission only? What’re some of the benefits of one versus the other? 

Anything helps, so thanks in advance for any advice you guys can provide!
[{"id": "fhlm4zn", "text": "If I was you I\u2019d figure a number that will just be barely above what it will take you to live. \n\nI get a salary (35k) and commission but my split is terrible until I decide to go off salary. However I don\u2019t see myself being 100% commission till the end of my 3rd year. I\u2019m a year and a half in.", "replies": [], "depth": 1}, {"id": "fhlmc2p", "text": "You are working for a landlord / developer, so 100% commission is not super common. For a brokerage, yeah, you kill what you eat, but for a developer you are servicing their existing clients ect. Ideally brokers would come to you and you would run the numbers and then give a yes or no on potential development. \n\nSo your job is what would typically be aquisitions / dispositions, and for larger firms you can expect a 6 figure salary + a nice bonus based on certain criteria. \n\nMy guess is that you are not at a larger firm and that the people you are working with will try to screw you. \n\nWhoever gives a student a commission only job is punishing both the student and the company, that is just dumb. \n\nI would take the experience you have and the client list you have and look around at what you can get. \n\nDon't do a draw, that is a loan that you have to pay back. That is what senior brokers give to junior brokers to enforce a type of indentured servitude and almost always backfires.", "replies": [{"id": "fhmadtp", "text": "Thanks! The firm I\u2019m at now is small in employee size (about 30 people) but we have a portfolio of about 7.3 million sq.ft. valued at approx. $625M. My title is leasing associate and yes there\u2019s a lot of sq.ft. for me to focus on but 4M sq.ft. of our portfolio is within a different city and because the size of the properties there, those are typically handled by the execs of our company. Yes that leaves 3.3M sq.ft. of space in my market it we currently have a 92% occupancy so there\u2019s not much room for a steady income with commission only, which is why I\u2019m looking for the salary aspect. When I first started, I was only 21 so I kinda offered to go for the commission only position until I graduated so I\u2019d be able to gain experience without having to worry about crushing it to keep my job/salary while finishing up school.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fhlmqwu", "text": "If brokerage is your path, you're going to end up fee-based 99% of the time unless you're in-house for a REIT, etc. Draw is a common structure early in your career, but it's usually set up as a *just barley enough to survive* wage. Perks are you have some consistent income, but the structure requires you to pay it back if you leave before the draw period extinguishes. Salary plus fees is pretty uncommon if it's a straight brokerage role with no other responsibilities. \n\nSincere question - If you've been fee-only for the last 2.5 years at this shop, what leads you to believe that's going to change once you graduate? Has the owner suggested that?", "replies": [{"id": "fhmct5l", "text": "&gt; Sincere question - If you've been fee-only for the last 2.5 years at this shop, what leads you to believe that's going to change once you graduate? Has the owner suggested that?\n\nI would also be curious about this.", "replies": [], "depth": 2}, {"id": "fhmebwz", "text": "Thanks for the advice on the draw! Since we\u2019re still a relatively small company, as far as employee count goes (30 people), I get to work with the owner on a daily basis. He\u2019s mentioned that after graduation is when we\u2019d negotiate a salary. There\u2019s also another rep in our firm that was put on salary after he graduated, so that was a bit more reassuring. I initially offered to go commission only when I first started so I could gain the experience and not have the entire stress load of keeping the salaried job while I was finishing school. Keep in mind that I was also only 21 when I first started so it\u2019s not like I came from another brokerage with a full client list and years of experience to give any reason as to why I should\u2019ve started on salary.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fhltapn", "text": "My question here is: why do you want a salary? Some brokerages will offer a tiny salary or draw to brokers that are brand new but you more than pay for it with lower splits. This is 100% my opinion, but if you're trying to dip your toe in to brokerage you may want to be a bit introspective to see if it's really what you want to do. Brokerage is eat what you kill and the best brokers want to have the opportunity to do big things and be rewarded for it. If you're looking for a salary you're asking the company to share your risk with you. That means you have a reason you're not willing to take that burden yourself. It also means the company will need to be compensated for assuming some of your risk. Asking for a salary translates to \"I'm not sure I can do this, will you pay me to try?\" a draw says \"I can do this but I don't want to starve between now and my first deal\". These are very different because if you take a draw and leave without paying it back you still owe that money. I'd never hire a broker on any type of salary. It's a perverse incentive. I'd consider a draw if it made good sense and was the only thing keeping me from bringing on someone strong. On the flip side I'd write a check as a bonus to someone I'm confident will be good (with some teeth). These are my opinions so don't let this comment discourage you completely, it's food for thought. Consider what you want to accomplish in the medium term and build a plan then work backwards to the starting point. If what you want to be in the medium term is a high producing broker then your plan probably won't include a salary.", "replies": [{"id": "fhmco67", "text": "I agree that it doesn\u2019t make sense for a true brokerage to offer salaries because their product is what the market has available. In my situation, working directly with the developer, the only product I have to lease is what we have in our portfolio. That shrinks my product from the full market to 14 properties that have a 92% occupancy since we don\u2019t do any third party representation. \n\nI\u2019ve been in love with the art of commercial development since I was 14. Working directly with a developer as I\u2019ve gone through school has been a dream, especially now that I\u2019m nearing graduation and will start this as my career without any outside distractions such as classes or tests. If we were able to do third party tenant rep then I wouldn\u2019t be looking to ask for a salary, but since I\u2019m only able to focus on bringing tenants to a small amount of sites (our sites) there\u2019s a lot of lost leasing/income potential which is why I figured a developer/landlord would offer a salary to compensate for the opportunity cost.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fhlvt7u", "text": "if you are a good broker you would only want commission only.   good brokers don't need to worry about salary.  this isn't the type of business where you want to make 50-100k.  if you're looking to join the big boy league 250k plus but realistically much more in good markets then become good and do commission only.", "replies": [], "depth": 1}, {"id": "fhlx7t8", "text": "I\u2019m at a debt brokerage and have an $80K base plus 4% of whatever my team produces regardless of if I work on the deal or not.", "replies": [], "depth": 1}, {"id": "fhlxfk2", "text": "It depends on what your responsibilities are.  Working for a smaller landlord/developer may give you the opportunity to take on a variety of roles (development, asset management, etc.) which would give you a broader industry knowledge base.  If you are taking on non-brokerage responsibilities, you should negotiate a salary that takes into consideration how you split your time.", "replies": [], "depth": 1}, {"id": "fhmagbs", "text": "They should be giving you a salary + bonus/commission.\n\nTrue brokerage means you represent any clients you want, prospects that don't lease/buy your clients space you try to capture etc.  You determine your book of business.\n\nYou don't have that here.  You have one client.  If they decide to expand and you have tons of business great, if they decide to sit still and you have nothing to do I wouldn't want to make 0 dollars.  \n\nAlso they are almost surely going to rope you into doing work on refi's, some pm with the tenants you brought in, and a million other things that you won't be able to commission.  Probably the less sales there is to do, the more they will dump that stuff on you too.  And if not, what are you going to do when you aren't busy?  Twittle your thumbs?  Most brokers use that time to create new business, this seems nearly entirely outside of your control.", "replies": [], "depth": 1}, {"id": "fhmffgu", "text": "Are you staying on after graduation to provide in-house asset / prop mgmt services with brokerage when necessary? If so that would definitely be salaried. I think many of the responses are focused on going 100% commission because you put brokerage in the title, but it doesn't seem like that would be your main day-to-day role.", "replies": [{"id": "fhmqwys", "text": "A big focus of my job is and would still be brokerage/asset management. We have in-house property management but that\u2019s their only focus. My job entails typical brokerage but I also assist with the marketing of our properties/company, as well as public and tenant relations. If I was only tasked with finding tenants for our sites then I wouldn\u2019t be looking for a salary but since a noticeable portion of our reps\u2019 time is needed for the actual company\u2019s operations they are put on salary. Since I\u2019m getting to that point, I was looking for advice on negotiating a salary because I\u2019m curious as to what a typical pay structure is (i.e. higher salary earns lower commission splits or does commission remain the same but the salary is low)", "replies": [], "depth": 2}], "depth": 1}, {"id": "fhn5zzg", "text": "OP consider benefits too.  Its unclear if you are a 1099 or how this works exactly.  Just shitty health insurance is like 10k a year difference", "replies": [], "depth": 1}, {"id": "fiahfz5", "text": "Yo I would say do NOT wait until after graduation to negotiate a salary. Your company will have you by the nuts then and you may be more desperate to take a job at a lower salary/split from them. I would start applying/looking elsewhere 6+ months before graduation (1. Because you never know and owe it to yourself 2. You want a market check of what your worth). I would also explain to your current boss that you\u2019d like to have this conversation ironed out and agreed before graduation. If he agrees and y\u2019all reach a deal that you\u2019re happy with, I probably wouldn\u2019t go looking elsewhere, as real estate is a small world.", "replies": [], "depth": 1}]