Chartered Financial Analyst and licensed real estate broker with 15+ years experience in property finance.
Find your breakeven point as a real estate agent. Enter any three variables—Monthly Fixed Costs, Avg. Commission per Deal, Variable Cost per Deal, or Breakeven Deals—to solve for the fourth.
Real Estate Agent Breakeven Calculator
Real Estate Agent Breakeven Formula
The breakeven formula for an agent finds the total number of deals (Q) you must close each month for your total commission income to cover all fixed and variable costs.
Q = F / (P – V)
Solve for Monthly Fixed Costs (F):
F = Q * (P – V)
Solve for Avg. Commission (P):
P = (F / Q) + V
Solve for Variable Cost per Deal (V):
V = P – (F / Q)
Variables Explained
- Monthly Fixed Costs (F): Your recurring overhead. This includes broker desk fees, MLS dues, marketing, car payments, insurance, and software.
- Avg. Commission per Deal (P): Your average *gross* commission income (GCI) from a single transaction (before paying your broker).
- Variable Cost per Deal (V): The costs tied to a single deal. This is primarily your broker’s commission split, plus any referral fees, transaction fees, and closing gifts.
- Breakeven Deals (Q): The total number of deals you need to close each month to reach $0 in profit.
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What is a Real Estate Agent’s Breakeven Point?
A **Real Estate Agent’s Breakeven Point** is the exact number of deals (Q) you must close each month or year to cover all your business expenses. It’s the minimum sales volume required to pay for your fixed “overhead” costs (like MLS dues and marketing) and the variable “per-deal” costs (like your broker split).
**Fixed Costs (F)** are your consistent overhead, whether you close 0 deals or 10. This includes your brokerage desk/office fees, MLS subscriptions, marketing and advertising budget, car expenses, E&O insurance, and CRM software subscriptions.
**Variable Costs (V)** are the costs incurred *only* when you close a deal. The biggest one is your **broker commission split**. For example, if your split is 70/30, your variable cost is 30% of the commission (P). Other variable costs include transaction coordination fees, referral fees paid, and closing gifts.
The **Contribution Margin** (P – V) is the profit from a single deal that goes toward paying your fixed costs. If your average gross commission (P) is $8,000 and your broker split and other fees (V) cost $2,400, your contribution margin is $5,600. This calculator finds how many $5,600 “profit chunks” you need to cover your total fixed costs.
How to Calculate Real Estate Agent Breakeven (Example)
Let’s calculate the breakeven point for an agent on a 70/30 split.
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Identify Monthly Fixed Costs (F):
Your desk fees ($150), MLS dues ($100), marketing ($500), and car/insurance ($750) total $1,500.
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Identify Avg. Commission per Deal (P):
Your average home sale is $400,000, and your average gross commission (GCI) is 2.5%, so (P) = $10,000.
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Identify Variable Cost per Deal (V):
Your broker split is 30% of GCI (0.30 * $10,000 = $3,000). You also pay a $500 transaction fee. Your total (V) = $3,500.
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Apply the Formula: Q = F / (P – V)
First, calculate the contribution margin: $10,000 (P) – $3,500 (V) = $6,500.
Next, divide the fixed costs by this margin:
Q = $1,500 / $6,500 = 0.23 -
Conclusion:
You must close 0.23 deals per month to break even. To find your annual goal, multiply by 12: 0.23 * 12 = 2.76. You must close **3 deals** per year just to cover your fixed costs. The 4th deal is your first profitable one.
Frequently Asked Questions (FAQ)
Yes, absolutely. You should determine your minimum monthly personal income (e.g., $4,000) and add it to your business **Fixed Costs (F)**. This ensures your breakeven goal is high enough to actually pay yourself a living wage.
A capped split complicates this simple formula. You should calculate your breakeven *twice*: once with the Variable Cost (V) including your split (for deals *before* you cap) and once with (V) at $0 (for deals *after* you cap). This calculator is most accurate for pre-cap calculations or for agents on a fixed-fee model.
Take your total GCI (Gross Commission Income) from the last 12 months and divide it by the total number of deals you closed. This gives you a reliable Average Commission per Deal (P).
You can compare two brokerages. Broker A has high Fixed Costs (F) (e.g., $2,000/mo) but a low Variable Cost (V) (e.g., $500 per deal). Broker B has low (F) (e.g., $100/mo) but a high (V) (e.g., 40% split). This calculator will show you how many deals you need to close at each to become profitable.