I’ve worked with agents at every stage of their careers, from agents who deposited their first commission check to veterans celebrating their 500th deal. And this is what I learned. Most of them do not have a systematic approach to assigning commissions, regardless of experience level.
If that’s you, you’re not alone. Real estate school teaches you how to close deals, not how to manage the money that comes from them. to be honest? Most agents focus on the error part and solve the problem through trial and error.
But here’s the good news. It’s never too late to start. Whether you’re a brand new agent staring down your first check, or a seasoned professional looking to stop writing checks, you can put checks to work in no time.
Why is this important now?
Fee-based income creates unique challenges that W-2 employees never face. When money arrives in irregular chunks, it’s tempting to treat each check like a windfall. Pay some bills, maybe splurge a little, take care of anything that seems urgent, and hope there’s something left over.
problem? It’s very unlikely that anything will be left behind. Then, when your next commission takes longer than expected, you suddenly find yourself panicking.
According to the U.S. Bureau of Labor Statistics, the median gross income for real estate agents in 2024 was $58,960. Still, we all know that some years are higher and some years are lower. Too many people make predictions, expecting things to happen. And when that doesn’t happen, they panic. Want to stop scrambling? Next, focus on how to manage what’s coming in, rather than just increasing it.
Without a system, even successful agents can find themselves stressed out about money. Using a system creates predictability from unpredictable income.
5 account system that changes everything
This approach is adapted from Mike Michalowicz’s Profit First methodology and is designed specifically for commission-based professionals. Rather than expecting profits to show up after paying expenses, first allocate the profits and then work with what’s left.
Here’s how it works: Open five separate bank accounts.
Revenue Account: This is where all commission checks land first. Think of it as a storage tank. The money won’t stay here for long. Profit Account: This is your reward for being a business owner. Not for emergencies. It’s not because of expenses. Money grows, compounds, and ultimately becomes a fund of long-term wealth. Start with 1% and increase gradually as needed. Owner Salary Account: This will be your personal “salary”. That’s money to actually live on. Use your three lowest income months to calculate your baseline and consistently pay yourself that amount, even during slow periods. Any surplus remains in this account to cover lean periods. Tax Accounts: Set aside your estimated tax liability immediately. No more April surprises. No more fighting over quarterly payments. This percentage varies by tax bracket and state, so work with your CPA to set it correctly. Operating Expenses Account: This account pays for marketing, technology, MLS fees, E&O insurance, trade coordination, and all expenses necessary for your business to function. When you have less money in this account, you naturally become more strategic about your spending.
How to get started (wherever you are)
If this is your first commission: Congratulations! Build good habits from day one! Open these five accounts this week. Most banks allow you to do this online in about 20 minutes. Sets the percentage to follow before the first check is hit. Then plan to adjust after a few months or a few fees. You are building a foundation that will serve you for decades.
If you’ve been doing this for a while: You’re not starting from scratch. Upgrading in progress. Open your account and use the percentages above to calculate the amount allocated from your last three commissions. This will give you a baseline for each account. From now on, we will allocate all new fees according to our system. Within three months, you’ll wonder how you ever got along without it.
For everyone: Set a calendar reminder for the 10th and 25th of each month. Transfer funds from the income account to the other four accounts based on fees that have arrived since the last allocation. Make this routine not optional.
What does this look like in real life?
Although the names have been changed, these are real commission stories that demonstrate how this system works.
Sarah’s Story (First Commission): Sarah’s first commission was $4,200 before splits and fees. Before she spends a penny, she allocates $210 to profits (5 percent), $1,680 to owner’s salary (40 percent), $840 to taxes (20 percent), and $1,470 to operating expenses (35 percent).
That month, she paid herself a modest “salary” of $1,200 and left $480 in the owner’s salary account to make life easier for the next month. She didn’t panic when the second closing took six weeks instead of three. She already had a system in place to fill that gap.
Marcus’ Story (Year 7, Ready for a Change): Marcus had a six-figure income for three years, but he didn’t know where the money went. He had no savings, was behind on his taxes, and felt stressed despite his success.
He opened five accounts and began allocating just 1%, or $120 of his $12,000 in fees, to profits. That small trigger changed his mentality. Within six months, he increased his profit sharing to 5%, built a $15,000 tax reserve, and ultimately had a three-month emergency fund.
“I’m making the same money, but for the first time I feel like I actually have money,” he told me.
Changes you notice right away
Mental Clarity: If you know exactly where your money is and what you’re going to spend it on, constant low-level anxiety about money is much reduced and often disappears completely.
Tax Confidence: No more fearing April or quarterly estimates. The money is already there.
Improved business decisions: When you have clear boundaries in your sales expense account, you’ll naturally evaluate whether your $500/month lead generation service is actually producing results.
Increased personal stability: Paying yourself a consistent paycheck, even if it’s unstable, will change the way you sleep at night.
FAQ
“What should I do if the percentages don’t work as described?” Adjust. These are starting points. Some agents in high-tax states allocate 30% to taxes. Other companies with lower overhead costs use less operating costs. System is more important than exact proportions.
“What if I need to “borrow” from one account to another?”Resist this temptation, especially at first. The psychological power of this system comes from respecting boundaries. If you run out of sales expense accounts, that’s feedback. You may need to increase allocations or reduce spending, both of which are valuable insights.
“Can I use one account for multiple purposes?” Yes, but don’t. This works psychologically by visually separating the five different balances. Seeing your profit account grow will reinforce positive behavior. As operating expenses are reduced, creative problem solving is required.
“What about seasonal adjustments?” Absolutely. If the market is busy in the summer and slow in the winter, you can allocate more of the owner’s salary during the peak months to increase reserves during the slow months. The system is adaptable. One of the best ways to do this is to make adjustments intentionally rather than reactively.
next step
This week, take one action:
Open 5 bank accounts (even if you haven’t funded them yet) Use this system to calculate what your last fee will be Block out 20 minutes on your calendar twice a month to make allocations
The complete system will be installed next month. Start conservatively. Even 1% profit and 10% tax is better than zero. Increase your allocation by 1 percent to 3 percent each quarter as you optimize your expenses and become more familiar with the system.
The Profit First app was recently released to make tracking even easier.
Preparations are complete
There are always ups and downs in the real estate industry. Market cycles are inevitable. However, a systematic approach to managing commissions can create stability regardless of external conditions.
You don’t have to be perfect at this. You just need to start. Whether it’s your first commission or your 100th commission, this system works because it aligns with how human psychology actually works, not how you want it to work.
Your first or next commission check is an opportunity. Not just to pay the bills or celebrate a win, but to build something lasting. You are not late. You are right at the starting point.
