Inside sales agents are the front line of your real estate company, and it is their responsibility to keep a steady flow of new business coming in through the door. Here’s what you need to know about designing a proper compensation model for ISAs.

Before we jump into pay structures, let’s go over what exactly a real estate inside sales agent (ISA) is. Put simply, they are the backbone of a successful real estate business. The vast majority of real estate transactions begin on the phone. This means that all the effort and skill that goes into nailing listing appointments, finding properties for buyers, and actually selling homes is all for nothing if you don’t have effective people successfully setting up appointments on the phone.

This is why ISAs are so critical. They allow your agents to do what they do best, and allow you to grow your business without constantly being in the trenches every day. But for this to work, you need good people. And to get good people, you have to have a competitive compensation model that provides incentives, motivation and opportunities for your ISAs.

ISAs are sales professionals whose job it is to reach out to leads, introduce them to your company’s brand and the value you offer to clients, and, finally, to set appointments for your real estate agents. They are the front line of your real estate company and it is their responsibility to keep a steady flow of new business coming in through the door.

What not to do

Before we get to the most effective way to compensate your ISA, let’s discuss the way that is less effective and that you should avoid.

This less effective way is a commission only pay structure. It is very difficult to develop a successful, long-term ISA if they are paid solely on commission. While commission might make sense for real estate agents, for ISAs to make a decent living based only on commission they would have to be involved in a lot more sales.

They would also need to earn a substantially larger amount of the commission, which is not profitable for the team and would take away commission (and, consequently, incentive) from your real estate agents.

This system generally means longer periods of time between smaller paychecks for the ISAs. You run the risk of them favoring the “now” buyers or setting up appointments with less qualified leads because they are getting desperate and will try anything hoping it gets them paid.

You also run the risk of a high turn-over rate, which is bad news for you as a business owner or team leader because it drains a considerable amount of money. An ISA you took the time to hire and train will cost you thousands or tens of thousands of dollars if they leave your company, forcing you to hire someone to replace them.

Compensation-only pay models tend to lead to stress and desperation for the ISA and for you. Needless to say, businesses run better with less stress and less desperation. So let’s take a look at a better option.

How to pay your ISA

As in most areas of life, the key to an effective compensation model is compromise. The exact make up of how your particular pay structure will look depends on your specific business. But generally, the most popular and effective way to pay an ISA tends to be a low salary with a 5 percent-15 percent commission at closing. This allows the ISA to have a base pay, but also be motivated to set quality appointments because they are rewarded when the property has reached closing.

This pay model typically works the best because it gives your ISAs a sense of security, but also rewards quality talent and provides a strong incentive (a significant bonus) to set quality and productive appointments. Remember, they are only getting their bonus if the appointment they set leads all the way to a closing.

It is key to ensure that you are compensating your employees based on the value they are adding to the business, and this model allows you to do just that. Having a strong commission model also limits your exposure if you hire an ISA who underperforms.

Average compensation for ISAs

An ISA with little to no experience will normally make between $40,000 and $65,000 a year. More experienced ISAs will usually make between $60,000 and $80,000 a year. Both of these ranges include a base salary of between $24,000 and $30,000 a year.

The difference in the ranges between experienced and non-experienced ISAs is due to more experienced agents achieving increased commissions because they are more proficient in setting quality appointments. Simply put, the longer you are in this business, the more appointments and closings you are able to bring in.

Bonuses are compensated on 5 percent of gross commission income (GCI) after closing, with some real estate teams paying up to 10 percent of GCI. You may also go a different route and pay flat-rate bonuses for appointments that actually took place — usually between $50 and $150 per conducted appointment.

However, with the latter you run the risk of your ISAs having an incentive to set lower quality appointments because they are paid based on appointments conducted, not as a result of a property closing.

Tie it all together

If you are growing a real estate business you are going to hit a point where you need to hire an ISA in order to continue to grow and be viable. When that day comes, the most important thing you can do is make the right hire.

Once you find that go-getter, cold-calling ninja, the next most important thing is that you compensate them in a way that incentivizes them to both work with you and set the highest number of quality appointments that they can. All while not breaking your bank.

But if you can do that, if you can find the right person and devise the right compensation package, then you will see a 5 to 1 ROI for your new ISA. It’s all about incentives and putting them in the position to succeed.

Dale Archdekin is the founder of Smart Inside Sales and the current director of lead generation for Global Living Companies at Keller Williams in Philadelphia. Follow him on Facebook or checkout his Facebook group.

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