What is Gross Commission Income (GCI) & Why Does it Matter?
For many real estate agents, most of their earnings come from gross commission income. But what is GCI, and how does it affect your overall income as an agent? In this article, you’ll learn how to measure, track and increase your GCI so you can grow your business.
What is Gross Commission Income (GCI)?
Most brokerages define their revenue as gross commission income. Gross commission income is the total amount of dollars in commission an agent receives from closing a sale before expenses and fees. Brokerage fees, commission splits, taxes, and other costs incurred during the sales process are figured in, then subtracted from the GCI to calculate the agent’s net income.
How to grow your GCI.
Time management and effective marketing are essential if you want to grow your GCI. When you manage your time well, you’ll be able to do adequate marketing and client outreach. Marketing and outreach help you stay connected with potential clients so you can keep that lead pipeline full.
Not sure how to manage your time? Try time blocking, or breaking your day up into sections where you focus only on specific tasks. Time blocking is an excellent tool for exercising control over your time.
When it comes to time blocking, make sure you have regular chunks of time in your schedule for content creation, social media management, and meeting new people so you can get your name and face in front of as many people as possible. You’ll also want to set aside specific times in your calendar for follow-ups and lead generation.
The more leads you generate, the more clients you have. The more clients you have, the greater the chance of closing a deal. And, the more sales you close, the greater your GCI. Don’t we all like that kind of math?
Why does GCI matter to real estate agents?
Knowing your GCI is a necessary part of making a strong business plan. It will help you set goals and make plans to reach those goals. By having a handle on what you bring in, you can gauge what expenses you can afford while still earning a profitable net income.
Gross commission income is often used in brokerages to determine agents’ commission splits. Your GCI can also help you qualify for specific real estate designations. The higher your GCI, the more competitive your offers will be. Reaching a certain level of GCI is a great way to advance your real estate career.
How to calculate GCI.
You can calculate CGI by multiplying your commission rate by the property’s final sale price.
For example, if you sell a $100,000 home and your commission rate is 3%, your gross commission income would be $3,000.
$100,000 sale price X 0.03 commission rate = $3,000 GCI
There are a few factors that can affect this formula, including your split or seller concessions. Anything that affects the final amount of the sale your commission is calculated from needs to be considered. A great way to figure out how to earn the level of GCI you want is to break it down like this:
- First, determine what percentage of your GCI goes to brokerage fees, commission splits, marketing, and other expenses in order to close the sale.
- Second, figure out what GCI you need in order to earn to net the income you want after expenses are paid.
- Third, calculate your average sale price and GCI for the previous year, then divide it by your current goal to figure out how many transactions you need for the current year.
- Fourth, divide your yearly goal by 12 to determine the number of transactions you need to complete each month.
- Finally, create a plan to help you meet your transaction goals.
Real estate can be a seasonal business, but reliable financial tracking will keep you moving in the right direction. While GCI can be a good indicator of how business is going, it does not define your success. Having a handle on your gross commission income allows you to stay on budget and not over-extend yourself, especially at the beginning of your real estate career.
A rising GCI can also be a good indicator that your business is on the right path. If you want to learn how to increase your GCI, our core course, Sell it Like Serhant, serves up the strategies you need to sell more and ramp up your revenue.