Keller Williams is the second largest real estate company in North America. They have grown to this size because of their ability to hire quality people and their unique perspective of their industry. Many in the real estate business work independently of one another, refusing to share thoughts or ideas because it could cost them a commission at the end of the day.
The Keller Williams business model is different. Their business model is based on profit sharing. When one agent succeeds, then everyone within their chain succeeds as well. This allows everyone to become a top performer instead of just a few at the top of the earning chain.
Isn’t This a MLM Business Model?
Although the Keller Williams business model has some similarities to multi-level marketing businesses, there are a few distinct differences that must be noted.
There are downstream caps in place.
MLM companies have no limit on the size of the downstream that a representative may have. Keller Williams has a cap of 7 levels in total so that everyone can reach the top of their earnings potential.
There are no quotas involved.
When there is profit sharing involved with an MLM opportunity, there are quotas involved as well. Sometimes those quotas must be met in order to stay on as a representative. Keller Williams has no quotas in place to participate in profit sharing.
There is no upfront purchasing.
Instead of being forced to purchase inventory to resell to take the markup as the profit margin, at Keller Williams, it is a typical representative relationship. Agents get clients, help them buy or sell homes, and get a commission on the deal.
There are also some comparisons to a revenue sharing business model that some other real estate agencies employ. Profit sharing and revenue sharing are very different. In revenue sharing, everyone within a specific chain would receive a percentage of a commission. In profit sharing, the commission levels are set and the remainder above it becomes a pool that is shared by the chain.
Why Is the Keller Williams Business Model So Effective?
This business model works because it creates a positive work environment. From the first day of employment, agents are brought into a team-orientated environment where everyone is working to support each other. Everyone works together to create profits and are rewarded for those efforts at some point in time. By creating this type of welcoming environment, employees are less likely to leave because morale tends to be higher than other similar agencies.
The Keller Williams business model is also unique in the fact that it doesn’t spend any money trying to promote itself as a brand. Many real estate agencies will spend millions of dollars every year to create a level of brand saturation within their targeted customer segments. Keller Williams takes those millions of dollars and instead invests it into their agents and allow the marketing to happen at the one-on-one level.
That’s how Keller Williams has grown to reach North America’s #2 spot. They create brand ambassadors with every employee, not just a few, that spread the word about how good the agency happens to be. This encourages agents to come on board, buyers to work with agents directly, and sellers to list their homes with Keller Williams. Therefore the team perspective extends beyond the employee and into their customer base.
The Keller Williams Business Model Relies on Scale
In the last 12 months, Keller Williams has shared over $90 million in profits with their agents. According to some of their last numbers released, Keller Williams had over 110,000 agents representing the company. That’s a lot of cash going out to the team and why the growth rate of Keller Williams is 4x the growth rate of the National Association of Retailers.
What makes this business model unique is that a real estate agent can retire and still receive profit sharing. They just need to have the agents they recruited into the business to continue working under the Keller Williams brand. This is the kind of residual income that no one else can provide.
Does Keller Williams offer agents the chance at 100% commissions? No. It’s typically a 70/30 split. There are franchise fees involved and up to 50% of profits are contributed into the general pool for distribution. With over $500 million paid out in profit sharing in the last 3 decades, however, one thing is clear: Keller Williams is here to stay.