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What is GCI in real estate?
Gross commission income in real estate (GCI) is the total revenue an agent earns from commissions on real estate transactions. Every transaction you’re involved in should include a commission for your services. When you add up those commissions, you get your GCI.
It’s important to note that your GCI does not include any expenses you’ve had related to the transaction. Marketing costs, brokerage fees, taxes, and other direct and indirect costs that led to the commission are calculated separately. Subtract them from your GCI to get your net income.
Why GCI is important
At its core, GCI is a success metric. When you track it over time, you can better understand your performance in closing deals and identify any seasonal or location trends you might use to set commissions and improve service for your clients.
Tracking GCI in real estate also means improving your ability to set goals. With a better understanding of past earnings and any specific trends behind those earnings, you can strategically plan expenses to fit within your anticipated net income.
Measuring GCI can also help you compare yourself against competing agents. As you calculate your own GCI, you can compare it with others in the area to determine if your commission rates are appropriate and where you can gain potential market share and income.
Finally, tracking GCI helps determine progress against the brokerage-negotiated cap for agents working within larger firms. The better you understand your progress toward meeting cap requirements, the better you can estimate when you will no longer need to split commissions. This knowledge helps you better plan your expenses throughout the year.
Calculating GCI
The formula for calculating GCI in real estate is simple:
- GCI = Sales x (Commission Rate / 100)
In other words, your total sales in a given period are multiplied by your commission rate. This simple GCI calculator can help you generate a basic figure.
Of course, a few variables can complicate these calculations:
- If your commission rate changes depending on the type of transaction (like commercial vs. residential, renting vs. buying, etc.), you will need to calculate the GCI for each commission rate separately, then add the results together.
- If your commission splits between the buying and selling agent, you must calculate the GCI with half your average rate for that transaction.
- Any seller conditions that change your commission will also need a separate GCI calculation.
When in doubt, you can calculate your yearly GCI by manually adding all the commissions you’ve earned that year. For higher transaction volumes, working with the formula reduces errors and the time required for the calculation.
Gross commission income vs. net commission income
While gross commission income considers only the commission you’ve earned, net commission income (NCI) takes GCI and subtracts every cost that has to be paid before the commission ends up in your pocket. Examples of expenses that you might have to subtract to arrive at your NCI include the following:
- Transaction fees
- Referral fees
- Marketing fees
- Team or broker splits
- Taxes
Any other expenses directly related to earning the commission should also be included. For example, if you pay a photographer or videographer when listing a property, that expense must be deducted from your GCI. Same if you hire contractors or interior designers to help with property upkeep before a showing. Taxes should always be the last expense to calculate because you’re only taxed on your income.
Pros and cons of GCI
As with any metric, especially a shorthand like GCI, you should consider a few advantages and disadvantages before calculating your gross commission income.
Pros
GCI is the best shorthand for estimating your financial success as an agent. It’s an easy way to measure, track, and evaluate your income over time. Regularly tracking your GCI can prove motivating, especially when using it as a goal-setting mechanism to generate more revenue.
Measuring GCI also allows you to measure your success against other agents. This comparative step allows you to understand whether downturns in income are due to external factors like seasonal or economic changes or whether internal changes can lead to an increase in revenue.
Cons
On the flip side, because GCI doesn’t include expense tracking or calculations, it can be misleading as an accurate measure of income. Some transactions, audiences, and locations require significantly higher expenses for the same commission and price point, requiring more than just GCI to understand your net income truly.
In addition, GCI can be dangerous as an accurate performance metric. External market forces may lead to fluctuations in gross income that are outside the agent’s or brokerage’s control. A lack of awareness of this potential disadvantage can lead to setting unrealistic goals that any agent will have trouble reaching.
How to increase GCI as a real estate agent
Once you know the answer to “What is GCI in real estate?” and better understand its uses and benefits, it’s time to start making improvements. The five strategies and tactics below can help you optimize your efforts and increase your gross revenue as a real estate agent.
Set a goal for GCI growth
Setting a GCI goal helps you better understand how many transactions you need to complete at your typical commission rate in an average year. Determine your target income for the year and your average annual expenses to achieve that income. Add the two figures together, and you arrive at your target GCI.
You can target annual and short-term growth once you’ve set a broad initial GCI goal. Analyze your GCI over the last two years to determine how it’s trending. Use those insights to set an ambitious (but realistic) goal that includes an estimate of the income you want to achieve and the transactions you’ll need to complete in order to earn that income.
Develop a real estate referral program
Strategic referral partnerships in real estate are great for many reasons, but they’re especially valuable because they minimize the expenses you’ll incur to complete a transaction. If clients come to you, you won’t need to spend as much on marketing to attract them. The leads are already warm, reducing the friction you must overcome to close the sale.
Referrals increase your GCI because of the additional stream of potential clients they bring in. But they also reduce the difference between GCI and NCI thanks to the lower expenses you’ll incur. That, in turn, makes your GCI a more relevant metric to track and minimizes some of the disadvantages mentioned above.
Prioritize lead generation
You can only get a commission if you close a sale, and you can only close a deal with someone who has been working with you. As such, lead generation is a core variable in the equation for increasing your GCI and target income.
Fortunately, there are countless ways to generate leads for your real estate business, from outbound phone calls to building local connections, search engine optimization, and predictive analytics to forecast potential future listings. The key is not honing in on any of them but using a variety of lead-generation tactics, all designed to get contacts into your database. We surveyed 1000+ successful luxury agents for our 2023 State of Real Estate Marketing Report and found that the more methods an agent uses to market their listings, the more their median GCI increases. The bottom line: If you’re looking to increase your GCI, diversify your marketing.
Invest in real estate marketing
Sometimes, getting more clients is as simple as spreading the word about your brand and expertise. With a dynamic website that can receive potential leads around the clock, using a wide range of marketing tactics can help you draw the attention of prospective clients and convince those prospective clients that working with you is the best decision they can make while buying or selling a house.
Closely connected to lead generation, real estate marketing can take a broad range of shapes and styles. Social media has skyrocketed in popularity and influence over the past two decades, and content marketing helps solidify new leads by establishing your expertise through the digital content you choose to publish. And of course, you can build advertising campaigns designed to generate leads and grow your business. All of these pieces work together with your website to let people know you’re searching for the opportunity to help new clients.
Real estate marketing has proven to be a worthwhile investment for some of the industry’s leading agents. In our 2023 State of Real Estate Marketing Report, we found that on average, agents who spent more on marketing had a higher GCI. Some of the agents we surveyed even reported that spending $20,000 on marketing helped them double their yearly income.
In 2022, 15% of the agents we surveyed did not carve out any space in their budget for marketing. This year, that’s down to 5%, meaning that 95% do plan to invest in marketing. This indicates that more real estate professionals are realizing that marketing and advertising do, indeed, pay off.
Find a real estate niche
Finally, don’t underestimate the importance of specialization. It might seem counterintuitive since a broader scope of potential transactions could (in some cases) lead to more commissions. But in reality, specializing in a dedicated real estate niche can go a long way toward establishing your expertise and leadership, allowing you to increase your commission and GCI within a specific location or luxury niche.
For example, you could specialize in new condo construction and property sales. Or you could specialize in luxury real estate in mountain or farmland areas—or with ocean access. As you build your credibility in a given niche, more potential clients will want to work with you over agents who try to be everything to every client. Dedicated expertise is worth a higher commission for luxury transactions and can go a long way toward improving your GCI.
Improve your GCI with Luxury Presence
Improving your income might be as simple as finding the right partner to grow your credibility and help you be more discoverable for new clients. By working with Luxury Presence, you can build more effective marketing strategies for your real estate business—starting with a more professional and accessible website.
Each digital asset and strategy we help you create will be designed to outpace your competition, attract more highly-qualified clients, and improve your transaction volume and commission rates. It’s an advantage that goes beyond GCI and is meant to bolster your credibility and future success within the luxury real estate market.
Learn more about partnering with Luxury Presence, generating more leads, and earning higher commissions in 2023.
