Gross commission income (GCI) is a valuable metric in measuring success in real estate. However, as the industry changes and agents adapt to shifts in compensation, GCI will be just one of many ways to measure one’s progress in building a successful business.
Thankfully, calculating GCI is simple, as is determining the related figure of net commission income (NCI). Below, we provide a deep analysis of these performance indicators, as well as expert strategies to boost your GCI this year.
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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. GCI does not factor in business expenses, such as marketing costs, brokerage fees, taxes, and other direct and indirect costs.
Gross commission income vs. net commission income
Net commission income (NCI) is your take-home pay—it’s your GCI minus your business expenses, including:
- Transaction fees
- Referral fees
- Marketing and ad spend
- Team and brokerage splits
- Taxes
You should include any expenses directly related to earning your commission in this figure, such as fees paid to a photographer, videographer, contractor, or interior designer. Taxes should always be the last expense you calculate because you’re only taxed on your net income.
Why GCI is important in real estate
GCI isn’t just a number; it’s a success metric. When you track your GCI, you can
- Understand your performance
- Identify seasonal or location-based trends
- Assess your commission rates
- Improve your ability to set goals
- Strategically plan expenses
- Track the success of lead generation campaigns
- Compare yourself to competing agents
- Determine opportunities to gain market share and income
- Track progress against your brokerage-negotiated cap
Calculating GCI
The simplest way to calculate your annual GCI is to add together all the commissions you’ve earned that year. For higher transaction volumes, working with a formula (the total dollar amount of your total sales in a given period multiplied by your commission rate) reduces errors and the time required for the calculation.
The formula for calculating GCI in real estate is:
- GCI = Sales x (Commission Rate/100)
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 separately, then add the results together.
- Any seller concessions that change your commission will also need a separate GCI calculation.
Limitations of GCI real estate calculations
Any metric, especially a shorthand like GCI, has both advantages and drawbacks. GCI is an easy way to measure, track, and evaluate your income over time. However, because GCI doesn’t include expense tracking, it can be misleading as a measure of income.
You also shouldn’t rely on GCI as a standalone 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 limitation can lead to setting unrealistic goals.
Finally, as the industry shifts to comply with NAR’s settlement on cooperative compensation through buyer and listing agent commission splits, the way real estate professionals get paid will change. Commissions may not be as relevant, especially for buyer’s agents. As agents adopt different compensation strategies, such as flat or hourly rates, GCI will cease to be the lone metric for measuring success.
How to boost GCI as a real estate agent
These five strategies can help you optimize your efforts and increase your gross revenue as a real estate agent.
1. Set a goal for GCI growth
This helps you understand how many transactions you need to complete at your typical commission rate in an average year. Determine your annual target income and your average annual expenses to achieve that income. Add the two figures together, and you arrive at your GCI goal.
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 establishes the income you want to achieve and the transactions you’ll need to complete in order to earn that income.
2. Develop a real estate referral program
Strategic referral partnerships in real estate are 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. On the flip side, if you make a referral, you save the time and money of serving that client, but still get a fee when a deal closes.
3. Prioritize lead generation
Lead generation is a core variable in the equation for increasing your GCI and target income. Fortunately, there are countless ways to generate leads, including outbound phone calls, building local connections, search engine optimization, and predictive analytics to forecast potential future clients.
The key is not going all-in on any one of them but using a variety of lead-generation tactics, all designed to get contacts into your database. If you’re looking to increase your GCI, diversify your efforts.
4. Invest in real estate marketing
More real estate professionals are realizing that marketing and advertising do, indeed, pay off. In our 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.
Sometimes, getting more clients is as simple as spreading the word about your brand and expertise. With a dynamic website that can funnel potential leads around the clock, using a wide range of marketing tactics can help you draw the attention of prospective clients.
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. Content marketing helps solidify new leads by establishing your expertise through the digital media you choose to publish. And, of course, you can build advertising campaigns designed to capitalize on these marketing efforts. All of these pieces work together with your website to let people know you’re searching for the opportunity to help new clients.
5. Find a real estate niche
Finally, don’t underestimate the importance of specialization. Focusing on a dedicated real estate niche can establish your expertise and leadership, allowing you to increase your commission and GCI within a specific location, property type, or audience.
For example, you could specialize in new condo construction and property sales or luxury real estate in mountain or farmland areas. 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.
Your GCI + Luxury Presence
Improving your income might be as simple as finding the right partner to grow your credibility and help more clients discover you. 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 higher-qualified clients, and improve your transaction volume and commission rates. It’s an advantage that goes beyond GCI. Our goal is 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.
