Keller Williams’ big backpedal on profit-sharing cuts: The Download

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In the face of backlash from proposed profit-sharing cuts, the franchisor’s leadership council is changing its tune.

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Each week on The Download, Inman’s Christy Murdock takes a deeper look at the top-read stories of the week to give you what you’ll need to meet Monday head-on. This week: In the face of backlash from proposed profit-sharing cuts, the franchisor’s leadership council is changing its tune.

Getting paid is on the minds of everyone right now, it seems. Whether you’re a buyer’s agent who’s worried about how you’ll negotiate compensation or a broker who’s worried about a mass exodus of agents from the industry, it’s a tough time to make financial projections of any sort when you make your living in real estate.

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To no one’s surprise, when Keller Williams announced last August it was cutting profit-sharing for past agents to the bone (reversing their previous policy) the reaction — wasn’t great. Last week, they reversed their reversal — and there was much rejoicing.

After a formal recommendation from KW CEO Mark Willis, the franchisor’s International Associate Leadership Council (IALC) “voted to rescind changes to the profit sharing program, previously set to go into effect July 1, 2024,” which were set to reduce “the amount of profit share that former vested KW agents who actively compete against our franchises receive.”

KW had previously announced that associates who joined the real estate franchisor on or after April 1, 2020, and subsequently jumped ship to a competitor would no longer be able to receive profit shares from the company’s lifelong revenue program. That policy was not retroactive, so it didn’t apply to agents who joined before that date.

However, in August 2023, at its Mega Agent Camp event in Austin, Texas, the IALC voted to change its profit share distribution policy so that vested agents who joined KW before that 2020 April Fool’s Day and who “actively compete” with KW brokerages, would have their profit share amount cut from 100 percent to 5 percent.

Want to know how that went over with agents? Check out the comments on this article announcing the change: “Keller Williams cuts profit sharing for agents who fled to competitors.”

By this spring, three former Keller Williams agents had filed class action lawsuits against the company. The suits all sought to halt the changes, and one of them also asked for $250 million in damages. The three agents behind the lawsuits alleged that the changes would have amounted to a breach of contract and unjust enrichment on the part of Keller Williams.

The attempted, and now rescinded, change comes at a time when brokerages are working harder than ever to recruit and retain winning agents. A combination of tough market conditions and projected revenue dips caused by the aftermath of the commission lawsuit settlements has brokerage companies looking for ways to keep their best players onside.

Whether you’re an agent trying to choose the right brokerage or a broker trying to choose the right business model, we’ve got all the information you need to make an informed decision in this week’s Download.

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