Topic: Has anyone tried to do away with commissions?

We have so much drama with our leasing agents over commissions for both new leases and renewals. Has anyone tried to do away with them all together and just pay them a higher rate$/hour?

What is the drama? Maybe you need new leasing agents.

I have a new girl that is thinking just because she may have talked to somebody that it should be her lease. I’m about to lose my mind! Mind you her name is nowhere in the trail of contacts!

Nope, since I've been in the biz, it's always been the first person who shows the apartment gets the commission.

And you damn well better have a paper trail or you're not getting paid cuz your not doing your job and entering your traffic. Js...

Exactly! First person to tour wins and yes, traffic best be in the system!!

Have you tried splitting commission? I've always disliked the drama of "that's HER lease, not mine" when the prospect calls, comes in, or needs help.

So I changed it to all are split evenly at one site.
Another site, the mgr got 25% of all commission, the asst got 25%, and the leasing agent got 50%.. everyone began working together much better at that point

best way to work.

Completely disagree! Showing an apartment is the smallest part of the transaction these days. If you want to play it that way, that person better do every bit of the paperwork and have every “i”dotted and “t” crossed. Just showing an apartments isn’t doing the job. If you leave the rest to everyone else, you don’t deserve (and aren’t getting) the commission in my offices.

I like splitting if you have a team oriented staff if you don't then there lies the problem. We should all be a team!

Could you treat current residents like a book of business and split them evenly based on move in date among your leasing agents? That way when it comes to renewals it’s an even playing field and the “he said she said” situation would be squashed.

As far as new leases. What is typical protocol for when a prospect comes in to look. Is there something showing ownership between leasing agents from beginning?

I could see it being frustrating all around, and at the end of the day the goal is for the community to make $. If they are passionate about their pay, that’s a good sign that you hired hustlers.

Do you already have a policy in place? We’ve gone back and forth a couple times, and currently it’s the first point of contact that gets the commission. But that first point of contact needs to be documented.

Yes, we have been around 25 years and have policies in place. I think part of it is the current age group feels entitled to everything, and doesn't like to share.

I’d probably call a team meeting and remind them of the policy, just to get everyone on the same page. It’s frustrating when there’s complaining (whining) going on. I just saw the note on renewals too—we don’t bonus for renewals anymore but we used to group all renewals together at $100 ea and then split that total amount between all team members (office and maintenance).

They pitched a fit about sharing renewal commissions with maintenance. So we made them go plunge toilets and clean the compactor for a day to see how they liked it.

omg maintenance is typically why someone stays! I know we’re all likeable in the office but our service team are our rockstars!

I once had a boss change to hourly after I got 20 leases in a month at $100 bucks a pop. I was frustrated.

I'm not thinking about taking away any of their pay. I can project out what they are making currently, and have made in the past year, and just give them that rate.

split evenly. They would probably rather you do that then change to just hourly..no more drama

That will cause issues too. I’ve noticed there is usually one that will sit back and let everyone else do the work. Then get equal reward and that will really get people full of drama.

The company I worked for previously gave us all the same amount at the end of the month, we never had an issue and all helped each other out with leases and renewals. They may have given part time employees a little less but I’m not positive. I couldn’t imagine dealing with that drama, some people are shady when it comes to that kind of stuff.

Uh, this is the hustle we WANT!!

I agree. It isn't a hustle issue. It's an issue over claiming commissions that aren't earned, or partially earned, or being mad because they don't get paid the same as a friend who is on a new construction lease-up, or having to split renewal commissions with maintenance, etc.

If they want to work in new construction lease-ups, then they can, but they only have one lease up. And maybe they should spend a day with maintenance turning a unit. Are they new? Sounds like they haven't been around long enough to know how much goes into a lot of these things.

They new the bonus structure when they agreed to take the job. They agreed to it when they signed the hiring packet.

I make the bonus based on a total lease count for the month and then spilt a "prize" evenly between the leasing agents. Last month it was spa day for all. They have to work together or else they don't meet the goal.

We do similar things. But this isn't a bonus issue, but more fighting over new lease and renewal commissions and who is due what.

We also have rotation for new leases or online app so everyone gets a turn !

Uhhhhh.... who gets paid what for renewals is none of their business. Renewals is a team effort and what maintenance gets paid is part of their salary and has nothing to do with them. New leases is who shows the apartment first. There will be times when each of them will have to work on other files so it evens out in the end. First time someone complains I would yank their commission.

In Florida those are illegal unless you have a real estate license

Yes, I've told them that our FL teams don't even get commissions, and that they are welcome to transfer to one of those communities, lol!

unfortunately come management companies sneak under the radar with that

Bonuses aren't illegal.

Julie Neal Doll we consider bonuses separate from commissions.
Leah, under FL law, bonuses can be considered illegal. You have to call them “marketing fees”, or something else.

Mike, Riverstone gave out Florida bonuses for years but I haven’t had a Florida property in a while.

Florida law states that a person can not be paid for a single real estate transaction without a license. You definitely can pay bonuses tied to goals whether occupancy, income or both. You just can not pay “per lease” commissions in Florida to unlicensed people. It’s a silly rule imposed by Realtors.

Replace them if needed with adults. But no, keep it competitive and interesting

At one property I managed for 12 years, we did just that... higher hourly rate, no commissions, was so nice for no fussing over it all!!

I'll take a higher rate

Jodi Adams Jessie I prefer a higher pay rate. I do not like getting taxed twice, once for regular pay and the other for for “leasing incentive”. Creative title huh

I like the way you think lol ! I'd much rather have higher pay rate than commissions.

This never has been an issue for me. I make it a rule that commissions will be based among what the leasing consultants agree with. They make their own rule how to distribute them. They are adults and need to be able to work together period. If they can’t they need to seek employment elsewhere.

At the end of each month I print out a list of leases all five sign off on how to distribute them and give it back to me. Makes my life drama free. Since it is their own rules that they set they abide by it.

Take them away for two months
Be nice
Be a team player

Give to entire staff. Delinquency, occupancy, work order completion, NOI and bad debt. Get them all on the same page, our maintenance while in Apartments they talk to resident about signing renewal letters, we all stay late one night a week and make calls to delinquent residents then we pay over the quarter and everyone wins

Whoever gets up and tours them and puts them in the system is whose lease it should be.

We are dealing with this right now. Currently, we split each lease into 3 parts. $25 for the first tour, $25 for securing the app and $25 for the lease sign. We're considering moving to whomever does the first tour only. Someone once mentioned raising the hourly and eliminating commission but then what would motivate them to fill the units? The person that mentioned it no longer works for us and didn't perform well when he did.

There is an argument to be made here. What motivates them?
They are already getting paid to do a job. Their job. A paycheck at the end of the week should be motivation. A leasing bonus should not even be a factor. It should be said that bonuses are not a guarantee they are a privilege.

Charlotte Wilson with that being said I think its only fair to get rid of bonuses and incentives all around. Doesn’t seem too fair if only the PM have access to these things.

Vanessa Moultrie I am a PM. I am not eligible for them

One of our large clients went to no commissions in 2008, it was a big fail and viewed negatively by the leasing consultants. If considering this you might want to ask what hourly rate they think would be enough to meet their expectations.

The pay would be the same, or very close, as what they are getting now; it would just eliminate the extra strain and burdens that the drama is putting on upper management and the corporate office (HR, accounting).

I’ve given this more thought and if you do this, you run the risk of high employee turnover and the cost of the burden alone of hiring a new associate is roughly around $7000. You would be doing a dis-service to your clients. The high turnover and office morale alone as well as cost of temporary staffing (assuming you don’t go with (David Carchidi & The Phoenix Staffing) will be debilitating.

We always did who does the initial tour gets the lease

I never understood why this was a problem. We’re very lucky in our office that we all work together to lease apartments. First tour gets the commission. They closed the sale whether it be immediately or the prospect comes back later! We even try to help close the sales with one another. With renewals, we all do the work to get residents to stay. Of course we want our maintenance teams to be compensated. They are a huge part of why people stay in the first place. I’d say they need to suck it up. It’s not that hard to be professional and follow the policies that are in place for this.

I've never had any problems. Your tour, your lease. Renewals atlre split down the middle however if my coworker doesn't have a lease that week I let her take the renewals and vise versa

We all get a pay check and an hourly wage to do administrative work. We get a bonus as an incentive to get a prospect to commit to our community and move in. If that’s you that did that, then you get the bonus! (Or commission)

Whoever does the show gets the lease.

Whoever has been contacting them via phone or email, (and there’s a verifiable trail that proves this) and the prospect applies online, then they also get that lease.

Any person who walks in, emails, or calls, no matter who’s lease it is, should be treated with respect and welcomed by anyone available to help them!!!

We do who ever does the tour gets the lease. Doesn’t matter if they spoke to them over the phone etc. It’s a team effort. Depending on if it was a re tour from the past and they toured twice we split the commission. Good luck!

We pool our bonuses, and share equally. Equal cut to all leasing staff for new move ins and renewals. Higher bonus paid for renewals to put emphasis on retaining our residents. Much more team friendly, likely to help, and sell across the board. Never had an issue with willingness to jump in and do the work! We have NEVER had drama surrounding the way we pay out bonuses. Nothing to fight over.

Sometimes people come back several times. Calls with several questions. Makes it tricky. What bout the call that Converts to a tour but it’s the LC day off when they come in? I would pool all and split with added incentive for call conversion and closing percentage to incentivize the top performers.

As long as the leasing person is being responsible and entering the traffic in Yardi, Onesite or whatever tracking software you utilize, than that should be the determining factor. It was that individual that created the interest and it should be left at that to avoid grey areas.

I agree we should put a small commission in place for agents who can get the lead to visit. People are emailing several places before coming out and creating a relationship over the phone or email is hard. If that prospect comes out they should be rewarded. $1, 3, 5? Something

we apply that strategy too- it’s the first impressions that gets them in the door. We have the majority of applications never tour or cal at all and if they apply before anyone can reach out, the commission gets split between everyone.

It’s really about team bonding and the connection in the team! I’m very fortunate that I have a selfless team. Our leasing agent help me (assistant manager) with some of my duties without being resentful. She tries to give me credit for some of her leases even though SHE toured them. We have the policy where whoever tours them gets the commission. I think it’s less about policy and more about the PERSON you hire. I saw someone’s comment about the generation being entitled. I used to to think that too but my leasing agent is 19 and wise beyond her years. Sounds like you need a new team or a really intense meeting.

We don't pay commissions and we STILL have drama. I have a great team, but several very strong personalities and when they clash, it's exhausting.

First contact if it’s an online lease gets the commission. If they tour before applying, the person who toured gets it. With my company a lot of people apply online without any contact and the person who sees the application first and applies their name as the agent gets it. This part of it can stink, in the past two days I’ve had to tour prospects who applied online without talking to anyone and then came in to tour after being approved and the agent who saw their app first and assigned the guest card to themselves was off those days. So i spent hours touring (and even doing the move in for one) and don’t get commission for either because they applied before they came to tour.

We did it we all commission was split evenly and that made people lazy, they had nothing to work for because they got commission when someone else did all the work.

When my leasing start to fight for bonuses I give all of them to maintenance. They get the apartments ready and couldnt do it without them.

First person who shows the apartment gets the commission. Renewals can work many ways, but the best is to just split in my opinion.

I’ve not read all the comments. Very few actually. My company did a few years ago. $51,000. Does it make them work harder, not that I see.

I love the idea of a group bonus so everyone wants to work together

I have never done commissions and have always been blessed with high occupancy rates.

Same problem here! We have tossed around some ideas of a team commission structure that is based on more than just getting new leases and renewals. It would include reaching other goals like getting online reviews, helping to cut expenses/increase income and such.

Pool move in commission. Consider pooling renewals and giving them to maintenance. Or pool it all and split it all. Never forget your maintenance..

Yes. The company I work for now just pays salary. Just factored in a bit extra to offset commissions.

How is that working? Have you seen better employee results

Took some adjustments but everyone works together and it appears the same excitement and energy is still there. The bickering had just gone away.

No Commissions, Just Rent Apartments, or Work somewhere else,

Exactly, you’re paid for your time to lease units. Our company stop paying leasing commissions in 2014.

Eric, I really want to know your system on what the LCs do when the prospect completes the tour on their own. I’ve followed you for years and have always been intrigued. Thank you for that!

The way we do our commissions is whoever showed the unit gets the lease. The renewals we split between all employees, including maintenance.

I also worked at a highrise where the two leasing consultants split everything... works out very well if both work as a team. One was stronger in the administrative area - so he did a lot
Of the paperwork etc, and the other was great at closing, so it balanced out for the most part.

Show=commission

On my complexes I only pay 10% of the gross so that my agents goals are aligned with mine. If we pay for lease ups the agents make more for higher turn over. This is out of alignment of an investor's goal. I do pay them a bonus starting at 90% occupancy to 95% to reward them for a great job. Vacancy had dropped from 25% to single digits after we worked on their marketing.

AH! the age-old how to pay bonus question! some have the staff split the bonus money, but the superstar leasing consultants resent the ones who are not. And if you pay on occupancy the maintenance team should be included. Do you pay for renewals? Is that to manager or asst mgr? Do you pay to the one who handles the renewal?

As a leasing agent, I was very motivated by incentive based pay - and I can’t imagine not being paid that way....I also struggled with the paperwork, so I paid my assistant manager $ on each one of of my leases and she helped me with the paperwork ....leasing was my strong suit & details were hers....

Equal division of all leases would reward all equally, and that is only ok IF everyone is putting forth the same efforts.... which just doesn’t typically happen.
when I was a leasing agent, I would come in early and stay late.. I would work on my days off somebody called in sick .... I would do whatever it took to be the TOP.

It certainly would have been demoralizing if someone who did not work as hard as I was to benefit from my dedication

Those are the hardest positions to fill & generally only "entry-level" leasing will accept a leasing position lacking commissions. Signed, My 2 cents lol

Enjoyed hearing all this feedback on motivating the teams. If your company wants to experiment with commission and bonus structures to see what best motivates the leasing, maintenance and management teams for performance, then take a look at www.apartmentcommissiontracking.com. We have lots and lots of options to track and manage any strategy. Make managing commissions and bonuses easier for the onsite teams, the management teams and the HR teams! We will save you time every month and insure zero confusion on who owns the lease or renewal.

This may make me unpopular, but.....I used to tell my leasing agents that any fighting over commissions would mean losing them. I always felt it was important for them to work together on those apps ( back then we had to call everyone to verify, etc). I had a lot of split commissions that THEY agreed to, not me.

Agreed - no arguing over the lease. Plain and simple. Who toured them first & did they document it? The end. They could choose to split it if they wanted to or if they felt that was fair - but no arguing.

First RECORDED tour gets the lease. If they come in online then take turns. Simple. I do not allow them to make deals or exceptions or “give” the lease away. Then it is cut and dry. No questions.

If it comes in online, the prospect should have already spoken to or emailed someone.....and IF they are documenting those contacts, wouldn’t that be their lease?

When I was a leasing agent...I documented the crap out of every call & email I sent and I leased a TON of apartments sight unseen ....90% of the time I actually listed a them as a tour and put notes that clearly stated “prospect lives out of state, etc etc, so we had a virtual tour, emails, phone calls etc & she/he is expected to be completing online application in the 24-48 hours, etc”...

I went and took videos of every vacant apartment we had - so I could set up a YouTube channel and send those links to anyone who lived out of state...it paid off - 157 leases my first year & over 100 leases every single year I was in a leasing role....

I have a few thoughts on the subject.

I've worked with 3 different companies and each one had the same policy others have mentioned- whoever tours the prospect and records the tour in the system/guest card gets the lease. Thankfully, I've always had managers and coworkers who emphasize respect for one another. If a person comes in seeking information, each leasing agent does their part to stand up and greet them. We've made it a habit to ask in the first few questions whether they have spoken to someone in the office before. Regardless, each person, NO MATTER WHAT, must be entered into the system. If they have called or contacted before, they recorded info from previous contacts pops up and we respect each other enough to say, 'oh! It looks like you may have spoken with so-and-so! Let me see if he/she is available to help you!' Even if the prospect doesn't understand or says that they don't care who helps them, we always try to be fair to each other and may even tell them, 'of course I would love to help you, but I just want to be fair to my coworker.' If the agent who spoke to them previously is not in, then the prospect becomes fair game. It's fair because it happens to everyone at some point or another.

Additionally, if my coworker shows a prospect and that person calls or comes back in and their agent isn't available, we still help them as if it was our own lease. Customer service is paramount, period. If everybody has that mentality, the rest falls into place. Occasionally we will have instances when an initial tour goes super smoothly, but another agent has to handle a lot more than anyone bargained for at or leading up to move-in. In those instances, sometimes we'll approach each other and ask if the other agent is willing to split the commission with them. If so, great. If not, bummer, but no hard feelings.

You mentioned the idea of taking away commissions and paying roughly what each agent would be paid in their hourly rate instead. The only thing that pops up in my mind is, how sure can you be that you'd be paying a fair wage based on prior performance. If you're looking at last year's numbers, what if they don't perform as well (get as many leases, generate as much money for the company, qualify for as many commissions) this year or X month as they did last year? Also, is it fair to assume that just because someone under-performed last year, that they will also underperform next year? How do you account for seasonal changes in pay with commissions (higher commission checks in the summer, etc)?

100% agree - customer service is paramount!!! We ALL help anyone we need to - regardless of who’s name is on the file !!!
Also 100% agree that if you work with a mature, fair, and hard working team - the commissions always work out - always always always.....many many times one agent has 4-10+ points of contact with a prospect before they physically came in to tour....and it can happen on “their” leasing pro is off that day, or out to lunch, etc....someone else tours them & they end up leasing....happens to all of us....it works out equally in the end, or the commission can be split...all depends on team dynamic and leadership

So, what if we did what restaurants do and put a table or range of suggested bonuses on a welcome letter?

Manager and Assistant, straight salary plus bonus on NOI, Budget, Low Employee Turnover, Limits on stale units, etc... I also paid for leasing traffic, to measure how well they were marketing the property.

Leasing base salary plus commission. However I often used metrics to push for higher rents and longer lease terms... I would “ear mark” premium units and would pay a higher bonus. Also would pay higher bonuses for renting ugly units (I’d cut the rent but bump commissions).

Maintenance got a leasing bonus on no call backs within 30-days.

The no call backs are a great idea!!

I believe in TEAM GOAL BONUSES!!! everyone moving together in same direction as a TEAM!!!! From a TEAM and Leadership Trainer.

One property I managed, the lease renewal went to maintenance.

I like that Teresa, How did that work?

We already pay lease renewal commissions to maintenance. It works well.

Eric Brown. We paid a flat amount for 12 month renewal. Maintenance is most important and it is because of their great service that factors into renewal.

Something to consider... You know what hard about this, the typical property leases about 6 to 8 apartments a month, and as many renewals. Volumes/Velocity is relatively low when compared to other industries.

Just something to think through when considering all this. I think it is hard to motivate by using commissions when there's but a few opportunities to fight for... Maybe, we have it all wrong...

1% of total lease value. That’s the way to motivate.

This getting interesting. Just doing simple math. Average base pay of $40k, 225 units, 50% churn, $1,000 rents = about $370 per lease ($12,000 lease). Is that enough? Too much?

My arithmetic is extremely simple...

Chris Finetto Most of our properties are affordable, so occupancy is always high. Average base pay for leasing in most of our markets is $25k, $65 on new leases (average is about 3-4 per month), $75 net on renewals (average 20+ per month). Another $75 is split between maintenance for every renewal the office completes.

I agree with Chris...when occupancy is high the commissions don't amount to much. However, I promise you that when you are in lease-up, or have many vacancies, the superstar salespeople you need will require commissions. Great salespeople will move on if not compensated on performance. In the 80s I started a lease-up company that worked nationwide. They were on commission and I was thrilled when they were making $60,000 a year. Times were different then, but I sure learned a lot about motivating great salespeople. this is a tough topic. My opinion stands; it all depends on occupancy. If I owned a property management company I would hire several powerful salespeople, a TIGER TEAM that I could send where needed.

Just make it the first to show that their lease. If the person comes back still belongs to the first to show period

I think commissions should be split evenly between all staff members, including maintenance. I also think they should be slightly higher for renewals, given you save money by not having to turn the apartment and potential vacancy loss. We need to encourage the team atmosphere more.

RENEWALS SHOULD BE HIGHER, our industry needs a SHIFT!!

I like Mike Brewer’s video above. We aren’t taking anything away; we are just considering raising base pay to include commissions so that teams can quit arguing and start focusing on the customer service aspect.

We had to do away with them to to a state law requiring commissions to be paid only to licensed agents. Our state doesn’t require leasing agents to be licensed if they work only one property in a 24 hour period. Therefore...no more commissions. We didn’t raise base pay, but rather instituted a team bonus structure based on total revenue goals.

Amy, different rules in different markets is also putting a strain on our HR and Accounting Dept’s, which was another reason for considering raising base pay to offset commissions. It would be much more efficient to have 1 or 2 systems in place.

TEAM GOAL....TEAM CULTURE...= UNITY and TEAM Performance at its BEST....Lead-UR-Ship by Denise Spencer

A good salesperson wants to be in a position where they have unlimited potential for earnings. I want that person who is hungry for the lease and will do what it takes to get it. I think a bonus program drives this person and weeds out the superstar salespeople when it comes to leasing apartments. Do I have to deal with some strong personalities with this bonus program? Yes, but if they are good closers, they are worth it. The drama placed on my shoulders for poor performance is much greater compared to deciding who gets the lease. In addition, I am in favor of a team bonus based on property goals. The team bonus is shared by the whole team.

Kate Good so who do you award the commission to? The person that tours or the person that does the follow up and closes?

The first person to claim the customer in the computer. This helps get the traffic accurately reported. There are times that you will show a co-workers customer but it always reciprocates. This is also a great time to discuss the power of follow up so that you know when your customer is coming back and try to set up an appointment when you are working.

Totally agree with Kate. When I was onsite, when I needed extra money, I worked even harder for those leases. I did everything I could to get more leases = more money!

If you don't have a commission system in place you can find yourself with employees that will sit back while others lease the apartments and do all the work. I'd rather deal with the grief from the commissions battles between the consultants. We do renewal commissions as a team perk so that everyone benefits.

Well said and AGREED!! Whoever puts them in our system first gets the leasing bonus after that they become OUR RESIDENT.

We also do games that are team oriented and include teamwork to achieve them.

I don’t pay commissions. High salaries and cross-train mixed activities. Leasing is an everybody job.

I feel your pain. And the ones that lease the most, are typically the most money driven, are the first to complain, first to make promises they can’t keep and the least likely to complete their “paperwork” application. That’s why I always like to base it on a team bonus paid on occupancy. Every one including maintenance is motivated. If you need to move an individual apartment pay a “stiff” bonus.

The first to show should get the commission. It makes the leasing agent make sure that they make the connection over the phone with someone to "ask for me" when they come in to tour. If they are not memorable enough to the prospect to say the name when they come in, anyone can show them and get the commission. The show is what makes the sell most of the time. If they don't lease within 6 months of the tour, and come back to show again without asking for that same leasing agent, it's free game. #Billingsleyco. Rules worked best and was fair in my opinion when I was a leasing agent. Their name is written at the top of the app, and they are to complete the work of the application.

Hi Mike, We here at Precision Appliance Leasing have a referral program that has paid out very handsomely to Apartment Management or individuals depending on your company policies. We could talk and get your agents on a referral program with us and we would be happy to add value to you property, comfort for your residence and money in your leasing agents or property’s pockets.

I have worked at properties where commissions are and at NOT paid and there is still drama when there is no extra $$ involved! lol The last place I worked, the one who gives the tour get the commission.

The company I work for splits commissions for new leases and renewals among the whole team-including maintenance. I love that they do it this way! If a leasing agent shows an apartment and doesn't do anything else, it's not fair to the rest of the team. What about follow-up? What about scheduling their move-in appointment? What about ensuring the apartment is ready? What about the lease and other paperwork? Putting the file together after the new resident has moved in? If one person just shows the apartment and everyone else does all the rest, how is that fair? Everyone plays a part in a new lease, from the showing to giving the new resident their keys. To make it fair for the leasing superstars out there, perhaps add an additional commission ($10, $15, $25....) On units specifically that have been sitting for a while, the most shows that resulted in leases, etc. I think that could work amazingly well for large teams with several leasing agents. But for someone to get a whole commission just for showing an apartment when everyone has a hand in a move-in is old school and policies need to be updated to promote a team environment. Just my two cents...

What is the usual Pay and commission rate these days? I have been retired for many years
and curious as to what a Leasing Agent makes now. Back in my days the pay was low but the commissions made up the difference to make the total package worth it.