Glossary / Commissions and splits
Also known as: Cap, annual cap, company dollar cap
A commission cap is the most a broker pays their brokerage over a set period, usually a year. Once the cap is reached, the broker keeps all or nearly all of each further commission until the period resets, often minus some fees.
Total Brokerage defines a commission cap as "the maximum dollar amount a real estate agent pays their brokerage during a set period, usually one year." Until you reach it, you pay your normal Commission split. After that, according to the same source, your split "flips to 100/0 for the rest of the cap period." The Close notes that agents on cap plans may still pay fees after capping. Whether your firm offers a cap, what counts toward it, and when it resets all depend on your agreement with the firm.
A cap changes how much of each later deal you keep, so it rewards production and can make the timing of a payment matter. Total Brokerage points out that the value grows with volume: on its example plan, an agent with $200,000 in gross commissions saves $20,000 compared with a straight split.
For leasing brokers, timing is the catch. A commission may be earned at Lease execution but paid later or in installments. Whether a payment counts toward this year's cap or next year's may depend on when the deal closes or when the firm receives the money, which your agreement should define. A payment that lands just after the reset date could count toward next year's cap instead, at the full split.
Ask your brokerage in writing whether deals count toward the cap when they are signed or when the commission is received.
For example, on a hypothetical 80/20 split with a $20,000 annual cap, you reach the cap once you have generated $100,000 in gross commission income, because 20% of $100,000 is $20,000. If you generate $150,000 that year, the firm would take $30,000 without a cap. With the cap, it takes $20,000 and you keep $130,000.
