How to Determine Your Net Income (NI)

Fundamental Economic Model

Gross Commission Income (GCI) – Cost of Sales (COS) – Operating Expenses = Net Income.

Definitions

Gross Commission Income (GCI) – In other words, it’s the amount of commission earned before broker’s splits and taxes. Example: 3 percent commission on a 500k purchase is $15,000 GCI. However, if the agent is on 50 / 50 split with broker, the net before taxes is only $7500, and then the agent has to pay Uncle Sam before they get their true take home.

Cost of Sales (COS) – monies paid to a listing and/or buyer specialist.

Operating Expenses – In real estate, operating expenses comprise costs associated with the operation and maintenance of an income-producing property, including property management fees, real estate taxes, insurance, and utilities. Non operating expenses include loan payments, depreciation, and income taxes.