This article discusses the preparation and use of the agent’s income data sheet.


A full copy of the form is available here so you can follow along with the instructions.

Analyzing the agent’s income data sheet

The agent’s income data sheet, first tuesday Form 504, is used by an agent (or associated broker) as a worksheet to prepare an analysis for the upcoming year of the annual income the agent needs from closed transactions to cover the various expenses the agent will likely incur and to provide the after-tax income the agent wants for personal expenditures and savings. To set realistic sales production and income goals, and to estimate business expenses, the analysis should be based either on a projection of the past income and expenses experienced by the agent or a forecast developed with the advice of a broker or other agents.

The form is broken down into three sections, with the income and expenses sections divided as they are in a regular profit and loss statement. The last sections address the sources of other income needed to sustain a new agent during the first several months in the industry, the capital investment required to enter the trade or relocate to another brokerage office, the amount of after-tax income sought by the agent and the necessary brokerage fees required from closings to attain the desired results.

Preparing the agent’s income data sheet

The following instructions are for the preparation and use of the agent’s income data sheet, first tuesday Form 504. Form 504 is designed for an agent to prepare a forecast of his income and expenses for the upcoming year.

The form is of assistance to an agent when:

  • selecting a broker’s office for employment by making a comparison of the probable income and expenses which will be generated by working with the different brokers the agent interviews; or

  • doing an annual review of the agent’s income and expenses in his present employment with his broker by setting income and expense goals before negotiating with his broker for any revisions regarding the sharing of fees and expenses.

The instructions correspond to the provision in the form bearing the same number.

Document identification:

Editor’s note — Check and enter items throughout the agreement in each provision with boxes and blanks.

Date: Enter the date the agent’s income data sheet is prepared.

Brokerage office: Enter the name of the brokerage office and the branch location which is the subject of this income and expense review.

Annual income and expenses:
1.

Gross brokerage fees: Enter the dollar amount of the fees it is estimated the broker will receive and share with the agent.

Editor’s note — To set the amount of the gross brokerage fees, see section 11.4.

1.1 Franchise fee: Enter the percentage figure and the dollar amount of the gross brokerage fees due a franchisor by the employing broker.
a. Subtotal: Enter the dollar amount remaining after deducting the franchise fee (section 1.1) from the gross brokerage fees (section 1).
1.2 Broker’s share of fee: Enter the percentage figure and check the appropriate box to indicate whether the percentage due the broker is taken from the gross brokerage fees at section 1 or from the subtotal remaining at section 1.1a after first deducting the franchisor’s fee. Enter the dollar amount the broker will retain.
2. Gross fees due agent: Enter the dollar amount remaining after deducting the amount of the fees retained by the broker at section 1.2 from the subtotal at section 1.1a.
3. Transactional deductions by broker: Enter the dollar amounts for each itemized deduction listed at section 3.1 which the broker will take from the agent’s share of the fees due the agent at section 2, calculated in dollars per closing or as a percentage of the agent’s share of the fees.
3.2 Total charges withheld: Enter the total dollar amount of all the figures entered in section 3.1, a through d.
4. Office expenses: Enter the dollar amount estimated to be incurred for each of the itemized expenses listed in sections 4.1 through 4.9.
4.10 Total office expenses: Enter the total dollar amount of all the amounts entered in sections 4.1 through 4.9. Editor’s note — These office expenses will be incurred because the agent maintains a properly equipped office from which he can conduct business, maintain files and perform the clerical work required to service his clients’ needs.
5. Agent’s business expenses: Enter the dollar amount estimated to be incurred for each of the itemized expenses listed in sections 5.1 through 5.10.
5.11 Total business expenses: Enter the total dollar amount of all the amounts entered in sections 5.1 through 5.10.
6. Marketing and sales expenses: Enter the dollar amount estimated to be incurred for each of the itemized expenses listed in sections 6.1 through 6.7
6.8 Total marketing and sales expenses: Enter the total dollar amount of all the amounts entered in sections 6.1 through 6.7.
7. Agent’s net income: Enter the total dollar amount remaining after deducting the amounts in sections 3.2, 4.10, 5.11 and 6.8 from the gross fees to agent at section 2.
7.1 Income, social security and medicare taxes: Enter the dollar amount of taxes the agent will pay to the state and federal governments for income taxes (federal 15% to 35%; state 5% to 9%) plus fixed federal taxes for social security, medicare, etc. (15.3%). Thus, roughly 20% to 30% of the agent’s net income will be due the tax collection authorities.
8. Agent’s after-tax income: Enter the total dollar amount remaining after deducting the amount entered at section 7.1 from the amount of the agent’s net income at section 7.
9. Other income: Enter the dollar amount of the funds from sources other than fees earned on closed transactions which the agent can rely on as additional funds to cover on-going expenses not covered by brokerage fees the agent receives.
10. Cost-of-entry/Change-of-office: Enter the dollar amount it is anticipated the agent will incur for each of the itemized expenditures listed in sections 10.1 through 10.13 if the agent is a new entrant to the trade or is anticipating a change of offices.
10.14 Total entry/relocation costs: Enter the total dollar amount of all the amounts entered in sections 10.1 through 10.13. This sum represents the capital required for the agent to enter into employment with a new broker.
11. Gross brokerage fee projection/forecast: Provides for an analysis and calculation of the gross brokerage fees the agent must generate to achieve a desired after-tax income. To estimate the after-tax income, the agent (with the help of his broker or other experienced agents) calculates the number of closings in the price range for properties the agent will be handling, the percentage of the price received by the broker as the gross brokerage fee generated by the agent, and the gross brokerage fees for section 1 from which all expenses and taxes are deducted.
11.1 After-tax income desired: Enter the dollar amount the agent deems necessary as his spendable income for the following 12 months. The dollar amount is the sum desired to be attained at section 8.
11.2 After-tax income/percentage of gross: Enter as a decimal amount the percentage figure shown in the right hand column at section 8. By division of the annual after-tax income desired (section 11.1) by this decimal amount, the agent sets the dollar amount of gross brokerage fees (section 1) the agent needs to generate the desired spendable (after-tax) income.
11.3 Gross brokerage fees needed: Enter the dollar amount resulting from the division of the desired after-tax income (section 11.1) by the decimal of the percentage of after-tax income desired be to attained by the agent (section 8 and 11.2).
11.4 Source of income analysis: Enter, as on a worksheet, the price of the agent’s typical real estate transaction, the total fee the broker will receive on the typical transaction and the number of typical transactions the agent will need to close in order to generate the annual gross brokerage fees at section 1 which the agent needs to attain the desired annual income set at section 11.3.