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The ISA vs. the Lead Package

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The ISA vs. the Lead Package

A solo agent closed 14 transaction sides in the past 12 months for $4.9 million in volume at an average commission of 2.5% (total commission, her share before split). Her brokerage split is 70/30 with a $16,000 annual cap; she has hit the cap. Fixed monthly costs: $250 desk fee, $180 CRM, $300 lead platform, $120 transaction software, $150 marketing. Variable costs average $700 per closing. She is considering hiring an ISA for $45,000 salary plus 15% of GCI generated from ISA-sourced leads, or buying a $1,200/month lead package projected to generate 6 additional closings at the same average price/commission. Her goal is 20 sides next year.

1. Calculate her current net income and per-side economics.

Read the worked answer

GCI = $4,900,000 x 2.5% = $122,500.

Brokerage split with a $16,000 cap: once the cap is reached, the agent keeps 100% of GCI except fees. Her net after the brokerage share is $122,500 - $16,000 = $106,500. Check that the cap was reached: $16,000 / 30% = $53,333 of GCI to the broker's share, which is below $122,500, so yes.

Fixed costs = ($250 + $180 + $300 + $120 + $150) x 12 = $1,000 x 12 = $12,000. Variable costs = 14 x $700 = $9,800. Net before taxes = $106,500 - $12,000 - $9,800 = $84,700.

Per-side economics:

  • Average price per side = $4,900,000 / 14 = $350,000.
  • Average GCI per side = $350,000 x 2.5% = $8,750.
  • Contribution per side before fixed costs = $8,750 - $700 = $8,050.

This is the baseline for evaluating either growth option. Taxes, retirement, and health insurance are not included.

2. Compare the lead package and the ISA financially. Which is safer, and what is the ISA break-even?

Read the worked answer

Lead package:

  • Cost = $1,200 x 12 = $14,400.
  • Six additional sides x $8,750 = $52,500 GCI.
  • Additional variable costs = 6 x $700 = $4,200.
  • Incremental net = $52,500 - $14,400 - $4,200 = $33,900.
  • New net before taxes = $84,700 + $33,900 = $118,600, assuming capacity and conversion hold.

ISA:

  • Fixed salary = $45,000.
  • ISA commission = 15% of GCI generated. On each $8,750 side, that is $1,312.50.
  • Contribution per ISA-generated side after variable cost and ISA commission = $8,750 - $700 - $1,312.50 = $6,737.50.
  • Break-even on salary alone = $45,000 / $6,737.50 = 6.68, so about 7 sides just to cover the salary.
  • At 6 sides, ISA net = (6 x $6,737.50) - $45,000 = $40,425 - $45,000 = -$4,575.
  • To match the lead package's $33,900 incremental net, the ISA would need about ($45,000 + $33,900) / $6,737.50 = 11.7, or 12 sides.

The lead package is the lower-risk option at the projected volume. The ISA is a fixed-cost bet that requires roughly 7 sides to break even and 12 to outperform the lead package. If she hires an ISA, negotiate a lower base, a higher performance component, and a 90-day trial with measurable conversion targets.

3. What non-financial and technology factors should drive the decision?

Read the worked answer

Financial projections assume lead conversion and service capacity that may not exist. Consider:

  • Capacity: 20 sides as a solo agent may strain follow-up, showings, and transaction management. An ISA can absorb lead qualification and appointment setting, but only if there is enough lead flow to keep the ISA busy.
  • Lead quality and response time: a lead package's projected 6 closings depends on speed-to-lead, scripts, and database follow-up. Track cost per appointment and cost per closing, not just cost per lead.
  • CRM discipline: both options fail without a clean database, consent records, and a follow-up system. The $180 CRM is not the issue; the process is.
  • Compliance: outbound calls and texts require consent and do-not-call compliance. A lead vendor's leads may carry different consent scope, and the agent remains responsible for how they are contacted.
  • Scalability: the ISA creates a repeatable process and can free the agent for listing appointments. The lead package is easier to stop if ROI disappoints.

Recommendation: test the lead package for 90 days with strict metrics, or hire an ISA only with a performance-weighted compensation plan and a clear 90-day conversion target. Do not commit to $45,000 in fixed salary on a six-side projection.