SOP Template: Month-End Close for Real Estate
Free month-end close SOP for real estate brokerages. Covers commission reconciliation, trust account balancing, and financial reporting.
Purpose
Close the brokerage's books monthly so that commission payments are accurate, trust accounts are reconciled per state requirements, and the managing broker has a clear financial picture within 5 business days of month-end.
Scope
Covers commission reconciliation, trust/escrow account balancing, operating expense review, and monthly financial reporting. Does not cover annual tax preparation or agent 1099 processing.
Prerequisites
- All closed transactions for the month entered in Dotloop with final closing statements
- Bank statements available for trust and operating accounts
- Commission schedules current for all agents
- Prior month's reconciliation completed and filed
Roles & Responsibilities
Bookkeeper
- Reconcile trust and operating accounts against bank statements
- Calculate and process agent commission payments
- Prepare the monthly financial summary
Office Manager
- Verify all closed transactions have final closing statements in Dotloop
- Review commission calculations for accuracy before payment
- Chase any missing closing documents from agents or title companies
Managing Broker
- Review and approve the monthly financial summary
- Sign off on trust account reconciliation
- Approve any commission adjustments or write-offs
Procedure
Pull the list of transactions that closed during the month from Dotloop. Verify each has a final closing statement (HUD-1 or ALTA settlement statement) uploaded. Cross-reference against the title company's closing confirmations. Flag any closings without complete documentation.
- aExport closed transaction list from Dotloop for the month
- bVerify each has a final closing/settlement statement uploaded
- cCross-reference with title company closing confirmations
- dContact agents for any missing closing documents
Completion Checklist
Key Performance Indicators
Close completion time
Within 5 business days of month-end
Commission payment processing
Within 5 business days of funds received
Trust account discrepancies
Zero unresolved
Transaction documentation completeness
100% of closings with final statements
Why This Matters for Real Estate
Real estate brokerages that don't close their books monthly accumulate problems. Commission disputes get harder to resolve as time passes. Trust account discrepancies that go undetected for months become audit findings. And the managing broker makes financial decisions without accurate data. A brokerage that's processing 20+ closings per month and doesn't have a structured close process will eventually overpay an agent, underpay an agent, or mishandle trust funds — all of which have consequences.
Common Mistakes
- ×Processing agent commissions before verifying the brokerage actually received the full amount from the title company
- ×Not reconciling the trust account in months with no closings — the account still needs to be verified
- ×Allowing agents to deposit earnest money directly into their personal accounts instead of the brokerage trust account
- ×Not providing agents with commission statements, leading to disputes about splits and deductions months later
- ×Mixing trust account funds with operating expenses, even temporarily, which is a commingling violation
Real Estate-Specific Notes
State real estate commissions have strict rules about trust account management. Most states require earnest money deposits within 2-3 business days of contract acceptance. The trust account must be a separate account at a federally insured institution, and the managing broker is personally responsible for its accuracy. Commission splits are governed by independent contractor agreements — verify the correct split is applied, especially for agents who may have recently changed tiers based on production volume.
Frequently Asked Questions
Learn More About Month-End Close
For a deeper look at building onboarding documentation, see our complete guide.