From time to time on the internet or from people on the street, I hear "real estate agents make too much money." I think alot of that is the misconception that the percentage charged for listing a property all goes to the agent. In fact, I have seen that on the web from person who really don't understand where all that money goes.
As those in the industry know, the agent may get 25% of the total take depending on the agreement with their broker, etc. They may get substantially less if they have to split it with another agent on their side of the deal (either Buyers or Sellers). However, there are other expenses to consider. First if all, if the agent is a listing agent, they have to buy the signs, signposts,lock boxes, pay for marketing the property, pay to use the MLS system (not cheap), pay for membership in the National Association of Realtors, their state association and their regional association. Then there is gas, wear and tear on one's automobile, insurance for their business, health insurance, and of course taxes. When its all said and done, the average real estate agent in the country makes less than $50,000 a year before taxes. Many make alot more but they work long hours, nights and weekends to attain that level of income. Considering the fact that the real estate agent is considered to be self employed and is responsible for their own expenses, then one could say that many real estate agents might be better off working at a regular old 9 to 5 job with a demanding boss.
There are positives. To some degree, you can choose when you want to work. Most savvy agents work when they can and take the slower season to take time off (usually the dead of Winter). That time of year is probably the best time to head South for a sun-filled vacation.
I mentioned the agent on either the buyers or sellers side might get 25% (more or less) on a deal before the expenses mentioned above if no other agents on their side get a cut. Keep in mind the agent works for a broker and that broker gets their share as does the agent and their broker on the other side of the transaction. The broker is responsible for supervising the agents. There is the cost of a real estate office and the usual business expenses that go with that.
In reality, only a small percentage of agents make the big bucks. My experience is those that work the hardest build their business and offer their clients top notch service are the ones making all the money, and if they worked that hard, then they deserve to be compensated like anyone else.
Comments(6)