Loreena, I would say that in terms of time spent on each transaction actually working with the client and working on the deal, my time is worth about $300-$400/hour.  If you were to factor in all the time spent on marketing to get new clients, prospecting, working on my own business processes, blogging, etc., the $/hour decreases -- but that time is my overhead.

So true, a lot of real estate professionals do not know what they are making.

Here is the way I do it, the way I told you that Dirk Zeller explains it.

Take your GCI per year, divide it by the number of transactions that year and then by the total number of hours worked that year.

For example:

GCI 1,000,000 / 12 / 480 hours (40 hours a week x 12 months) = $173 per hour.

Now this is just an example, and some will work more and some less so those numbers will vary.

He also explains that sometimes agents don't always consider the cost of the things we do.  For example, an ad in the local real estate magazine here.

Half page ad: $220 month (this is where most agents stop, they only count the $220)

BUT, you also have to figure your time and effort into it.

So let's say that it took you an hour to get your ad just right and an hour to convey that to the ad person so that it is what you want.  That is 2 hours.  At the rate in the example above the ad would really cost you $220 + $346 (2 hours of time that you could have been listing and selling) for a total of $566 for that ad.

This is business type thinking.  You MUST know what the costs are and what the return you have to have from that must be.

I really do recommend the book "The Champion Real Estate Agent" by Dirk Zeller as a good read.  I am going to try and do a book review on it shortly.

Hi Loreena:  I am sure that if we measure the value of your true worth... you are "priceless."

I just did the math. The calculator told me to get a job at McDonalds! In all seriousness it is vital to determine what we are worth an hour. We should only be doing direct income producing tasks. I know this is not completely possible. We should though be looking at ways of reducing the amount of time we put into non income producing tasks. This will help our rate per hour greatly!

At least $35 an hour! That's why we don't waste our time with buyers or sellers who are not ready or realistic (it's too costly) we'd rather be spending those hours prospecting!

I guess I need to go back to convenience store work! I netted more money doing that, by the time you figure all the business expenses.

Of course, part of what I am banking on is the fact that my income increases a little every year, as does my client-base. SO, the potential of the income increase continuing is far greater than it would be in a conventional, hourly wage or salaried position. And when you are in business for yourself, that is what you gamble on- the potential return....

I think I make minimum wage too, Loreena.

But it will all pay off in the end.

This is a hard on Loreena because of all those "unseen" hours that our clients never even consider. So I have to agree, I'm lucky if I'm making minimum wage if you have to count ALL the time that goes into each job I do, after paying others, etc.  But I LOVE my job and would almost do it for free...oh wait...I already almost do it for free ;)

I think sometimes I make $500 an hour, and I'm well worth it. At other times, I average much, much less. Just maintaining my blogs, websites, and doing those background things to bring business is very time consuming. I am busy whether I'm selling homes or not. It's all worth it to have the freedoms I enjoy, the satisfied clients, and the challenges of bringing more business to myself through my website and here on AR.  Great question to think about!!!

As much as I get get someone to pay me, but if I had to bill it would be about $200 per hour

What I'm worth and what I make are so very different!  The time spent on my business right now seems to be at a very high cost because I'm not producing with those hours, but I think it's a wise investment for the future.  But just in general all the stuff we do does take up so much time that we don't really account for.

Loreena,  I am afraid to figure out how much I make per hour.  Clients just don't know what we put into every deal -- then they question our commission!  I wouldn't be able to do a job if I didn't give 110% -- so what do you do?  Don't even think about it.  If you are making a living, and are happy doing what you do, you're blessed. 

Chris

I once joked to a seller, after 9 months of planning boards, engineering,filings with abutters and so on and so on that by the time the deal closed I needed to call the labor board because my hours compared to the pay on this deal were less than minimum wage. But the seller did send me a post card from his house on the coast to thank me "so I got that going from me".

The public's perception is we make BIG BUCKS. I just sold a house today and the commission check was $1500. Listed the property (and 5 others for this guy) in July 07. This is the first one to sell (they're all investment proeperties needing a very specific buyer. How much am I worth on THIS deal? I don't want to figure it out.

Loreena - have you considered outsourcing some of those tasks to a virtual assistant so that you can increase your per hour fee? If you get a good VA who knows what he or she is doing, and can get it done quicker than you, that leaves you more time to focus on your high value / high profit activities.

You may already be working with a VA, so excuse my ignorance if you are.

Please note: this is not a shameless plug for my own business, since I only work with mortgage professionals. There are several real estate VA groups in the Rain.

We are definitely priceless but who sees this other than ourselves.   The public does think we make a heaping amount of money.  If only they really knew the truth. 

You are worth the smile on the face of the people you help, the happiness you bring them when you find just the right house, the relief they feel when their home is sold, and the feeling of satisfaction you feel from a job well done.  Here's a flower from my garden.  I spend my time on that too and I think a garden is priceless.  If you enjoy all the extras that you do, it is all priceless.

Right now... way under minimum wage! But since just starting out and trying to get all things in place and my name out there... hopefully it will come to fruition within a year or two!

The real question is how do you leverage your time so that even when you're not working you are bringing in cash.  Multiple streams of income.  As an investor/attorney/realty company owner, it is nice to have something bringing in money when you need to attend to family needs, etc.

Great post , I don't know what I'm worth since I have not sat down and taken the time to calculate it.

Wow, great question/post. Now with the rising cost of gas, its going to become more costly to show those "maybe" clients properties in multiple communities. Plus a lot of people don't realize the actual cost of advertising and all the other expenses that come into play. Should we start charging for the hour ($100-$200) and then a small "success fee" or commission at the close of the transaction? Could that be the next craze in real estate? What do you think?

Loreena, back in 2000 I was making an average of $285.00 an hour based on the number of hours spent and the gross money made. I consider the driviing, reading, researching and so on the normal prep for actual business. We must keep on top of our business or we are not worth the time of day. Don't ever forget that the time you spend preparing to serve your clients is worth money. To each and every one of them. It's partly psychological remember. Can you voice what you're worth? Try it really. Later in the rain~Deb

PS. you are no where near minimum wage. Try flipping burgers.

Oh, and BTW, I am doing better today and believe me, I work for it.

Hi Loreena,

I always tell people that that if they have to ask how much that they can't afford me!  LOL

If they only knew the truth!

With the market slowing down my sales have gone down for the last 2 yrs. I need to be making more but I try not to think about how much I'm making or not too much. I really love helping people. It's not only about the money.

Well sometimes you make more, sometimes you make less--that is why it's called "commission only"

It does seem interesting to me that we are one of the only businesses out there that don't get an hourly wage.  The problem with putting a dollar ammount to the work we do is that there is no accepted model fordoing so.  Hahaha I with charging an innitial fee for future work, and a sucess bonus...that way we would no longer have to just take the hit for customers that arren't serious, and would allow us to work harder for the ones that are serious. 

The better question is how much is your real estate business worth that you are building?

Are you capturing all your contact information in a CRM package?  Your prospects, your contacts, past clients, geographic farm?

If you retire or when you retire, how much can you sell your business for?  If you have everything organized -- you could sell your business.  Think about the end game.  Make it a profitable day!

Great question and one with many answers.  The problem the way I see it is not how much we work for, it is that we will work at all without some guarantee of pay.  But as long as we have big franchises hiring anybody that just got a license to sit on phone duty and part timers just in it to make a few bucks, this industry will have no creditability

Brian...it might make you feel better thinking you're making $300 to $400 an hour, but your DOCTOR IS making $300 to $400 an hour and that's EVERY hour he's "in" the office and you're sitting in that waiting room.  And ALL his overhead is built in that rate.

Factoring in all the late night calls, marketing time, driving time, dead end clients, etc. as everyone has pointed out....we're making less than minimum wage, BUT, we also have the flexibility of WHEN we work and not brow beat by some jerk boss.

Loreena:  Not all deals are the same.  These short sale listings have me making about $2/hour on my work.  A rental I make about $50/hour.  I like to think I'm WORTH at least $100/hour. 

Loreena.. I was not a member back in Nov. 07, so this is why I am answering this now.  My clients I spend time with, I never get paid enough. But they are priceless in more ways than one.  Now the clients that call me at odd hours... 2am to see if the lightbulb in the refrigerator of the house they want to buy works or not.. these people I would like to bill at $525.00 an hour.