The average real estate agent makes right around $39,421 a year gross from selling real estate. This number which I got from Salary.com and that is about $9,000 a year higher than what the US Department of Labor figure is, is still reflective of what I think is one of the fundamental flaws in the US real estate industry. That is, that there are simply (still) too many real estate agents out there! In essence, the pie is getting split too many ways.
If you don't believe me, let's take a look at what the "average" incomes from groups that hold themselves out as professionals. (All salary information from Salary.com)
Dentist:...................................$136,038
Attorney:.................................$ 88,507
Physician (Dermatologist):.........$233,964
But Bob, is it really fair to compare real estate agents and what they make to Doctors and Lawyers? Maybe it's not because Doctors and Lawyers are required to undertake a tremendous amount of education that isn't required of real estate agents. Honestly though, I think that real estate agents should have additional educational requirements levied upon them. If we were required to undertake additional educational requirements or some kind of apprenticeship program, I think that those of us who stayed in the business would end up being better compensated.
Another consideration is that Doctors and Lawyers are sometimes called upon to make life and death decisions, which is something that not very many real estate agents have to contend with on a regular basis.
So, to be fair, let's look at what some other jobs pay and compare them to what the average real estate agent makes;
Dental Assistant:................................................$ 32,436
PC Maintenance Tech:..........................................$ 41,302
Heavy Truck Driver (includes Garbage Collector):....$ 37,967
Is this right? Look at the level of complexity that our jobs entail compared to these guys?
In real estate we have to wear many different hats. Sometimes we are sales people and sometimes we are are required to calculate figures. Part of our jobs requires us to be able to appraise the value of properties. Other times we have to be there to hold our client's hands in times of personal crises.
In order to get the business in the door we have to get out there and hustle. Sometimes this means that we have to be marketers and sometimes writers.
Many times we are required to be able to shift gears such as when you're going up against another agent for a listing tonight, yet closing a transaction with that same agent tomorrow.
My point is that, if done right, real estate agents deserve to be paid more than they are. Which leads me to this question:
Why Aren't Real Estate Agents Paid More?
As pointed out above, the problem is that there are simply too many of us in the field. The barriers to entry into the real estate field are very minimum. Basically, you have to be able to sit through a class for 6 weeks or so and then to pass a test.
If you can do this and you haven't been convicted of a felony (recently) you too can become a "Real Estate Professional".
This lack of qualifying requirements has led to a situation where just about anybody can get a real estate license and then take a stab at the business. As we all know, most people fail and eventually go back to doing something different. While others practice real estate on a part time basis.
To those of us who stay and make this our profession we are forced to "compete" with these agents and as the laws of supply and demand would require, our compensation is reduced. This isn't to say that it's impossible to make a good living at selling real estate. I've done so and I'm sure than a lot of you have done so too.
But even if you are a superstar, you can't escape this downward draft on your income.
But Bob, If Real Estate Incomes Are Limited By The Number Of Agents, Isn't This Good For The Buying Public?
The answer is no. It's no because the professional real estate agent is forced to spend a good amount of his/her efforts and resources on marketing themselves. These efforts and resources could have gone into actually practicing their craft instead of competing against agents who won't be in the business three years from now.
If licensing requirements for real estate agents were to be tightened up and there were fewer real estate agents as a result of this tightening, then the market would actually end up being better served.
While the income of individual real estate agents would go up, the gross amount of real estate commissions paid by the public would go down because there would no longer be the need to entice agents with the "hit it big" carrot and stick approach that is now used throughout the industry.
Also, as the income of individual agents went up, more people would be enticed to enter the field in pursuit of these higher wages which would then tend to reign agent's incomes in. The difference would be that these "new" agents would be better trained and qualified to serve the public's real estate needs.
R.B. "Bob" Mitchell
ValueList Real Estate Services, Inc.
Bob Mitchell is president of ValueList Real Estate Services, St. Louis' largest discount/full-service real estate and mortgage company. If you would like to find out more about Bob, ValueList or our flat-fee listing program, please feel free to visit our web site at valuelistre.com
;)
;)
You know, Bob, when you consider how many of us there are, that's a pretty high average salary. If they took the average earnings of the top 10 or 20 percent of agents the earnings would be very high. You take 20 agents in an office and earnings have to be divided between 20 agents, several non-producing, then the top producers are dragged down, statistic wise.
But whichever way you look at it, there are too many of us!