Making Money Selling Homes For Sale In Woodbridge
Get A Real Estate License And Make A Fortune... Right???
A lovely lady said to me that she will get her real estate license and make some "quick money" so she can remodel her kitchen, and put a pool in her back yard.
"How much will your kitchen and pool cost?"
"All I need is $50,000 and I'll have a new kitchen and pool by summer," she replied.
"What's your business plan," I asked.
"My what?"
"How do you plan to make $50,000 by summer?"
"Well," she said, "all I need to do is sell three houses."
"Thre houses? How did you figure that out?"
"Well, 'somebody' told me that the average sale price for Prince William County homes is $280,000. So I'll ask the company I join to 'give me' three houses to sell, times 6% commission, and that will give me the $50,000 I need."
"Oh."
"Yeah," she said, "Real estate agents make big money. I see Realtors ads where they brag about how they make a million dollars a years and get into the "Million Dollar Club".
"Are you open to coaching?"
"Sure, I'd love to pick your brain."
"First, the Million Dollar Club just means they sold two million dollars worth of property last year, they didn't MAKE a million dollar income."
"Are you sure?". She looked puzzled.
"I've been selling real estate for a living for 23 years, I've owned real estate companies, so I think I got that down."
I went on, "Also, your business plan has a few flaws you'll need to fix."
Here is the short version of my response to her business plan.
1. The "company" you join does not give you listings to sell. You have to find your own business... find your own customers... companies do not give out leads.
2. You will not get paid 6% of the selling price for a house you sell. You and your company get 3%. That's because in a normal sale, one agent/company works for the seller, while the buyer has his/her own agent/company.
So if a seller pays 6% commission, half goes to the listing company, and the other half goes to the selling company.
3. You sell three $280,000 houses, the gross commission to the company for the three sales is $25,200. You don't get the $25,200, the company gets it.
4. As a rookie agent, you split the commission with the company 50/50, meaning you get paid 50%. The company has to make money to stay in business.
So you get $12,600 for selling three $280,000 houses.
5. Now deduct FICA, federal income tax and state income tax. She is married to a big-buck-makin' Beltway Bandit, so they pay taxes at the top bracket.
Gross earnings: $12,600
Less 15% FICA: ($1,890)
Less 36% fed : ($4,536)
Less 5% state : ( $630)
Net income : $5,544
Yep, sell three $280,000 and you'll earn a whopping $5,544 after taxes.
Her mouth dropped open so far, flies were flying in and around her molars.
Oh, and remember, you'll pay $2,000+ annual dues combined to the National Association of Realtors, the Virginia Association of Realtors, Prince William Association of Realtors.
MLS dues, a subscription fee to use the Multiple Listing Service is $144 per month.
Advertising your listings??? YOU pay for ads, the company doesn't pay for ads.
She said nothing... for a long time, until she finally asked, "Are you SURE?"
"Look dear, I've sold over 2,000 homes over 23 years in real estate. I've owned a couple of real estate companies. I think I've got it down by now."
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Erick Blackwelder or Peggy James of Erick and Company - Exit 1st Choice Realty, Woodbridge VA. Realtors®, call 703-590-2252 list your property for sale or to purchase a property in Lake Ridge, Westridge, Old Bridge Estates, River Falls, Middle County, Cannon Bluff, Meadowbrook Woods, Blooms Crossing, Manassas Park, Beaver Creek, Hunter's Ridge, Brittany, Manassas, Montclair, Dumfries, Occoquan, Dale City, Nokesville, or anywhere in Prince William County.
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