How Much Money Do You REALLY Make?

Education & Training with The Lones Group, Inc.

The Lones Group, Inc.

How Much Money Do You REALLY Make?

When I think about how many hours most people work per week, I think you would agree that 40 hours is what most people would guess to be the average hours that most people work in a typical business setting. When I think about real estate agents, I think you would also agree that most real estate agents can work many hours one week and less another week. In other words, their work hours are flexible and therefore do not conform to the "corporate average."

When I am working with an agent and they tell me that they want to increase their income, the first question I want to get answered is what their hourly rate has been the past couple of years. The solution for making more money can be to increase the number of hours you work, but there should also be a strategy to make more per hour. If you want to double your income, the solution isn't to double the amount of hours worked. You may have more money on paper if you do that, but you would have given up more of your life to get there. Unless the ratio between the extra income and the extra time makes sense, you could simply be spinning your wheels for nothing.

Here is a classic example:

Let's say you looked at your income for the past two years and, for the purpose of making it easy to make my point, let's assume you earned $100,000 gross commission.

If you truly worked 40 hours per week for 52 weeks of the year then your hourly rate of pay is approximately $48.08 per hour. What if you worked only 46 weeks per year and you took 6 weeks of vacation? That would increase your hourly rate to over $54.34 per hour.

So you can see that it is VERY important to get real about the time you spend working in real estate. You can't just say that you make $100,000 per year without looking at how many hours of your life it took to earn that.

I often tell agents that if they are happy with the amount of money they make but they want more quality of life and even more money, I tell them to increase their time off. This not only gives them an automatic raise but it also gives them better quality of life.

I had an agent recently that bragged about making over $400,000 in gross commission. He told me he wanted to make even more money and perhaps take time off to enjoy his life. But when I asked him to go through his calendar and his email to see how much time he was REALLY spending working he was shocked to see that most of his email communication began around 7 a.m. and ended close to midnight on many days. Basically he was working over 16 hours most days.

So is you take his gross income of $400,000 and look at the total number of hours he was working (6 days per week, approximately 16 hours per day totals 96 hours per week or 4992 hours per year), he made $80.12 per hour.

Even though his gross income of $400,000 is four times higher than my example of the other agent who made $100,000, he did not make four times the hourly rate the other agent made.

So you can see how important it is to monitor the TIME you spend working not just the GROSS INCOME you are making. When you want to give yourself a raise, the quickest and easiest way to do that is to simply double or triple the amount of vacation you take because you will still strive to make more this year than you did last year, but you will do it in less time when you take that extra time off. Perhaps simply adding a dedicated day off every week would help you to have more quality of life and make more per hour.

The other thing that determining your per hour rate will do is help you prequalify clients better because you know the TRUE cost of wasting time on clients that aren't serious about buying or selling. It also helps you make smarter decisions about cutting commission, working with companies that supply you with leads but only pay you 50% of the commission, or referring out business that is not in your field or area of expertise.

Also remember, we are just looking at gross commission, not net commission. Once you take out your expenses, take a second look at how much you are making per hour. But that is an article for another day.

Take some time to really figure out what your true hourly rate is. It will quickly put things into perspective for you. Remember, you can't improve what you can't measure!


By Denise Lones CSP, M.I.R.M., CDEI - The founding partner of The Lones Group, Denise Lones, brings over two decades of experience in the real estate industry. With expertise in strategic marketing, business analysis, branding, new home project planning, product development, and agent/broker training, Denise is nationally recognized as the source for all things real estate. With a passion for improvement, Denise has helped thousands of real estate agents, brokers, and managers build their business to unprecedented levels of success, while helping them maintain balance and quality of life.

The Lones Group, Inc.

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Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

If it was only "about the money"....and hourly one would do short sales or divorce.....and that would be very sad.  Do what you love...the money will come...and we have never measured it in hours.

May 04, 2017 06:07 PM #1
Kat Palmiotti
406-270-3667 (MT), 914-419-0270 (NY), Broker in NY with Grand Lux Realty and in MT with (coming soon!) - Kalispell, MT
The House Kat

Knowing what we make per hour could be a catalyst for changing the way we do business, but I"m with Sally above. If it was all about the money, I wouldn't be helping service members (military, law enforcement, fire fighters, etc) with the Homes for Heroes program because that definitely decreases my $/hr. But I love that I can help those who help others, so I'm okay with the reduced income.

May 20, 2017 03:34 AM #2
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Denise - you make a very good point about measuring hourly rate.  This applies not just to real estate but also many consulting jobs.

May 20, 2017 05:21 AM #3
Dorie Dillard CRS GRI ABR
Coldwell Banker United Realtors® ~ 512.750.6899 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good morning Denise Lones ,

I'm so glad your post was in "Second Change" hosted by Carol Williams. I would have missed your post. I agree with you finding out your hourly rate is important  because it does put things in perspective for you. You can't improve what you can't measure..BINGO!

May 20, 2017 07:08 AM #4
Denise Lones
The Lones Group, Inc. - Bellingham, WA
CSP, MIRM, CDEI - Real Estate Coaching & Branding

A note for future readers that parts 2 and 3 on this topic can be found here:

Part 2: What's Your Net?

Part 3: Leverage: A Way To Give Yourself a Raise

May 24, 2017 04:33 PM #5
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

This is excellent advice to share. Best wishes for continued success.

Jun 01, 2017 07:33 AM #6
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Denise Lones

CSP, MIRM, CDEI - Real Estate Coaching & Branding
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