Q&A: How Much Do You Make?

I have to admit this is a bit of a touchy subject with me right now, and I’m tired of sitting back and listening to the National Association of REALTORS and others “cover the tracks”.

The world of real estate is full of “false truths” which are either misconceptions by the public about real estate professionals or “near-truths” that the real estate community doesn’t want you to really understand.

How much do you make as a real estate agent?

One of the common questions, I get asked. Whether by friends and family or in listing appointments when someone wants me to cut commission.

And I understand why this is happening, there are a lot of “half-truths” being tossed around out there. And I’m ready to step-up to the plate and make this issue a little clearer.

How much does a real estate agent make?

Well that depends on the company, the amount of sales, and other factors.

There are basically three real estate models that companies use:

• Low Risk, Low Reward: These are your traditional business models, mostly small companies that have low overhead and the REALTOR pays a small monthly fee to be part of the company, however in exchange the company keeps a higher split of the commissions.
• Low Risk, High Reward: This is the model that Keller-Williams has used to establish itself and its now being “copied” by other emerging companies.
• High Risk, High Reward: This is a lot of the “newer” national brokerages and includes among others the ReMaxs of the world. The agent will pay a large monthly fee however in return they get nearly 100 percent of the commissions they earn during the year.

These are other models, but these are the basics that give you an idea of how an agent gets paid.

When you list for 6 percent, that’s a great payday for you isn’t it.

Well not really. During the listing appointment, the discussion will revolve around a couple of things, but one of the key things is the buyer’s broker co-op – which is usually 3 percent in the greater Columbus market.

So on a $100,000 house, that 6 percent commission is now cut down from $6,000 to $3,000 for the listing side of the transaction.

Ahh, but that $3,000 is now split based upon the splits above — which for my case would be 50/50 — which yields $1,500 for me.

But that doesn’t end the flow of money, there is advertising to pay, marketing and promotional materials for your property, errors and omissions insurance, and other expenses to get your house sold.

So, how much do real estate agents make? Not as much as you think.

Photograph by Shaun and used via license of Stock.xchng.

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