Perhaps some agents on this thread can answer a few questions for the unwashed masses like me.
For example, if the commission is 3%, how much does the agent actually get vs. what % goes to the agency he/she works for ?
I understand that they are self employed in some cases and have overhead and expenses.
In most cases your compensation is paid relative to the amount of business you bring in.
For large firms your first year compensation can be as low as 40% of the commissions you bring into the agency.
This is typically on a commission scale, in many cases evaluated every year or sooner at the agents request. Other firms its a sliding scale. A top producing agent can keep 70% or more of what they bring in. When discussing these commission splits there are a dozen variables among firms. Some full service large firm offer their agents transaction coordinators and services to keep track of your deals and follow up for you. In those cases a top producing agent maybe get 70% of the split but other firms may offer much more than that and you provide your own staff (or do it yourself.
I understand that they are self employed in some cases and have overhead and expenses.
It's not a matter of "some cases" in all cases, you have all your expenses. So right off the top reduce your commission another 12+% in Self Employment taxes then throw in vehicle, gasoline, advertising, flyers, materials, everything which are business expenses and does reduce your tax bill.
Also, regarding people taking offense at others suggesting how much they should be paid, how about this scenario.
An 1800 sq. ft house in a nice neighborhood in Podunk sells for $250k. The same house in SouCal sells for close to a million dollars. Both houses sell within 30 days. Exactly how many hours did each agent put into that sale, on average ?
For discussion's sake let's say 40 hours. If the agents net 1% of the selling price the agent in Podunk made $2500 for a weeks work while the agent in SouCal made $10k for that same 40 hours work.
This is impossible to answer, what if it took 40 hours or 400 hours marketing to an area to get those homes? Time and money spent trying to acquire listings and sales. It's an impossible question to answer.
The agent who made $2500 might have more listings or sales than someone selling million dollar homes. Agents dont work 40 hour weeks getting paid. They can work for weeks with no income at all. One has to go by annual income and as
@Tharber pointed out which I think very well maybe accurate on a national scale less than 1% of agents make over 100k a year. It's something many of the public doesnt understand. Many agents have pathetic incomes and can not provide a living wage ultimately give up.
I think, as I type this, a better way to explain this (Im being sincere) its not about sales and commissions and the time frame it takes to make a sale. It's about acquiring the business to make the sale. I was what I would call a very successful in my real estate business because I with a select few others, very few in my local office of a nationally respected local franchise as far as agent productivity. I knew going into this I had to work almost day and night to get things going because Iwas self employed in a still successful NYC business that I sold to go into real estate. I made peanuts the first year, sticking to a business plan, to market myself and create sustainable working model.
Can you see why sellers are incensed at how much they have to pay in commissions in a high property value, fast selling market ?
Those sellers may have a household income of $150k and think an agent who is making close to a half million dollars a year is making too much money. The sense of entitlement is why people want to fight the traditional commission structures.
It's ok to fight commission, truly, that has gone on for over 50 years. I could care less what someone might think, if they dont want me, fine, trust me, there was/is always someone willing to take a cut in pay. Just like they cut their own pay, they will cut their sellers down anyway they can because they have no self respect or passion for what they do.
If you dont like my rate, why get upset? Why get jealous? Get someone else if you dont want what I offer.
Truly, I can not tell you how many times I have been approached by either an agent (most often) or homeowner (rarely) trying to make a sale, asking me to split a reduction of my listing commission with the selling agent. Many of these agents are part timers or just less experienced or no self esteem. This is 100% true what I am about to say.
When asked by another agent or a (rarely) homeowner if I will split with the other agent a reduction of $$$ in my commission, as polite and fluid I can possible explain it is, my reply, exactly like this just respectfully flowed off the tip of my tongue "Thats not going to happen"
typically that ended the conversation but lets say it was a phone call from another agent and they pressed further I would come out with "Im not going to take income away from my family and give it to someone else" I mean, why?
Hope this helps! I got to get going! This was completely written in a sincere way. Hope it makes sense, I spent way too long on it! *LOL*
BTW- another true story, I truly worked hard for my homeowners, other agents would comment that they would use me if they sold their homes because I do what I say. Although what I typed above may sound cold, my homeowners really liked me and I them. I can not tell you how many awards I got for that due to corporate customer followup. I shave even had a case where people trusted me so much and liked me that if I had my own buyer on one of my listings a couple times they took my buyer over another that offered more money (not kidding) some of these people were wealthy and didnt care about a few thousand dollars.
This whole commission stuff is social media stuff and from our own industry cut rate commission firms unable to stand on their own two feet, not knowing what they are doing, the one thing they can do to get business is cut their fees. Good for them!
Even those people the few I met that went that way came back to me regretting their decision. I loved what I did, I found just treating people like people, consulting with them truly made a name for myself on its own. Caught on like wildfire without cutting my fee.
The only reason I got out was to move out of NYS, if it's not evident, I do miss it at times when I think about it, it grew so much and so fast local long established competition didnt know what hit them, and the key was to be honest with people.
I was starting to burn myself being so busy so didnt miss it as much once we moved out of state. I dont regret leaving, not at all but I was at a good place at the time.
