How Much Do Real Estate Agents Make?
How much do real estate agents truly make? That’s a great question. The short answer is that it’s variable. Like other sales based jobs, how much a real estate agent makes, depends on much they want to work. Some real estate agents may only close a couple of deals a year in order for some supplemental income. Others are hardcore machines that live, breathe, eat, and sleep real estate. So, while there is an extremely large range as far as yearly income, some things are fairly standard.
Realtor Profit Breakdown
Real estate agents typically work on a commission-only basis. They make a percentage of the sale of the property, typically split 50/50 between the buyer agent and seller agent (but not always). Usually, it is the seller-side that charges the commission to the seller, and then the commission is split with the buyer’s agent.
Sale Price of House: $200,000
Total Commission: 6% ($12,000)
Seller Side Commission: 3% ($6,000)
Buyer Side Commission: 3% ($6,000)
Seller Nets After Commission: $188,000
While that may seem like a nice check, the agent usually must split the fee with their broker – the company that allows them to sell under their brand and hang their license there. A broker split with an agent is very variable, but let’s use a 60/40 split as an example. If we are looking at the seller side:
Seller Side Commission $6,000
Broker Split: $2,400
Agent Actual Commission: $3,600
When you look at it that way, the agent’s commission looks much smaller and more of a reasonable amount, considering the amount of work done.
Does A Realtor’s Commission Vary?
Now, I only use this example and say “typically” because that is not always what is paid out. Remember – everything is negotiable in real estate! Just because the “standard” is 6% doesn’t mean that the commission is always 6%. Each agent can generally decide what percentage they are willing to work for. Some agents may decide they will never accept less than 5%, while others will accept 4%. It all depends on the individual real estate agent and how much work they feel the deal will take.
So, getting back to how much an agent may make – let’s take the commission from the above example – $3,600. To make a $60,000 per year, the agent would have to do 16-17 of these deals a year – about one every three weeks. However, most agents are self-employed, which means they pay all their own expenses out of pocket – e&o insurance, travel costs, marketing costs, license fees, health insurance, etc.
Commissioned real estate agents sometimes get a bad rap, but they can be incredibly useful in certain deals. It all depends on who you go with – their knowledge, expertise, motivation, and negotiation skills. Sometimes it may totally pay off to use a Rockstar agent to sell your property or buy a property. Other times, it may not work out so well – resulting in not getting top dollar for your property, a deal that takes way longer than it’s supposed to – or no deal at all.
What is the Benefit of Working with Property Buyer Connect?
At Property Buyer Connect, we buy properties of all shapes and sizes – and work with you, the seller, directly. This means we cut out the middleman of an agent.
However, we do take on more risk since we usually buy properties that have more uncertainty to them than ones that are listed with an agent. For example, many properties we buy have an unwanted occupant in them, or need a lot of repairs, or aren’t very marketable and can’t be well advertised. In these cases, we offer to buy the property and make it as easy as possible for the seller – they don’t have to worry about fixing it up to show it “on the market” or worry about an agent’s commission – the offer they receive is what they get (minus required city/state & title fees, of course).
We have a great referral network and relationships with both Pennsylvania and New Jersey real estate agents and are happy to recommend them if the situation calls for it. Real estate is a problem-solving business – we believe that there is a solution for everyone and there is certainly no one-size-fits all solution.
If you are considering selling your property, give us a call. We are a one-stop shop to help you find a solution. We specialize in the Greater Philadelphia / South Jersey area and its surroundings. Give us a call at 215-770-3122 or contact us online. We’d be happy to help!