You Earned How Much in Commission? Breaking Down an Agent's Pay Out...It's Not All That!



Commission pay outs can be great and I appreciate every sale I get. At first glance, an agent's pay out can seem impressive especially in the higher priced market. I'm sure you have all watched the Million Dollar Listing Show and have seen how "easy" making money can be. Well...surprise! It's not that easy and it doesn't happen with a quick chat over lunch. There is a lot of time and effort put into a transaction and it's important to remember that Real Estate Agents don’t get to keep all the money they make on deals. In addition, agents assist many clients with things that don't result in a commission. Sometimes we work with clients for months and years and many clients don’t ever close or close with a different agent often because they really don’t understand how it works. So let's break it down.... A $1 million sale with a typical 2.5% commission will pay $25,000 to the agent and we can all agree that's an impressive dollar amount. But this money comes.......

- Before taxes - Before broker splits - Before marketing - Before board dues

- Before MLS dues

- Before monthly subscriptions for websites, key box, ADA compliance apps, etc - Before office bills that include Admin fees, transaction processing fees, franchise fess etc - Before professional photographs on your home - Before all the other costs of doing business

- Before paying for transportation Agents are self-employed so the regular 9-5, company benefits don't come into play for us. We pay all of this out of pocket and when the phone rings, we answer so sometimes our time is not really our own. In terms of time, it's true we often have flexible schedules but we spend a lot of time researching properties, reviewing documents and showing properties outside of regular business hours. In terms of money, two big employee benefits that aren't covered as a self-employed Real Estate Agent are 1) Employer healthcare and 2) Employee matched retirement accounts. Other benefits that aren't included:

- Paid vacations - Weekends off - Nights off - Maternity leave - Bereavement pay/leave - Company car

- Corporate travel/spending allowances

No complaints from me as I love what I do and no argument that some of the top producing agents in the country are banking big bucks but the majority of real estate agents aren't in this category so it's just something to keep in mind when you think your Real Estate Agent is making too much.