How Much Money Do Real Estate Agents ACTUALLY Make? - YouTube

How’s it going everyone welcome back to another video.

In this video we’re going to be talking about how much a real estate agent actually

makes.

What I want to do is really break down splits, costs, and percentages to show you the bottom

line, take-home pay for real estate agents.

And I’ve seen a few other videos on YouTube out there like this but none of them really

showed an accurate amount.

Some were way too high, some made it seem like agents make minimum wage.

The real answer is of course somewhere in between so with that being said, let’s dive

into a real life example so you can get an idea of the actual take home-pay.

So let’s get started.

By the way, if you’re not already subscribed to my channel, be sure to do so for weekly

real estate videos.

Ok what we’re going to do here is look at the sales price of a property in my area at

$400,000.

We’re going to look at the buyer’s side in this video.

What you need to know is that the seller will pay both the buyer’s and the listing agent’s

commission.

The listing agent’s commission can vary drastically anywhere from $500 flat fee and

I’ve even seen some as high as 4%, but usually on the listing side it will be anywhere from

2% - 3%.

Ok so let’s look at this example.

$400k is the sales price.

In Arlington, the commission for the buyer’s agent is 3%.

58% of properties right now are offering 3%.

About 40% are offering 2.5%.

If you average these two together, I know it’s not a perfect science, you get about

a commission of 2.75%.

To give you an idea, go over to D.C. and a majority of the commission is 2.5% but we’ll

use 2.75% because that’s more in line with where we’re at and what I see everyday.

Ok so with that being said, we’re at $11,000.

Now most agents in the area are affiliated with a large brokerage.

Century 21, Re/Max, Keller Williams, and these brokerages take a franchising fee.

This is to use the name, branding, the perks that come with having your license held under

the broker.

Now it’s important to remember all these numbers are going to be different, I’m just

going to go with the industry average, from what I’ve heard, is around 6% off the top,

goes to the broker.

So now we’re at $10,340.

The next amount of money that gets taken out is your split that you’ve negotiated with

your broker.

There are 100% splits out there for some brokerages where you get to keep all your commissions,

but you don’t really get much in return, maybe you do.

And these splits are negotiable and if you’re thinking oh I’m just going to negotiate

a 100% split with my broker and keep all the money.

Well if you’re paying any money to your broker, how can you expect any value in return?

If you’re a new agent, your split might be 50% where 50% of your income is going to

the broker for a certain period of time.

Let’s meet right about in the middle…let’s do 70% split, just kind of like a nice round

whole number and it’s a more accurate representation.

Now we’re down to $7,238.

Guys it’s 2018, most agents are on a team.

Because of the way a team works, you as the buyer’s agent will be paying money to the

team lead or CEO or whomever is in charge to be apart of a highly-producing team, right?

They put the systems in place, you succeed, and you throw them a percentage at settlement.

This could vary as well.

We’re going to use 15% as the split paid to your team.

You may not have a team, you may pay a lot less, you may pay more, we’ll use 15%, that

brings us to $6,152.30.

I think we’re pretty much done here.

The last thing that is usually taken out is what’s called the desk fee or admin fee.

This is another charge that the bigger brokers include as a fee to help out with admin expenses.

I’ve seen some agents pass this on to their clients.

For me, my thinking is that my client just bought a house, I don’t want to hit them

with a little extra fee, so I pay this fee, lots of other agents pay this.

This fee varies, we’re going to use $450.

That’s going rate.

That brings us to $5,702.30.

That amount is the take-home pay for the buyer’s agent on a property that sold for $400,000.

NOW, there are additional costs that will eventually be deducted.

For example.

This amount right here, this is the pre-tax amount.

This is the amount before any taxes.

Guys, just like you’re out there getting your money.

Uncle Sam is going to get his money too.

So on this $5,700 figure, you are taxed.

And I’m not an accountant or tax professional so check with your CPA on how much you would

owe in taxes.

A few other expenses as well, since you will be an independent contractor and not actually

an employee of your brokerage, you will also have to pay healthcare.

Healthcare/dental is not included for realtors.

You also have E&O Insurance.

Errors and Omissions Insurance, this is a type of insurance usually the broker will

have it and deduct it from your commission.

The coverage focuses on defending against a potential negligence claim made by a client.

Finally you also have BPOL.

Business, Professional and Occupational License, which is essentially a tax to run your business.

Which is kind

of backwards to me, but so be it.

So there you have it, How much does a real estate agent make, this is a typical transaction

on a $400,000 property.

Your numbers might vary you might have different splits, different commission percentages and

whatnot but you should be around this amount.

If you are an individual agent with no team, hopefully your commission is a little bit

higher.

And one last thing, there’s a lot of stats out there that talk about the average real

estate agent salary, it’s very tough to determine the actual average salary.

Don’t think about the average salary.

Think about you.

How much money do you want to make?

And it sounds cliche, but the reason I’m doing this whiteboard is because you have

to work backwards.

You’re 100% commission and you only

get paid on the closing.

So if you want to make $60k in a year, you have to do about 10 closings.

If you want to make 100k you have to make 17 deals happen.

I have heard of people coming out of the gates and in their first year doing over $100k in

gross commissions.

There are people in this office that make $500k, $800k…there’s also people that

make $30k and $45k.

So set up your goals.

How much are you going to make

and work backwards from there.

If you’re going to make $100k don’t just say it and then take the afternoon off to

clean your house.

In real estate you have 2 jobs — your first job is lead generation, and your second job

is being a real estate agent.

It’s very simple, the more people you talk to and the more connections you make, the

better chance you have to hitting your numbers.

So I hope you found this video helpful, if you did be sure to hit the thumbs up button

and subscribe for more real estate videos.

I hope you learned how much money you would actually make int his video.

Ok thanks for watching until next time, create a productive day.

Take care.