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 More Statistics about Being an Agent (Part 2)
By: Darin "Sid" Cameron, CRS
Mon, Nov 13th, 2006 2:32 pm

Yesterday I started looking at some of the statistics I found while researching last month's blogs on how commissions are paid.  The first statistic showed agents worked an average of 46 hours a week, and 20% work 60 or more.  Here are a few more stats to know.

- The average full-time agent has 9 years of experience but has been at their current brokerage for 2 years.

Being a 100% commission salesperson unfortunately means some months you feast and others you starve. At the same time federal regulations that define independent contractor status prohibit a broker from using a lot of the traditional perks an employer might use to retain a traditional employee- such as health insurance, benefits- even logical things like helping to market or grow the agent’s business.

So no matter how much you may like your broker, office, or coworkers, ultimately as an agent you are forced to take an “every man for themselves approach” in order to survive. This means the successful agent is resigned to “shop” brokers for better compensation deals- because a little more from each commission check can mean the difference between making it in real estate and failing.

- says the average agent earns approximately $31,000 per year. I’ve seen other sources that peg it at $33,000-35,000 per year.

Compared to the average hourly waged employee running a cash register at Wal-Mart or waiting on tables at Applebee’s, this is probably a pretty good income. However, compared to most people’s perception of what real estate agents make it’s significantly lower.

A lot of this has to do with the fact that most people see the total commission being paid on a real estate transaction, but they don’t understand just how many people get a part of it beyond the initial agent- or the expense the agent might actually have to generate that commission (see last month's blogs on this subject).

For example, one of the top listing agents in our office retains two full-time salaried employees to process administrative paperwork at a total cost of $100,000 per year- and that’s an expense she has to pay every month even if nothing sells. Combine this with the stats below.

- 10% of agents earn less than $17,600 per year.

How is this possible? I have seen statistics from various local associations of Realtors that show the average agent in their geography processes a low of 1.9 transactions per year (I believe that was Massachusetts) to a high of 12 transactions per year.

Depending on where you live, that means agents average less than one sale every six months to a high of once a month. I can no longer find the Missouri statistics but I believe it was somewhere around 6-7 transactions per year (basically one sale- or paycheck- every 60 days) and national statistics I've seen are closer to 4 transactions per year (one paycheck every 90 days).

- An Inman News study shows that 61% of all real estate commissions are earned by the top 25% of agents. The bottom 25% of agents only earn 3% of the total real estate commissions.

In other words, forget about the 6-7 transactions per year average. In reality a few agents are doing more than that a month and the rest are going months between transactions- and paychecks.

One theory on why the industry works this way is that success breed’s more success. However my theory is that being a real estate agent is no different than any other business- to be successful you need a solid business and marketing plan for how you are going to attract new customers and a critical mass of start-up capital to pay for the initial marketing and expenses required to be successful- and most new agents have neither.

I have seen statistics that show the average first year income for a new agent is somewhere between $12,000-14,000 (on the low end) to $22,000 (on the high end). Realty Times did a survey of people in licensing school and found that more than half of the people got into real estate expecting to make over $40,000 in their first year. 23% assumed they would make over $60,000 in their first year. (See this article.) Clearly reality and perception is out of line.

Tomorrow I'll discuss a first more year agent statistics.

[ Next Article: << More Statistics about Being an Agent (Part 3) ]
[ Previous Article: >> Interesting Real Estate Statistics... Hours an Agent Works ]

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Darin 'Sid' Cameron, CRS

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Darin "Sid" Cameron spent 15 years working in tech sales which in 1998 relocated him to St. Louis. In 2004 he took over web development tasks for Kimberly's real estate team and later became the full-time Marketing and Operations Director. In 2011, he launched two brokerages, The Realty Store, Inc. and Realty Referral Partners, Inc. Sid holds a real estate broker's license in Missouri, CRS certification and was the first CyberStar in the St. Louis area.
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