"Theresa, Is this video really applicable to today?
Aren't agents making money left and right? After all they get a big chunk of the sales price, right?!?"
Well, I hate to break it to you... Selling Real Estate is hard!
To be honest, most agents need a side job to be able to stay above the poverty line.
Don't Believe me? Let's look at some numbers.
Here's a look at some basic numbers:
| Persons in Family | 48 Contiguous States and D.C. | Alaska | Hawaii |
|---|---|---|---|
| 1 | $10,890 | $13,600 | $12,540 |
| 2 | 14,710 | 18,380 | 16,930 |
| 3 | 18,530 | 23,160 | 21,320 |
| 4 | 22,350 | 27,940 | 25,710 |
| 5 | 26,170 | 32,720 | 30,100 |
| 6 | 29,990 | 37,500 | 34,490 |
| 7 | 33,810 | 42,280 | 38,880 |
| 8 | 37,630 | 47,060 | 43,270 |
| For each additional person, add | 3,820 | 4,780 | 4,390 |
Okay, Let's say our hypothetical agent is a family of One.
How much volume does one agent need to sell to be above the poverty line?
Assumptions:
1) They work in a traditional Real Estate Firm that starts the commission splits at 50/50
2) The agent has no other out of pocket business expenses like Marketing and Advertising.
3) The average commission on each sale is 6% which is split between the listing and selling broker 3%-3%
If we want to find the sales volume needed to
make $10,890 in commission we must first divide it by 3%
$10,890/.03 = $363,000
But then we need to account for the Firm's 50/50 Split
$363,000/.5 = $726,000
To be AT the poverty line as a family of one, the agent must sell $726,000 a year.
You say "Oh but that's easy... aren't homes selling at $300,000 a pop?"
Actually in our market, last year's Average Sales price was $166,271.
That means our agent would need to sell at least 5 homes to be above the poverty line.
You say...
"I see tons of house for sale, so they must be making it up with lots of volume"
Actually, Last year only 1,335 homes sold
You might think that's a lot
but...
There are roughly 426 Agents in town.
If all agent sold an equal amount of homes, each agent would only sell 3 homes per year and every agent would be living in poverty.
We know life is not fairly distributed, some agents are just better than others...
"So how many agents actually sell over $726,000 per year?"
Good Question!
In 2010, only 167 agents sold more than $726,000!
Which means 259 other agents in town either lived in poverty, had side jobs, or were so wealthy they didn't need money.
