HARDISON’S TIPS – APRIL 28, 2021 – IS REAL ESTATE SELLING FOR YOU? (PART THREE)
Working With Real Estate Clients
You’ll spend part of each day working directly with clients, whether they’re buyers, sellers, or renters. And keep in mind that it won’t always be during business hours. That means you may have to sacrifice some of your personal time—time you spend with family and friends. If something pops up at the last minute, it may mean canceling your existing plans.
As a seller’s agent, you’ll spend time preparing listing presentations, taking digital photographs of properties, staging homes so they show well, marketing properties, and hosting open houses.
As a buyer’s agent, you may spend time combing through the Multiple Listing Service (MLS) to find suitable listings and sending them to potential buyers. You’ll also show the property to interested buyers and accompany your clients to inspections, meetings with loan officers, closings, and other activities where your presence is either required or requested.
Are you comfortable working with the public? Can you maintain enthusiasm and professionalism, even when you have a tricky or demanding client?
Real Estate Agent Earnings
Most real estate agents and brokers don’t earn a salary. Instead, they make money through commissions, which are usually a percentage of the selling price of the property, or, less frequently, a flat fee.
In general, commissions are paid only when you settle a transaction. Ultimately, this means that you could work hard for days, weeks, or even months without taking home any money at all. Like other commission-based jobs, it can be feast or famine.
The average annual pay for a real estate agent.4 For real estate brokers, the figure is $57,274.
Of course, when you do close a sale, you generally don’t keep the entire commission. That’s because commissions are usually shared with the other agents and brokers. In a typical real estate transaction, for example, the commission might be split four ways:
- Listing agent: The agent who took the listing from a seller
- Listing broker: The broker the listing agent works for
- Buyer’s agent: The agent who represents the buyer
- Buyer’s agent’s broker: The broker the buyer’s agent works for
Here’s an example. Say a sales agent takes a listing on a $200,000 house with a 6% commission. The house sells for the asking price, so the listing agent’s broker and buyer’s agent broker each get $6,000—half of the $12,000 commission.
Next, the brokers split the commissions with their sales agents—say, 60% for the sales agent and 40% to the broker. So, each sales agent receives $3,600 ($6,000 X 0.6), and each broker keeps $2,400 ($6,000 X 0.4). The final commission breakdown would be:
- Listing agent—$3,600
- Listing broker—$2,400
- Buyer’s agent—$3,600
- Buyer’s agent broker—$2,400
Do you have the financial reserves to go weeks or months without a paycheck? Are you OK with an uncertain income? While many real estate agents and brokers work part-time, the most successful ones are available whenever their clients need them—whether that’s during business hours, evenings, or weekends. Are you OK giving up your nights and weekends? Are you in a position to dedicate that much time to your career?
The Bottom Line
If you are comfortable with these realities—and you enjoy hard work, are a self-starter, and like the idea of making your own schedule—a career in real estate might be right for you. If you sell enough properties, you can earn a very comfortable living.
A career as a real estate agent or broker can be both challenging and financially rewarding. But keep in mind that there are many different unique opportunities for anyone who wants to work in the industry. You could be an agent or appraiser, or a professional or investor. You might decide to work strictly with residential properties or perhaps you’re more interested in commercial buildings. Whatever you choose, be sure you meet the job requirements and are prepared for hard work.