Home Buying in Antioch>Question Details

Wil, Home Buyer in Antioch, CA

New agent average pay

Asked by Wil, Antioch, CA Thu Sep 27, 2012

I am curious about a few things. I have considered moving from general management to Real Estate. I live in the San Francisco Bay area and looking at mostly the Contra Costa county area. I am curious to know honest opinions on a few things. First I know that this can vary depending on every person and their ability but an average for an average agent would be helpful. Please also consider the market in the state it is in now and not how it was in the past.

1. What can a beginner agent expect to make first year on average assuming they are average at the job, not great not horrible just average.

2. How long on average would it take for the same type of agent to see a first paycheck.

3. What is considered an average % a new agent should be paid from the brokerage and what would be considered fair in terms of fees?

I know these can all sway greatly depending on the person so a general ballpark would be great.

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Answers

13
Part 1:

With all due respect, I disagree with John Souerbry (and I'm not trying to recruit you):

You ask:

Q: What can a beginner agent expect to make first year on average assuming they are average at the job, not great not horrible just average.
A: Since you are asking about average, I’ll give you numbers based on 50% of the “active” agents in Alameda County (TrendGraphix):
• Total Realtors shown as active: 8,271
• Maximum number of transactions a year for the bottom 50%: 2
• Average sale price (all types of properties) in Alameda County was $497,000 (8/2012). The average buyer side commission is 2.5%. If your split with your broker is 60%, your paycheck will be $7,455. If it’s 70%, you will get $8,697.50. Multiply by 2 … your yearly income is $17,395. And that’s BEFORE you pay for your license, MLS fees, E&O insurance, desk fees, franchise fees, training, auto expenses, phone, internet, etc.

Let’s assume you’re NOT average and in the top 85% – you will have done a maximum of 6 transactions:
• At 6 transactions, your typical income IF at a 70% split would be approximately $52,185.
• You could reasonably expect to pay fees of $7,000 for the privilege of being a Realtor. This does not include the advertising, websites, auto expenses, computer, phone, etc. and any other fees associated with related services you subscribe to. Now your income is down to $45,000 … or less.
• Most beginning realtors function on the lower end of the market, therefore the average price of $497,000 could easily be much lower. If your average sales price were to be $350,000, your subsequent net income would now be down to about $29,850.

Let’s imagine you’re in the top 94% - out of 8,271 Alameda County agents, only 473 sold more than 12 homes in the past 12 months – 1 a month. 94% sell 12 or less a year. At that rate, your split could go to 80-90%, and your income would obviously be higher. You might, as an exceptional top-rated agent, make approximately $120,000 … BEFORE expenses. Just an aside here – it takes LOTS of money in advertising, transaction costs and so on to make this level of income. A BIG chunk goes back into the business. The adage, “It takes money to make money” was never truer than in real estate.

More data for the past 12 months in Alameda County – out of 8,271 agents:
• Agents who sold 24 homes or more – 144 (1.74%)
• Agents who sold 30 homes or more – 94 (1.14%)
• Agents who sold 36 homes or home – 59 (0.71%)
• Agents who sold 42 homes or more – 37 (0.45%)
• Agents who sold 48 homes or more – 25 (0.3%)
• Average sales price for the top 10% - $368,647
2 votes Thank Flag Link Fri Sep 28, 2012
Part 2:

Q: How long on average would it take for the same type of agent to see a first paycheck.
A: An absolute minimum of 2 months – in most cases, it’s 6 months or longer.

Q: What is considered an average % a new agent should be paid from the brokerage …
A: It’s not unusual to see a new agent getting a 60-70% split from a large, well-managed and successful brokerage … but you have to realize that this really means nothing until you actually start selling homes. There are plenty of brokerages who provide a higher split, but they’ll also not provide any meaningful support or training … and you’d better believe that a HIGH degree of training is required to be successful. Good training costs money. Lots of it. Larger brokerages tend to provide training free of charge – this is factored into their split arrangement.

If you join a team (the approach I recommend), then your split could range from 30-50% - BUT, you’d be in the middle of a successful venture and get a firsthand look at how the business really works AND, as is the case with teams like ours, a steady flow of high-quality leads to work with (I’m not recruiting). To be honest, generating quality leads is the bottom line to this business and is a very illusive target for many new agents.

Q: and what would be considered fair in terms of fees?
A: Here are some approximate numbers (and keep in mind, these need to be paid regardless of whether or not you close a single deal):
• MLS fees: $1,600-$1,850 a year.
• E&O insurance: approximately $1,500 - $1,800 a year (some brokerages deduct this from your first transactions).
• Desk fees: $100-$300 a month.
• Franchise fees: 4-6% taken off the bottom of every transaction (in addition to your split)
• Advertising/Marketing: $150 a month bare-bones minimum.
• Phone: must have a smart phone and plan to pay for unlimited voice, texting and data
• Websites: $75-150 month
• You need a decent car and have insurance so you can drive clients around.
• And so on … to be honest, the sky is the limit depending on how much social media you do and what types of services you pay to coordinate everything. Technical support can also add up to make sure everything works together seamlessly.

Bottom line – this is not a vocation for the timid. Let me know if you have any other questions.
2 votes Thank Flag Link Fri Sep 28, 2012
There is no answer to any of your questions. There is no such thing as "average" in the real estate business. Anyone who tells you different is either A) trying to recruit you to their brokerage or B) full of ****.
If anyone responds to your question with a recruiting pitch, run from them. Why would anyone try to recruit you without first seeing your resume and knowing something about you? Don't get caught by a broker playing a "numbers game" and messing with your career.
If anyone responds to your question with "average" information - discount it. Question the source. Sure, some offices keep statistics that answer your question, but the sample size of the agent population is far too small to consider accurate.
Don't worry about "averages." As I said, there are none that apply to your unique situation. There is no average agent, average income, or average brokerage split. It's all up to .... you.
2 votes Thank Flag Link Thu Sep 27, 2012
No kidding ... you either have to excel or get out. Or never get in … and it’s getting harder every month because of all the new regulations, bank nonsense and so on. . .

Every time I run the numbers I’m astounded at how many agents in Alameda and Contra Costa counties are not making enough to survive. I can only assume that they’ve got other income coming in from somewhere else (spouse, regular job, annuity, etc.). For us full-timers, it’s either produce or die.
1 vote Thank Flag Link Fri Sep 28, 2012
You won't survive as a realtor if you are average and depend upon real estate sales as your sole income. In Palo Alto 361 agents completed at least 1 sale so far this year. Only 3 agents have completed more than 10 sales in Palo Alto.

If someone leaves a career where they had contacts with many people, they may be quite successful their first year (a new coworker just did this). Other people can spend a lot of time waiting for something to happen and never make enough money to pay their fees. Average is meaningless when talking about real estate agents.

If you are thinking about getting into real estate the key questions you must find honest answers to are:
1.) Will you constantly push yourself to find answers? YOU have to find them.
2.) Can you budget and do you have the resources to go without income for months?
3.) Will your personal life adapt to the demands of the job? Don't even think 9-5, M-F

You will probably be competing with people who love the work almost as much as they love life.

If you decide to jump in and swim in the real estate pool, I strongly recommend Keller Williams. I've worked for several real estate brokerages and recommend Keller Williams. Different brokerages have different "accounting methods" but the costs are close enough you should pick a first brokerage which has a helpful environment. KW puts effort into making their agents a family.

Juliana Lee, MBA, LLB
Top 3 agent nationwide at Keller Williams Realty
Over 1000 homes sold in the South Bay
Over 20 years experience.

650-857-1000
Web Reference: http://www.julianalee.com
0 votes Thank Flag Link Tue Oct 2, 2012
Not trying to be a smart A__. But I would say nowadays anywhere from 0 to $1,000,000 would be a reasonable answer. Now if you had gotten into RE in eary 2000's and could fog a mirror you would have probably made a killing.

RE is definitly not for the faint of heart or folks that like the comfort and security of a weekly salary. If you're concerned about a guarantee you may want to consider another area of RE i.e. escrow, title, administrative i.e. tech support for a mover and shaker that could mentor you until you are prepared to go it alone without any guarantees.
0 votes Thank Flag Link Mon Oct 1, 2012
I sincerely appreciate the responses. I am considering this still but after reviewing the responses I need to form a good strategy. I think I may look at assisting a good agent to start and going from there. I will have to wait until after the first of the year as I have to ensure my finances are in proper order as well but overall I think I would enjoy the realestate business. I am lucky in that I am skilled in IT and have some great connections in commercial investors so I may want to look at doing that route as well.

Again, thank you all for the great info, this gives me something to mull over and begin to formulate a game plan.
0 votes Thank Flag Link Fri Sep 28, 2012
Use all the skills to your advantage and talk to an agency that has a supportive Broker that may (may not) enjoy your skills and use you those to the entire offices advantage and or a good sphere of influence to let them know of the new career direction. Good Luck had I known I would have done this well in this business I would have done this years ago.
Flag Fri Sep 28, 2012
With all due respect to Carl... interesting numbers.
And Bernard, I agree... what the hell were we thinking...
Carl's answer is both very responsive to your question and generally good information to ponder regarding your possible entry into the real estate sales industry.
But there's a big gorilla in the room that should also be considered - most agents fail in their first year. Of those that make it through their 1st year, a high percentage drop out in their 2nd year. Those statistics are not presented in Carl's numbers. To make the data more applicable to your situation, you would need to parse Carl's numbers into those experienced by agents in their 1st year, 2nd year, and so on. After all, you asked "What can a beginner agent expect to make first year on average..." You didn't ask what agents with 2 or more years experience are doing....
What I believe you CAN take from Carl's numbers is that there is a huge range of income within the population of all agents. Your business plan (target market, niche focus, choice of mentor, start up capital, etc.) will greatly influence your earning potential and whether or not you will eventually contribute to raising or lowering industry averages.
0 votes Thank Flag Link Fri Sep 28, 2012
Great statistics, Carl. It makes you wonder why any of us ever got in to this business based on average expectations :-)
0 votes Thank Flag Link Fri Sep 28, 2012
The average agent in the USA according to NAR does 4-6 deals per year. Living in CA 4-6 deals a year in this market value is hardly surviving in my opinion unless you can score in the estate level sales.
If you really want to get in this business I would look into starting as a lisenced assistant or buyer's agent for a top Realtor. Most people get so caught up in splits they don't see the value in working for someone that is making it through this market and economy.
It's rough out there right now with low inventory , lending, marketing for leads , and so much more.
The education working with a "closer" "survivor" is priceless.
0 votes Thank Flag Link Fri Sep 28, 2012
Hello-

1. It depends. You need to choose a supportive agency with a great broker. Also having a great mentor who will get you there and support you will help a lot in your success as will if you are truly cut out for the job.

2. I saw my first pay check within a few weeks after starting. However most of it went to pay my E&O.
It took nearly 8 months to be way ahead of my last job.

3. There are a lot of hidden fees in this business so make sure your broker and mentors spell this out for you it will help as you progress. The more sales you have the better your % will be.

The market varies where you are so in theory where I live it's 'hot' if priced to sell. It's not nearly where the market was years ago but we're seeing multiple offers. I have also been very lucky and successful but I define it a lot like dating. So location and support and patience are good things to repeat.
I also think it's like starting your own business. Having a supportive family and give yourself a full year to get up and running. Patience helps in so many ways in this business. Good Luck.
0 votes Thank Flag Link Fri Sep 28, 2012
The average agent is lucky to break even the first year. That is one of the reasons that turnover is so high in our industry. If you come in with a few sellers lined up and some buyers waiting you are off to a better start. Make sure you have 6 months of reserves saved because it takes a while to get that first check.
0 votes Thank Flag Link Fri Sep 28, 2012
Yes, it varies a lot and there are a lot of overheads. There are 100% splits (less fees) and there are 50% splits. I think you should interview with at least 4 companies, all of different types. A RE/MA, K-W, small local, etc. and see what they offer.

Unless you are pretty good, don't expect to gross more than $50K in year 1.

Now if you are really good, the sky is the limit. Millions of dollars in income can be made if you acn survive and thrive for 5-10 years.
0 votes Thank Flag Link Thu Sep 27, 2012
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