Quote:
Originally Posted by Jandrews
Good info notfarnow. Can you give us a little idea of what an "end" pays, without revealing too much about your personal situation? Is an end the 3% portion of a full 6% listing charge? 5 of those a month would be REAL money, no? Just trying to get an idea of how a realtor really gets paid, and what expenses do to that pay.
Thanks,
JA
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An "end" would be one half of a deal... either the buying or selling side. So, if I "double-end" a deal, I count that as two ends. So, 2 homes where I had the buyer & seller would give me 4 ends.
Commission varies. As the market has receded, there has been a lot of downward pressure on commission. Last year my average "end" gave 2.65%. Focusing on LISTINGS has put me more in control of my commission (and my time) so this year, I'm pushing up around 2.8% average.
In terms of expenses, it varies a fair bit. When I started, I figured that I needed the 2 "ends" per month to pay my bills and stay afloat. After my expenses were paid, my pre-tax paycheck was usually about 50-60% of the gross commission.
Expenses include (keep in mind these vary tremendously)
- "Split" with brokerage: usually 25-40% at the "entry level" while you are getting started
- advertising
- signs (I pay $40 to have signs put up)
- real estate board fees
SO, if you wanted to figure what you NEED to make:
Take the AVERAGE price of a home in your community:
180k locally
Multiply by the average commission:
180k @ 2.65% = $4770
substract your fees and expenses, figure 50% to be safe, to figure your AVERAGE NET INCOME PER END
$4770 x 50% = $2385
Take the pre-tax slary you want to achieve or replace, and devide by you avarage net income per end
$50,000 / $2385 = 20.96 homes you have to sell per year.
The "split" with the broker is something you always watch. When you are starting out, an agent usually wants to be on a low split where the broker is paying more of the out of pocket expenses.
As you sell more, you raise your split, but cover more of your own expenses, and usually end up paying a desk (flat) fee. I am on a high split, but I pay everything right down to my photocopies PLUS a pretty high desk fee. At 5 deals per month, after I pay my expenses I'm doing around 65-70% pre-tax. The first 3 deals or so get eaten up by expenses, the 4th one is decent and the 5th is sometimes a bit nutty.
The more listings you have, the more you are in control of your time. Excluding time at open houses, the average listing will take 5-8 hrs of my time. The average buyer takes 15-20. It takes a $hitload of work to build a reputation (and a business) as a listing agent, but once you do, you have a LOT more control over your time and income.
A strong, diverse inventory of listings will also let you cherry-pick the buyers you WANT to deal with. I qualify buyers based on how motivated they are, but also whether they are looking at homes I enjoy showing (older homes, or waterfront are fun for me), but I also like to grab buyers who just seem like fun. Then I don't care if they take a while to settle on a house... if we spend a few weeks, or even months shopping, I'm enjoying myself and it's all cool.
I try to watch the numbers pretty carefully, and chart out goals based on where I want my business to go. It's a bit of a rodeo, but once you get a feel for it you can really have a lot of fun & success. It really is a lifestyle career though, there is no such thing as "free time", ever again.