Where's the Money in Being An Agent?

CO · Member since 2014 · 166 posts · 44 votes

I'm really having trouble seeing where the money comes from from being agent. It seems that if you're not selling 12, 20, 30 homes that it's extremely difficult to make a living. From the experiences I've heard it's hard to even sell 5 or 6 houses a year. Take away the marketing money and the commission split and you're left with almost nothing. Can someone help clarify this for me? Speaking from your own personal experience? Thank you so much in advance!

Johnny Lujan

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Joel OwensBusiness Member

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Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes

11y

The reality is no matter the profession chosen the strong not only survive but thrive to heights not reached by many. Decide what you are passionate about taking the money out of the equation and make the decision to be the best at it.

Most people in life are just mediocre. Mediocre eeks you out a living. Mediocre makes you just a number. Mediocre let's you set low goals and not challenge yourself to see what REALLY is possible.

Being mediocre is a CHOICE. Most people see the success but they do not see the hard work behind the success. They want a quick buck with little effort. Some of the greatest achievers I have read about in books and watched documentaries on failed and fell flat on their face many times. They never gave up. It is tough. You will be challenged everyday to get better.

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Jon Magnusson
Cobble Hill, BC · Member since 2015 · 56 posts · 25 votes
11y
Don't forget that you can always become a Broker too. Less commission to split and you get a piece of other's success. I think it all comes to how well you network and how much you're willing to sacrifice.
1 Reply
James Barnes
Rental Property Investor · Mechanicsville, MD · Member since 2015 · 123 posts · 62 votes
11y
Originally posted by @Alexi Correa:

Real Estate is like any other career you get out what you put in. I got my license in March 17 2015 and I had my savings and checking accounts in -350 dollars. Since then and as a newbie, I have been able to put 25k in my bank account, I have two properties under contract and Wholesaled one with the help of an attorney. I'm currently in the process of negotiate a 15k commission deal. So don't pay attention to others failures and focus on what your goals are. Good Luck!!!!
@Johnny L.undefined
Nice Alexi,
Awesome Success. Are you also investing in real estate as well?
To everyone: What are the perks of being a an agent if your main goal is to invest?
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Rafael Norat
Investor · Lodi, NJ · Member since 2013 · 487 posts · 179 votes
11y
As a fix and flipper, I like to work with good agents and give them both the buying and selling side of things. That way they get paid on both ends and hopefully establish a long term relationship. Also, possibly incentives for selling quicker. Maybe find such partners and establish relationships were you know they will be repeat customers..
Hope that helps..
1 Reply
Alexi Correa
Investor · Edgewood, MD · Member since 2015 · 13 posts · 7 votes
11y
I'll probably start investing next year, I'm still having fun with my license. I have see superb deals and I have been passing them on to investors around the area and just collecting a finding fee. As per your question: I have been approached with many deals and I can see where having my license will save me so much money.
Good luck to all and thank you for your time and knowledge. I have learned more here than I did in my real estate course.
@James Barnesundefined
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Johnny L.
OP
CO · Member since 2014 · 166 posts · 44 votes
11y
Originally posted by @David Hunter:

I remember hearing the average agent makes like $35,000/year.
Look at the agents who have "teams." They're the ones making a killing. They have buyer's agents and selling agents. They have an office manager.
That's the way to make the big bucks.
I have heard the same statistic and that's what scares me!
Yeah I have seen those teams definitely looking at becoming a part of one. They have all the skill sets needed and really seem to do a lot of transactions.
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Johnny L.
OP
CO · Member since 2014 · 166 posts · 44 votes
11y
Originally posted by @Mark Ferguson:

Originally posted by @David Hunter:
I remember hearing the average agent makes like $35,000/year.
Look at the agents who have "teams." They're the ones making a killing. They have buyer's agents and selling agents. They have an office manager.
That's the way to make the big bucks.
Right on. The average agent makes just under $40,000 a year now. The reason is many agents are part-time and most of the agents who are full-time don't know how to run a business or make themselves do what it takes to succeed.
The awesome part about being an agent is when you get to a certain level it is not all about working as many hours as possible to make as much money as possible. It is about leveraging your time by hiring staff and other agents to sell for you. I have 9 people on my team now with 6 licensed agents. It used to be all me selling 150 to 200 houses a year and now I sell about half that and make more money thanks to my team.
I heard the 80/20 analogy and it seems more like 95/5 to me as far as 5% of the agents make 95% of the money. A small number of agents make the money because only a small number of people take the time to plan their business, train themselves and keep working hard when times are tough.
That's amazing it's under 40k, that's what makes me so eery of the business, but as you said many are part time or do not know how to even run a business! I guess becoming part of the right team and having the right mentor is huge so you can be guided in how to run your own business.
That does sound awesome! Once you get to that certain level I imagine it's a whole different business that you're dealing with but more beneficial. So nice that you have had the opportunity to build your business to that point.
Makes sense, now making it to that 5% is certainly a challenge but a fun one to tackle. Wish you were located in the Springs area, you sound like the perfect mentor and team to work with! Thanks so much for your time and advice Mark!
Thank you,
Johnny Lujan
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Johnny L.
OP
CO · Member since 2014 · 166 posts · 44 votes
11y
Originally posted by @Alexi Correa:

Real Estate is like any other career you get out what you put in. I got my license in March 17 2015 and I had my savings and checking accounts in -350 dollars. Since then and as a newbie, I have been able to put 25k in my bank account, I have two properties under contract and Wholesaled one with the help of an attorney. I'm currently in the process of negotiate a 15k commission deal. So don't pay attention to others failures and focus on what your goals are. Good Luck!!!!
@Johnny L.undefined
Great advice! Keep up the good work! Sounds like you're doing awesome!
0 Reply
Matt Cramer
Residential Real Estate Agent · Rochester, MI · Member since 2012 · 152 posts · 52 votes
11y
Originally posted by @Johnny L.:

I'm really having trouble seeing where the money comes from from being agent. It seems that if you're not selling 12, 20, 30 homes that it's extremely difficult to make a living. From the experiences I've heard it's hard to even sell 5 or 6 houses a year. Take away the marketing money and the commission split and you're left with almost nothing. Can someone help clarify this for me? Speaking from your own personal experience? Thank you so much in advance!
Johnny Lujan
You answered your own question. You need to sell 12, 20, 30 or even more homes a year to start seeing the real money or sell higher priced homes. The money is there, you just have to go get it. Hard to sell 5 or 6 homes a year? Yes at first it seems that way, as you grow it becomes hard to sell 5 or 6 a month then 5 or 6 a week etc. Just have to go at it with determination and be willing to do what needs to be done when it needs to be done.
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Matthew Paul
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
11y
If it were easy , everyone would be doing it . if everybody starts doing it , nobody makes money .
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Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
11y
My business model is highly unusual.
Had about 50 agents years ago and didn't like it.
This was on the residential side. Thought was to build it up and have the big companies by out the roster. Lot's of headaches with residential agents.
1. Licenses lapse notices from state commission 2. Not completing education requirements 3. IRS tax levies on agents commission for back taxes 4. license suspended for back child support 5. license suspended for student loan delinquencies 6. The agents do maybe one to two deals a year so they are rusty and the broker steps in to save the deal while only getting a nominal transaction fee. ( I could go on and on but I will stop )
Maybe only 2 out of 10 agents you have will close something a month in residential. These were just my stats I found. If you had 50 agents and 10 closed 1 property a month on average for a 400 trans fee that is 4,000 a month gross for babysitting 50 agents BEFORE business expenses and taxes. I just found it to be a massive waste of my time. Eliminated all of that.
The problem with teams is you need volume. If transaction volume drops or the market shifts and you have high overhead it can take down your profit quickly. I saw many REO giants doing hundreds of deals years exit out completely or cut out 90% of their workforce to keep the doors open when volume evaporated. Some waited too late and their business sank like to Titanic never to recover.
The 40,000 agent average isn't even accurate. They take high earners and low earners and average the two. So what really happens is the majority might close 1 or 2 deals a year and make 10k to 15k and then you have a very small percentage doing six figures and then it averages to 40k etc. I think the broker average is around 65k but I last checked years ago so my numbers may be way off.
These days I have my investments and work with clients one on one. In my world of commercial where each check averages six figures you only have to do so many of those a year and invest to create a happy life for yourself where you are not working to death.
As I get older I want to keep it simple and relax.
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Dion Boose
Redford, MI · Member since 2015 · 5 posts · 4 votes
11y
A ton of great ideas shared! Best of luck getting out there.
@Johnny L.
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Karen MargraveBusiness Member
Moderator
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
11y
@Johnny L.
Though I am a licensed agent, I don't really work as an agent anymore. I started in real estate working in an office where I was an executive assistant and ran the office. I did all advertising, floor schedules, etc. I can tell you without a doubt, the agents that made the most money were the ones that KNEW the inventory, would return calls in a reasonable time, stayed on top of the listings or sales, and went out and networked.
Real estate agents can make huge sums, but it takes hard work and dedication to get established. Referrals are the name of the game, so good service is a must.
Maybe @Joel Owens agent extraordinaire will weigh in, I have never met him, but can tell from his posts that he's a professional agent, and takes his business seriously.
1 Reply
Brandon Uehlein
Real Estate Agent · Cleveland, OH · Member since 2015 · 58 posts · 34 votes
11y
@Johnny L.
Work, work, work! Real estate is a 24/7 job. A lot of people try to only work a few days a week and that does not cut it. Marketing is key. Get your name out there! Property management is a great aspect to consider if the market is right. Think, some people want to buy 10+ rental properties! Good luck to you and your future endevors.
1 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
11y
@James Wise
You crack me up half your post counts are welcomes. so don't spout about those. LOL
but your doing a great job as an agent no doubt bringing in many investors into your deals.
I started as a RE agent in 1975 and made 50k my first year... now that's probably 250k or better in todays dollars.. I made great money for 15 more years.... and if I stayed in SFR residential I would be making 500k a year in the bay area with out really doing anything but working my referrals.. but I grew board of working with the public and went in to lending money which is still working with the public but mainly investors.. and of course as James will no doubt attest to there is a LOT o money in the US never know when some person calls you and it becomes a very nice gig.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
11y
@James Wise
and to follow up many of my top tier investor I work with over the years are now my investors in the lending arena and or doing major deals with me.. I would Have NEVER met them if I was not a RE agent selling them a home.
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Joe Bertolino
Investor · El Dorado Hills, CA · Member since 2012 · 1k+ posts · 1k+ votes
11y
In my area the average home price is $515k. I know agents that do fairly well selling 8-10 houses a year to gross six figures. Those will larger teams will sell 40-50 and double end 1/3rd of their deals. 20% make 80% of the money. I have no idea how agents in lower cost areas make money. It takes a lot of $100k houses to make a decent living.
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Dawn BrenengenBusiness Member
Moderator
Real Estate Broker · Raleigh, NC · Member since 2014 · 2k+ posts · 1k+ votes
11y
I would be surprised if there was an agent who was more than one year in the business, working full time and only making $35k/year. I think those stats include a lot of part time agents, stay at home moms with a license, retirees who have the occasional sale. You have to give yourself some time to learn the business, learn how to market yourself, learn how to be a good agent (responsive, on top of deadlines, familiar with the laws and contracts), but once that is all done, there shouldn't be any reason to make so little money. Maybe if you are in a very inexpensive market?
I actually put very little time into marketing myself as a sales agent because I also run a property management business, but I still have managed to sell around 15 homes so far this year equaling almost $3 million in volume. I've been doing this for a long time, so I do realize it's not as easy when you are first getting started, but if you put in the work and have the right personality/mindset, you should see the success.
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Joel OwensBusiness Member
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Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
11y
I think it is tough for newer agents because in the beginning they are working with people starting out to see what sticks.
They have not devised a screening strategy to not waste time. If a broker/agent hones their craft over the years they get extremely good at what they do. People can tell by interacting their level of knowledge and experience right away.
Commercial is all I do day in and day out. I focus on nothing else. People need to pick one thing and get AMAZING at it. If you are mediocre at 5 things then you make a sale here or there but do not stand out in that niche. The larger deals the clients want the best on their team. You do not get there by being mediocre.
If there is something I do not know you better believe I am working on learning it. If I already know something it doesn't mean I am not trying to get that much sharper at it then yesterday. Each day I am confident in my knowledge but wipe the slate clean for maximum learning in the moment.
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Carson Sweezy
Rental Property Investor · Fairfax, VA · Member since 2014 · 328 posts · 101 votes
11y
@Joel Owens I just got my license and want to get into commercial. How can I work the residential business to best set me up for a career in commercial real estate down the road?
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Joel OwensBusiness Member
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Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
11y
Forget residential. Go straight to commercial with a big firm to get trained up.
Two different universes.
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Johnny L.
OP
CO · Member since 2014 · 166 posts · 44 votes
11y
Originally posted by @Matt Cramer:

Originally posted by @Johnny L.:
I'm really having trouble seeing where the money comes from from being agent. It seems that if you're not selling 12, 20, 30 homes that it's extremely difficult to make a living. From the experiences I've heard it's hard to even sell 5 or 6 houses a year. Take away the marketing money and the commission split and you're left with almost nothing. Can someone help clarify this for me? Speaking from your own personal experience? Thank you so much in advance!
Johnny Lujan
You answered your own question. You need to sell 12, 20, 30 or even more homes a year to start seeing the real money or sell higher priced homes. The money is there, you just have to go get it. Hard to sell 5 or 6 homes a year? Yes at first it seems that way, as you grow it becomes hard to sell 5 or 6 a month then 5 or 6 a week etc. Just have to go at it with determination and be willing to do what needs to be done when it needs to be done.
Yeah i guess you're right I did answer my own question! That's a very good point starting out it seems impossible but as you gain experience and grow it will start to come more natural. Very good advice coming from a successful young agent as yourself! Thank You!
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Johnny L.
OP
CO · Member since 2014 · 166 posts · 44 votes
11y
Originally posted by @Joel Owens:

Forget residential. Go straight to commercial with a big firm to get trained up.
Two different universes.
I am highly considering it! Always been interested in commercial and the way you make it sound is that it's much better than residential. Man Joel you're really making me think about commercial, ha!
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Johnny L.
OP
CO · Member since 2014 · 166 posts · 44 votes
11y
Originally posted by @Dawn Brenengen:

I would be surprised if there was an agent who was more than one year in the business, working full time and only making $35k/year. I think those stats include a lot of part time agents, stay at home moms with a license, retirees who have the occasional sale. You have to give yourself some time to learn the business, learn how to market yourself, learn how to be a good agent (responsive, on top of deadlines, familiar with the laws and contracts), but once that is all done, there shouldn't be any reason to make so little money. Maybe if you are in a very inexpensive market?
I actually put very little time into marketing myself as a sales agent because I also run a property management business, but I still have managed to sell around 15 homes so far this year equaling almost $3 million in volume. I've been doing this for a long time, so I do realize it's not as easy when you are first getting started, but if you put in the work and have the right personality/mindset, you should see the success.
Those are some good positive comments! I believe the same, if someone is working full time and has experience there shouldn't be a reason why they aren't making more money. It takes time, I have to keep that in mind.
Great advice, how's the property management business going?
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Johnny L.
OP
CO · Member since 2014 · 166 posts · 44 votes
11y
Originally posted by @Joe Bertolino:
In my area the average home price is $515k. I know agents that do fairly well selling 8-10 houses a year to gross six figures. Those will larger teams will sell 40-50 and double end 1/3rd of their deals. 20% make 80% of the money. I have no idea how agents in lower cost areas make money. It takes a lot of $100k houses to make a decent living.
Hey Joe!
I was thinking the same thing, sounds very tough for those selling the 100k to 200k houses to make a substantial amount of money. The market really does play a role.
Thank you!
Johnny Lujan
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Johnny L.
OP
CO · Member since 2014 · 166 posts · 44 votes
11y
Originally posted by @Carson Sweezy:

@Joel Owens I just got my license and want to get into commercial. How can I work the residential business to best set me up for a career in commercial real estate down the road?
I'm curious of the same thing! Rather which side to get into
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