All Forum Posts by: Lindsey Johnson

One thing I wish more people realized about agent's commissions is that we're not just pocketing the whole $60k or whatever the number is that you see listed on the settlement statement. We pay all of our expenses out of that which includes: broker split (my brokerage takes 22% of the total commission, this varies by brokerage and is typically anywhere from 5-50% depending on how much support the brokerage provides and whether or not the agent is on a team), transaction fees, transaction coordinator cut, income taxes (15-20% of what's left after broker gets their cut), errors and omissions insurance, MLS fees, board of Realtors dues, required continuing education costs, vehicle and vehicle insurance plus maintenance, repairs and gas, health insurance (also health insurance for the family if they are the sole breadwinner), technology fees, desk fees (office rent), marketing materials, advertising/ lead gen, etc. If the commission is $60k maybe $10-20k of that is actual profit. If the commission is $10k, that agent is basically working for a low hourly wage. I'd pick a different job if I was working for a low hourly wage personally (one with benefits and nights and weekends off).

On the listing side: I pay all the above overhead stuff plus staging, photos (including drone photos, twilight shots, Matterport 3D virtual tour), floorplans, marketing, advertising, a deep clean, signs, open house program, the works. That's why I charge 3.2% on the listing side compared to 2.8% on the buy side. You can find discount brokerages but you get what you pay for. 

You can also totally negotiate commissions with agents. I did that before I was licensed and have done so with my clients as an agent. But keep the above in mind and be aware that if your agent is willing to negotiate poorly on behalf of themselves (many do and they end up not being in the business for long because of it), how do you think they will do negotiating on your behalf? A good agent will save you more on the transaction than they make on the commission by negotiating well and helping you avoid making expensive beginner mistakes (which I see all the time when people decide they don't need an agent or work with a cheap agent). They will also save you a lot of time by handling the transaction details so you can focus your time on however you make money or your family or hobbies. 

It can be a fun and rewarding job at times but it's also a harder one than most people realize. Agents also put the same amount of work into multiple deals and only get paid for some of them (because sometimes deals don't make it to closing, and we only get paid at closing). A lot of times it's actually really stressful too. 

A lot happens behind the scenes that clients aren't necessarily privy to and good agents spend years becoming knowledgable, learning the market inside and out to become an expert and know if a property is overpriced or a good deal, how to handle all the situations that come up and how to protect clients and keep deals from falling apart, building relationships with other agents and developing themselves professionally in order to provide value to their clients... If it weren't a high-paying job, I personally wouldn't do it. We don't get nights and weekends off, overtime pay, sick pay/ paid vacation/ any real vacation because we're always expected to be available to clients, health insurance, matching retirement plan, 401k etc. None of that which you get with a W2 job because we are 1099 contractors. Everything we make comes from the commission and if we don't make good commissions, we don't get paid well and still have all of the same overhead expenses. It's not uncommon for busy agents to work 100 hours/week so if they're not getting paid well, it's not worth it.