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Think REALTORS Are Rich?

The 3 local REALTOR associations released 2009 housing statistics and I started going through them and my eyes were drawn to the number of closed sales in 2009 -  45,200.

Since most sales have a Buyer’s Agent and a Seller’s Agent, we’re looking at a total of approximately 90,000 trasaction “sides.”

The Twin Cities associations have approximately 15,000 members between them.  When you divide 90,000 transaction sides by 15,000 agents you end up with an average 6 transaction sides per agent.  Taking into account commissions and average sales price, the “average” REALTOR in the Twin Cities makes somewhere between $30,000 and $40,000 per year in gross commissions.

From the $30,000 – $40,000 per year in gross commissions, they have to pay:

  • Commission splits with their broker (often 10% – 50%)
  • Gas & car maintenance (IRS says it is $.55 per mile – 5,000 to 15,000 miles/yr is easy to do)
  • Technology (cell phones, computers, printers, etc – can easily be $500 – $1000 year)
  • MLS & lock box fees (approx $540/yr)
  • REALTOR membership fees ($350/yr)
  • FICA taxes (15%, twice that of W2 employees)
  • Healthcare costs (brokers don’t buy their agents health insurance)
  • Marketing costs (typically 5% – 10% of income)

The “average” REALTOR isn’t making much money at all!

If you get into it though, you’ll see a large number of REALTORS do not sell anything in a year – they hold onto their license for myriad reasons but don’t actively sell.  We also have many agents that are part-timers or semi-retired and only do a few sales a year, so these can also drag down the numbers substantially.

There are also agents that are making decent income and do this as their full-time job - in 2009 they had to sell more houses to make the same money but they are still earning a fair salary.

The last segment of REALTORS are the stars and superstars – these agents often sell dozens of houses per year or more - some agents are in teams that can sell 100+ per year – and these agents are financially very successful.

Regardless of how much a REALTOR makes, I believe nearly every one of them would say this job is far more difficult and time consuming now than at any time in the last decade.  It seems almost every sale has a speed bump or four and some have gigantic road blocks that take forever to get around or sometimes cannot be avoided.  If anyone questioned whether agents earn their commission, I’d say today that the ones that are working hard and doing right by their clients have earned every penny.

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This website is a service of Aaron Dickinson of Edina Realty, a broker Participant of the Regional Multiple Listing Service of Minnesota, Inc.