How Much Money Do Real Estate Agents ACTUALLY Make?
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How Much Money Do Real Estate Agents ACTUALLY Make?

How’s it going everyone welcome back to
another video. In this video we’re going to be talking
about how much a real estate agent actually makes. What I want to do is really break down splits,
costs, and percentages to show you the bottom line, take-home pay for real estate agents. And I’ve seen a few other videos on YouTube
out there like this but none of them really showed an accurate amount. Some were way too high, some made it seem
like agents make minimum wage. The real answer is of course somewhere in
between so with that being said, let’s dive into a real life example so you can get an
idea of the actual take home-pay. So let’s get started. By the way, if you’re not already subscribed
to my channel, be sure to do so for weekly real estate videos. Ok what we’re going to do here is look at
the sales price of a property in my area at $400,000. We’re going to look at the buyer’s side
in this video. What you need to know is that the seller will
pay both the buyer’s and the listing agent’s commission. The listing agent’s commission can vary
drastically anywhere from $500 flat fee and I’ve even seen some as high as 4%, but usually
on the listing side it will be anywhere from 2% – 3%. Ok so let’s look at this example. $400k is the sales price. In Arlington, the commission for the buyer’s
agent is 3%. 58% of properties right now are offering 3%. About 40% are offering 2.5%. If you average these two together, I know
it’s not a perfect science, you get about a commission of 2.75%. To give you an idea, go over to D.C. and a
majority of the commission is 2.5% but we’ll use 2.75% because that’s more in line with
where we’re at and what I see everyday. Ok so with that being said, we’re at $11,000. Now most agents in the area are affiliated
with a large brokerage. Century 21, Re/Max, Keller Williams, and these
brokerages take a franchising fee. This is to use the name, branding, the perks
that come with having your license held under the broker. Now it’s important to remember all these
numbers are going to be different, I’m just going to go with the industry average, from
what I’ve heard, is around 6% off the top, goes to the broker. So now we’re at $10,340. The next amount of money that gets taken out
is your split that you’ve negotiated with your broker. There are 100% splits out there for some brokerages
where you get to keep all your commissions, but you don’t really get much in return,
maybe you do. And these splits are negotiable and if you’re
thinking oh I’m just going to negotiate a 100% split with my broker and keep all the
money. Well if you’re paying any money to your
broker, how can you expect any value in return? If you’re a new agent, your split might
be 50% where 50% of your income is going to the broker for a certain period of time. Let’s meet right about in the middle…let’s
do 70% split, just kind of like a nice round whole number and it’s a more accurate representation. Now we’re down to $7,238. Guys it’s 2018, most agents are on a team. Because of the way a team works, you as the
buyer’s agent will be paying money to the team lead or CEO or whomever is in charge
to be apart of a highly-producing team, right? They put the systems in place, you succeed,
and you throw them a percentage at settlement. This could vary as well. We’re going to use 15% as the split paid
to your team. You may not have a team, you may pay a lot
less, you may pay more, we’ll use 15%, that brings us to $6,152.30. I think we’re pretty much done here. The last thing that is usually taken out is
what’s called the desk fee or admin fee. This is another charge that the bigger brokers
include as a fee to help out with admin expenses. I’ve seen some agents pass this on to their
clients. For me, my thinking is that my client just
bought a house, I don’t want to hit them with a little extra fee, so I pay this fee,
lots of other agents pay this. This fee varies, we’re going to use $450. That’s going rate. That brings us to $5,702.30. That amount is the take-home pay for the buyer’s
agent on a property that sold for $400,000. NOW, there are additional costs that will
eventually be deducted. For example. This amount right here, this is the pre-tax
amount. This is the amount before any taxes. Guys, just like you’re out there getting
your money. Uncle Sam is going to get his money too. So on this $5,700 figure, you are taxed. And I’m not an accountant or tax professional
so check with your CPA on how much you would owe in taxes. A few other expenses as well, since you will
be an independent contractor and not actually an employee of your brokerage, you will also
have to pay healthcare. Healthcare/dental is not included for realtors. You also have E&O Insurance. Errors and Omissions Insurance, this is a
type of insurance usually the broker will have it and deduct it from your commission. The coverage focuses on defending against
a potential negligence claim made by a client. Finally you also have BPOL. Business, Professional and Occupational License,
which is essentially a tax to run your business. Which is kind of backwards to me, but so be it. So there you have it, How much does a real
estate agent make, this is a typical transaction on a $400,000 property. Your numbers might vary you might have different
splits, different commission percentages and whatnot but you should be around this amount. If you are an individual agent with no team,
hopefully your commission is a little bit higher. And one last thing, there’s a lot of stats
out there that talk about the average real estate agent salary, it’s very tough to
determine the actual average salary. Don’t think about the average salary. Think about you. How much money do you want to make? And it sounds cliche, but the reason I’m
doing this whiteboard is because you have to work backwards. You’re 100% commission and you
only get paid on the closing. So if you want to make $60k in a year, you
have to do about 10 closings. If you want to make 100k you have to make
17 deals happen. I have heard of people coming out of the gates
and in their first year doing over $100k in gross commissions. There are people in this office that make
$500k, $800k…there’s also people that make $30k and $45k. So set
up your goals. How much are you going to make and work backwards from there. If you’re going to make $100k don’t just
say it and then take the afternoon off to clean your house. In real estate you have 2 jobs — your first
job is lead generation, and your second job is being a real estate agent. It’s very simple, the more people you talk
to and the more connections you make, the better chance you have to hitting your numbers. So I hope you found this video helpful, if
you did be sure to hit the thumbs up button and subscribe for more real estate videos. I hope you learned how much money you would
actually make int his video. Ok thanks for watching until next time, create
a productive day. Take care.


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