Proof that Real Estate Agents Get Paid Too Much!

Everyone knows real estate agents (and realtors) get paid too much.

Just look at their cars, the fancy clothes they wear - and they always have the latest "toys" - from PDA's to laptop computers, they are always donning the latest technology thats available.

Only professional athletes, and lottery winners have as many gadgets as real estate agents do.

And if thats not enough to convince you - just wait until you get to a closing, and watch the monster check that they go walking out the door with.

The one question remains:  if real estate agents are making so much money, why are they still working?  Why don't they work for 1-3 years, retire, and then take up the life of a beach bum down in the Bahamas?

Lets take a closer look.

What happens after the real estate agent gets that "monster" commission check?  First thing he has to do, is take it back to his office and turn it into the broker.  Wait, you mean you didn't notice that the check wasn't actually made out to the real estate agent?  It is made out to his broker.  The broker then takes that check and depending on the commission split that the office may be on, he takes up to 40% right off the top.

So, now the real estate agent is left with 60% of what he started with initially.  Not as monster, but still a pretty dang good size amount.

So, now what does the real estate agent get to do?

He gets to pay all the persons/necessities that he has used to operate his business:
His monthly office expense to his broker.  Expenses as much as $1200 per month are not uncommon.
Any assistants, closing coordinators, etc.
Office equipment like computers, phones, copiers, fax machines, etc.
Consumables like stationary, business cards, etc.

And don't forget Uncle Sam grabbing roughly 1/3 for taxes.

The commission check is getting smaller.

Is he done yet?  Heck no, he's barely getting started.

Unlike a lot of other full time jobs that provide full health insurance benefits, since he works as an independent contractor which means, you guessed it, no health benefits for him.  Heck, he doesn't even have a group health plan to work from to get accepted for insurance.  So he can plan on conservatively spending $1,000 per month for that.

And if he ever wants to plan on retiring, he better start working on a retirement plan.  No matching employer contributions for him.  Everything for him is 100% self-funded.

And of course, don't forget about the car expense.  He uses that as his office to meet with clients, so while he may like to show up in the 1984 Yugo, most clients would have a less favorable impression as a result.  And since he's using his vehicle to shuttle clients back and forth - he has to get sufficient insurance coverage to make sure he doesn't have a problem if he's ever in an accident and one of those clients is injured.

And what about the clothes.  While he may want to show up in cut-off shorts, and no shirt so you can see his nipple ring - again it is not acceptable to most clients for that sort of dress, so he has to go spend money on some new digs.

So, at the end of the day, how much money did he really "make" from that commission?

Still too much?

Well, lets keep going.

How about the 20 or 30 OTHER properties that he showed to the person and MANY hours of time he spent, before they finally selected the property for which he got paid in the first place?  Thats a big goose egg.  He gets no additional compensation for that.

And if the client flakes out on him, and decides to not do a deal, all of that time/effort is a whopping zippo.



So, lets put this in perspective, How would you like a job where you:
Walk in one day, and they say "Guess what - today we're redoing things here at Widgets, Inc.  We're adopting a similar program to what real estate agents use."
"You now have to interview for your old job every 2-3 weeks - and compete against 3 or 4 other guys that are wanting the same job as you - and they may be willing to do it at a much cheaper rate."
"And instead of us paying you a salary - you have to pay us $1200 per month for the priviledge of working here."
"A 40 hour work week?  Thats history.  You get to work the normal work week during the day time hours the same as everybody else - but you now get the added bonus of working on evenings and weekends when everyone else is off, since thats the only times when they are available to view your inventory."
"That health insurance we provided for you?  Provide your own."
"That matching retirement plan?  Hah."
"And we're going to pay you on commission - and IF you actually get to the point of getting paid, which is a big maybe, we're taking up to 40% of your check right off the top to stick back in our pockets."

How long do you think most persons would "work a job" like that?

Still not convinced.  No problem.  Lets keep truckin'.


Additional considerations include:
Lawsuits, lawsuits, lawsuits.  Do you like being involved in lawsuits?  You better become accustomed to them.  If anything goes wrong - guess who they look toward to fix things.

Do you like crime?  Real estate agents are among the leading victims of crime: rape, theft, and even murder - can and does happen.

How often do you put people you don't know in your car and drive them around to distant locations across multiple counties? or meet a stranger that wants to see a vacant property but he works an odd shift and can only meet you in the evening?



There have been industry studies that estimate 80% of all real estate agents get out of the business within the first year.

A staggering 90% are out within three years.

Is it because they are all making so much money that they are retiring to that beach I mentioned earlier to live the life of leisure?  Of course not.



Now I'm not so naive as to believe that there aren't real estate agents making a living, a VERY good living in this business, but when an overwhelming majority get out of the business in the first 3 years - MOST real estate agents aren't making as much as some persons would have you believe.

Of course, if you still truly believe there is that overwhelming profit margin, and that all real estate agents are nothing more than wastes of space...........
Quit your job, go to school, get your real estate license - and dominate the market, so you can earn that big, lucrative living that you just know is there.

Good luck.

For those that may see benefit in the services and value that a real estate agent provides, please visit my website at the bottom of this column.  Thanks.

• Kentucky Real Estate Agent

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