Why does my Realtor make so much money?


Managing Broker/Owner

Tammy Craig

Admit it, this thought runs through your mind sometimes.  “What do Realtors do?”  I was one of them before entering the real estate profession.  Like most jobs it is eye opening once you actually do the job.  The Realtor pay supports the Realtor, but also the many businesses that support the real estate industry.

There is a huge job market behind the check paid to a real estate company for a percentage of the purchase price.  Your commission cost pay to employee real estate office staff, pay rent and/or office mortgage, and photographers.  We support office equipment businesses, newspapers, marketing people, print magizines for real estate, realtor boards and regulatory agencies, non-profit organizations, web site providers, sign people, car dealships and sales people, insurance providers, gas stations, fast food, fine dining, and taxes.  All these support businesses get paid before your realtor gets their take home pay.

Each real estate company sets their own fee structure.  There is not a set rate.  I can charge by the hour, by the deal, or by a commission percentage.  I can charge $75 per hour, or 1% or 100% of the purchase price.  The market dictactes the pay rate,  just like the price you pay for a jug of milk or a gallon of gas.

For talking purpose let’s say a commission check of $10,000 is paid to the listing office from the proceeds of your home for brokerage services.

$10,000 paid to the listing office

30% approx off the top for listing office support (This rates is a little different in each office but no matter how you slice it the average is about 30%) =$7000 paid to the sub-contractor agent for services to the listing office.

$7000-25% taxes=$5250

$5250-20% operating costs for the sub-contractor agent =$4200

Final net take home for your agent is $4200 out of the $10000 commission check. 

Realtors can’t think about hourly wage or a monthly salary.  We think in terms of pay per year and hope for the best.

$4200 x 12 months (if we are lucky) in a year=$50400 a year

Stats show most Realtors average $40,000 per year which means the average Realtor may get paid once every two months.  A Realtor may get paid 4 times in one month than have to wait two or three more months for the next closing.

The job can pay very well if you are willing to give up week-ends, births, graduation, funerals, and vacation, just like any other career.  The top selling agents that are able to have a personal life also employee several people to keep everything on track.  The money helps keep the local economy running.

If you get nothing else from this post understand this: the majority of Realtors receive $0 pay until they close on properties.  All services they give until closing are done for free.  These services can take hours of computer and commuting time.  We tour, preview, talk on the phone, learn the market, buy endless tanks of gas.  We counsel, buy meals, and are a friend until the buyer or seller is ready to make the move.   

Bottom line is the sales commission paid for services provided are not just for your Realtor service but for the many people they work for and employee to get the job done.