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Understanding How a Real Estate Agent is Compensated

Tuesday, February 8, 2022   /   by Capprice Kitchen

Understanding How a Real Estate Agent is Compensated

My friend and local lender recently shared this break down of how real estate agents are compensated. I thought it fitting to pass along as it’s an excellent break down of how most real estate agents are paid, and the typical expenses that we have ...

Friends, before you go and ask for a discount on the commission paid to a Realtor for helping you sell your home, please understand what you're truly asking for them to do ... and ask yourself this question: If your boss came to you and asked you to work overtime, but wasn't going to compensate you for doing so, would you still do it?

Another day, another person who says Realtors are overpaid and an unnecessary part of a transaction. I’m assuming that those who think this have either been watching too much Million Dollar Listing or think they know how to do it all on their own.

A few things to consider. Real Estate Agents don’t get to keep all the money they make on deals. You see 3% on a $600k home as $18k. The agents sure don’t.

That commission is paid to them:
- Before taxes
- Before broker splits
- Before marketing
- Before board dues
- Before office bills
- Before professional photographs on your home
- Before professional staging on your home
- Before all the other costs of doing business

Out of what’s left of their checks after all this, they can then begin paying for everything else. But wait, that’s not all! They don’t get afforded a lot of the things you enjoy at a 9-5 job.

They don’t receive:
- Employer healthcare
- Employee matched retirement accounts
- Paid vacations
- Weekends off
- Nights off
- Maternity leave
- Bereavement pay/leave
- Company car

They pay for all of this out of their own pockets. Every single penny.

Yes, there are some Realtors married to people working company jobs who receive some of these benefits. But the vast majority of Real Estate Agents, they support their families on what’s left after their benefits are taken out and spoken for.

Yes, they did choose a career in real estate. It’s a career which they love and it allows virtually uncapped growth and income potential. But they also have to often be available at any time of the day when needed. Whether it’s showing homes at 7pm, writing offers at 11 pm or doing final walkthroughs at 6am. They are there, available to help their clients when they are needed.

So before you tell another one of them that they make too much money and aren’t really needed anymore, I encourage you to do the following ... Get your real estate license, start lead generating on your own, find clients who like you and trust you to help them with the BIGGEST purchase of their lives. Make sure you know not only what goes in the blanks of the contracts, but also what the promulgated parts of them say. Learn the legal steps of what happens once you write a contract, and what business partners are a good fit to help your clients and who’s a scam. Try and keep deals together when they’re about to go south with critical thinking skills all while staying within legal parameters. Educate your new homeowner clients about what’s gonna happen after they close and what to expect in the couple years to come. Then listen, repeatedly, as others tell you the money you’ve been paid is WAY too much and they could do what you’ve done for much, much less.

Exhausting, isn’t it?

  real estate agent

Capprice Kitchen with Pineywoods Realty

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