Pulaski

Right, but most people seem oblivious to the fact that of the "6% realtors fee" half gets split between the brokers, .... and indeed oblivious that "the broker" even exists, they just think that the buyers and sellers agents on a $500,000 property each put $15,000 in their pocket.

SultanOfSwing

That being said, even at 1.5%; $7,500.00 is nothing to be sneezed at ...

Pulaski

I'm not going to argue with that!

SultanOfSwing

Even for my far more moderately priced house, they'd have been pocketing over $2K each at that rate. I'm not belittling the amount of fannying about they probably have to do to generate sales, but it seems to me if a realtor isn't making enough money, they only have themselves to blame.

RoadWarriorFromLP

A typical real estate commission is 6%.

If the listing and selling agents are not the same (which is usually the case), then this will be divided between them, leaving each brokerage with 3%.

Typically, the broker will keep 50% of that, with the agent receiving the rest. So that's 1.5% to the agent. An experienced agent should be able to negotiate a higher split.

The agent is responsible for many of the expenses associated with the business, so the 1.5% or whatever it is is not pure profit.

The agent also has to use commissions to compensate for time, effort and expenses devoted to other deals that didn't work and paid nothing. Your deal may have been easy, but there will have been another deal or six that went nowhere and produced a loss for the agent.

Pulaski

When we first moved to NC we, Mrs P and/or I were taken round by our realtor to see probably 80-100 houses over three months and a 100x30 mile area before we found one we liked, which was literally just around the corner from our realtor's own home! She worked hard for her 1.5%.

At one point we had a purchase provisionally agreed but the seller wouldn't play ball on a termite problem and by the time they came to their senses my employment situation changed and we tore up the offer and started over! .... Most of the houses we looked at were after we tore up the offer and started over.

kins

She is the franchise owner.

Pulaski

So she is also saddled with the rent/ business mortgage, taxes, and other expenses and overheads of running a realtor's office.

Yorkieabroad

I heard somewhere recently that over 80% of people that take the realtors exams are not in the industry 5 years later - maybe shows that despite the appearance of a huge payoff, in reality, what they see at the end of the day is far from the headline number.

On the other hand, I've just sold my mothers house in the UK for 285,000
Estate Agents Fees 1100 - Less than half a percent. And most UK agents have a significant cost that most US agents don't (at least round here) - a high profile High Street storefront.

Ok, US/UK property transactions are based on very different business models, but, despite that statistic in my first para, the costs of property transactions here are, frankly, ridiculous, and my heart is never going to bleed for a business that charges 6%.

Yorkieabroad

Not to mention, presumably, a Franchise Fee?

scrubbedexpat091

My wifes office is fairly small, but between the 2 admins (my wife and another girl) and the office manager, 80 to 100k right there just to employ those 3 people.

They have 15 agents in total.


The turn over of new agents and the fierce competition from existing agents, it can be really hard to enter and make money for newbies.


There a some months where the agents owe the broker so much their entire commission check goes to the broker, I don't think its the money maker it appears to be on the surface.

kins

I'm also saddled with similar costs but I've never received a cheque that big for that little work...

Pulaski

I believe that you are under-estimating her overheads, including the franchise fee that Yorkie referred to, and the amount of time she spends on "projects" that never lead to a fee, that RWFLP referred to. ..... I have no doubt that in the "good times" she may well be raking it in, but the lean times for a realtor can be very lean indeed.

When we were in New York we had signed up with IIRC four realtors in different parts of Westchester County and Putnam County, and saw a number of houses, probably 30+/-, and never bought a house, so that was a load of unreimbursed time for several realtors.

Suz16

Thanks so much for all the replies! Looks like I won't be buying a gift then.

GeoffM

For a bit of fun, try this realtor exam. Only 44% for me! (The cost per acre question marks you as wrong even when it says the correct answer is the same as what you said)