Friday, April 22, 2011

Realtor Compensation-$6,000 Per Sale, $121 Per Hour?

From a summary of recent real estate issues and comments on Mortgage News Daily HERE, I noticed this comment: 
Regarding the comment that real estate commissions are split 4 ways and a Realtor gets around 1.25% to 1.5%, that is as false as the belief that LO comp is good for the consumer.  I own a real estate company and my Realtors get 100% commission with a flat $695 taken out per deal.  There are many companies that now compensate this way. In my area, the average purchase price is $225,000 and the average commission is still close to 3%, giving my agents an average net commission of $6,055 in their pocket on each deal. The average deal takes about 20 hours of showing homes and another 20-30 hours of paperwork to the close.  That is a max 50 hours of actual time working on a deal or $121 per hour for a job that requires no college degree, you can set your own hours and just 1 closing per month puts you at $72,000 take home pay per year.  Please do not feel that Realtors are in the same boat or even ocean as loan officers."
Any additional comment or insight about Realtor compensation? Please add as comment to this post. 

Originally created and posted on the Oregon Housing Blog.


  1. ummm - since the average buyer in my area starts their buying process 18 months before purchasing - I think you are forgetting that part of the equation - not to mention all the other expenses involved - mls fees, license fees, e&o insurance, flyer costs, additional insurance costs, fuel, copy costs, telephone, websites, and 18 months of dragging around a buyer that only qualifies for this price range - and knowing that 80% of the homes are going to require a ton of work - maybe you better reconfigure what take home pay is and get a freaking clue -

  2. I think it's certainly a good question about whether Realtors are fairly or unfairly compensated. I think that's why we've seen the growth of folks like RedFin that hope to bring a bit more balance--especially since sales price is a strange metric to determine compensation. (You can do as much work to sell a $200k house as a $500k house.)

    But I think in lower cost regions, compensation at 3% is probably about right. Mainly because, from my knowledge of having a family member in the business, nearly half of all gross commission goes to taxes and ongoing office fees. So that $72k/year gross is really $36k net. Not such an amazing gig after all. Not to mention a closing a month is pretty darn good track record. There are plenty making maybe 6 a year.

    That said, as a whole industry, I'm generally inclined to mistrust the whole lot of 'em.