LAKE HAVASU CITY PROPERTIES ON REAL ESTATE
Do real estate agents make the big money?
Guaranteed
salaries are rare in the residential real estate business. Most real
estate agents work for a commission, they are paid when the sale goes
through. If a deal falls apart, the agent makes nothing for his or her
efforts and often looses money.
In a
conventional home sale, the seller pays the commission. It is
negotiable, but is usually in the range of five to seven percent of the
sale price. The seller's broker typically shares the commission on a
50-50 basis with any other broker who finds a buyer for the property.
There is often another commission-splitting arrangement, which occurs
between the brokers involved, and the agents who work for them. It is
often these agents who work directly with the buyers and sellers to
consummate the transaction.
For
example, let's say you're selling a house for $200,000 and you have
agreed to pay your listing agent/brokerage six percent of the sale
price as compensation for completing the sale. The commission in this
case is $12,000. If another agent/brokerage is working with the buyer
for your house (which typically happens), that broker will receive
$6,000 at closing, leaving $6,000 for your agent and his or her
employing broker. Now your agent that you are working with will need to
give his or her broker a share of the $6,000. The average share given
to the employing broker is between 50% and 20% usually this split is
negotiated between the employing broker and agent based on a total
sales volume generated by that agent. The average share given to a
broker for overhead costs such as the cost of running the office and
advertising properties is approximately 35%, so for example the remain
$6,000 will need to be split again and the agent would now receive
$3,900. Now if an agent works for a national franchise real estate
office, the franchisee will take on average 6% to 8% of the agent’s
commission leaving the agent with $3,588. The remaining $3,588 is gross
income; self-employment taxes, social security, State and Federal tax
will need to be paid. Agents are also responsible for medical insurance
and establishing their own retirement plans. If the average agent could
sell one home per month they could gross almost $40,000 per year.
Sounds easy just sell one home per month, however it is very difficult
because of the competitive nature of real estate. The amount of homes
sold vs. the number of active real estate agents. For example in Lake
Havasu City there are currently 762 active real estate agents and this
year approximately 2,375 homes sold if you divide that by the number of
agents that leaves 3 home sales per agent in the city for the entire
year.
For buying or selling real estate in Lake Havasu City, call Dean Baker Owner/Broker Lake Havasu City Properties, 16 years experience, over 600 homes sold in Lake Havasu.
Cell phone 928-486-3368or (888) 854-7210.