How Much MONEY Do REAL ESTATE AGENTS Make?


We're going to talk about how much agents in central Florida actually make let's get started. Hey there Jared Jones, real estate broker-owner of Jones group real estate, 19 years now going on in the business and I've sold thousands of homes in Vegas, hundreds of homes in central Florida. And one of the things that occur to me, as long as I've been in the business, there's a lot of people look at our business from the outside and say, wow,


I hate tests. I still can get a license. I can get easy, it's not like passing the bar. I can take as many tests as I want. And I can get in relatively easily with that being said, people look at our real estate checks and they oftentimes will go online. [inaudible] 3%, 3% of $400,000. That's 12,000 blocks. Like my agent, like I saw them for five minutes, are you believe they make that much? And what they don't understand is the actual net earnings of most brokers is probably far lower than they realize, but let's break it down in central Florida, 80% of it, the real estate agents, and I'm in the Orlando board. So it's about 15,000 realtors in this area. And 80% of them don't make one transaction a month. They make half a transaction a month. That's kind of sad. That's not a lot, right?


So in reality, what that says to us is if you're closing six transactions a year that's part-time. So there's about 80% of the real estate agents probably I'd say maybe around 90 to 95%, who actually don't close enough business to be full-time. Okay. And if full-time in real estate is probably 20 to 30 transactions. Okay? Now I'm not going to get into the reasons why most real estate agents can't sell that many homes, because there's a whole lot to discuss and actually did another video about that, that you can click to right here on how to get into the business and why people fail. Let's talk this out, how much the 80% make. Well, if they're closing six transactions on average, those checks are going to be $7,000. Each that's $42,000. Now let's think about the overhead. They're going to have to split it with their broker, which is anywhere from 30 to 50%, most likely for that agent.


So right off the top, that's 12 to around $21,000 gone right there. On top of that, they got to pay for the board dues. They got to pay for technology costs. They got to pay for fuel. They gotta pay for expenses. Their own time is worth something. All of that on six transactions, a year, that particular agent nets probably 10 to 16 grand a year to their pocket. Okay. Now, who's excited about that. In that case, you might want to be flipping burgers at Burger King, not knocking that. I'm just saying what people's perception is, is not the same. Now let's shift to the top of the class. Shall we? The top five, 5% of earners are closing 20, 40, 60 transactions. And then when you start going to 80, a hundred and beyond you have a very, very short list of probably less than 50 agents in the area, that's five, zero agents in the area they're actually producing that kind of volume.


Now understand this too, the bigger, the volume class, most of these people then start hiring other agents and other team members. And what happens in those instances is they become a broker inside of a broker. Okay? So they pay an advertisement for their team to take leads. And most of those teams are going to be earning anywhere from 40 to 60% of the commission. Okay? So you're an agent. You have a sale assigned to your name, but you got to keep 40% or maybe 50% yourself and you paid out 60 or 50 to the other agent that's on your team. In fact, 50% is kind of an industry standard for team agents. Even that a team lead that let's say does a hundred transactions. They're giving away 50 of those transactions, the revenue from those 50, they have a net of 50, but then they have administrators, they pay and they have office costs that they pay and they have expenses on every transaction.


They at least have a 30% of those 50 files gone. So thinking about it that way, you're going, man. So, so literally they're getting the volume of maybe 20 or 30 transactions. Yes. Because they're producing high volumes, but they're defusing a lot of the cash to pay other people. So revenue is vanity. Cashflow is sanity. Revenue is bragging, right? So you have a lot of these teammate agents that would say I made a million in commission last year, or I did 200 transactions. They, I might've got paid for 50 of those things. Okay. Understand that what they actually trickled to the bottom line is way different. And a lot of times, you know, and even my case, like I've opted to stay much smaller than I used to because of all the diffused expenses of being large, right? Like I heard stories worry about, Oh, so-and-so made a hundred grand, but I didn't know his numbers, he kept a hundred grand.


He made six figures. He made a hundred grand, he's got $10,000 a month income or something like that. Massive overhead. Right. I understand the, these agents that run bigger teams, the numbers seem better. But a lot of times, if you look at it, revenue is vanity. The top line is vanity. The bottom line is sanity. That's where you want to be looking. Okay. And so even the larger teams end up, you know, keep in mind the teams that are doing a large business, they're still doing fine. I mean, you're doing great. But on the outside, what you think they're earning is most likely a much lower slice. And I think a lot of teammates would appreciate me saying that because they're working hard, they're taking all the financial risk of, of having all these agents under their, their team and hats off to them for selling all that, those houses.


But the team agents look at the team leader like, Oh, he or she is making all this money. And in reality, they're paying a lot in terms of brands, branding, and marketing to, to rain, make for everyone under them in their system. And that's exciting. And so at the end of it, they're probably going to eat a reasonable profit for all the risk and all of the branding and all of the sticking their neck out in the training that they're doing for their own team. So, so thinking about that, let's net it all down. When you think about how you want to go to business in real estate, maybe you're watching this and thinking, well, like I want to sell 200 houses. Well, do you want revenue? Or do you want cashflow? Okay. You can get cash flow without all the agents and all the splits by having a smaller, independent team where you're hiring assistants around an artisan agent and artists and an agent as a central agent who is touching really everything.


Okay. They're not really well leveraged. They don't have all these team agents. They're doing a lot of the deals themselves, but with support, they can do 70, 80, a hundred, 125 transactions take weekends off. And they have a lot of payroll instead of commission splits. And what happens is in this situation and artisan can keep 50, 60%, I think going 60 plus is amazingly high for an artist and type team where a team over here is going to be running much higher expenses because before they have operational costs, they have costs of sale. They have to pay the splits first for all the team members, you can also go obviously independent. But the problem with being independent is your time a limiting factor. So as a solo agent, you can have a very low expense, 25%, which is unheard of in real estate, 20, 25, 30%.


I work referrals on the artwork by myself. You will probably be on the feast to famine, right? If you're doing it that way, okay. You can have the other problem where you're like, my revenue is okay. And my cashflow is awesome. I have no expenses in between, but Oh my gosh. If I hit a drought, if my business dries, because I don't really have whiteness and how many income generators are helping my business, you can get into trouble. Okay. So that gives you an idea of what real estate agents make. Right? Here are the cool stories. What are you making real estate? Let's talk about the big guys, the guys, the very, very top of the pile they're doing anywhere from 5 million to 10 million. I think these days, some of them are breaking higher, 10 million in commissions. It's insane. There are some agents that have when you see the agent on Zillow and they have massively built out teams.


There are some of those guys that are making 10 to 20%, if they're lucky, 10 to 20%, okay, now don't get me wrong. 10% of 5 million bucks is still 500 grand, but those are the teams that have high expenses. Then there are the teams where you have, you have some of the teams that are like smaller artists and teams. We have a pro in the middle of just licensed support staff that are in markets like DC and California, like silicone Valley, there are guys out there in those areas. Like they call the golden triangle in California. They're making eight, nine, 10 million in commission. And it's ridiculous how low their expenses are in relation to the expense because they're selling one, two, $3 million homes like that. As the bread and butter purchase is a big house. Whereas you might be in Kentucky and you've got to sell 20 homes to keep up with that guy's one sale.


And when he has to sell 20, it costs him more to generate all that business. Whereas one guy hits a Homer it's 2 million. So that's the thing too. You want to affect your, your business, go into a marketplace where you hit homers. I mean, the cars are awesome. I remember going to a DC conference anytime I went to real estate conferences, like the DTDC Arlington area, there's always Lambos. I mean, I remember I sold my first event to the door at a real estate conference, parked out front. And I was like, who's driving that. And I look them up. The average price point is like a million bucks average. Okay. That means their average commission is like 25 to $45,000 and they're just clicking them off. So, if you're in a high-value market, man, I mean, you get ahead of the game much faster that way.


And that's to be said for any agent, if you're in a marketplace where you can lift your value of what you're selling, that's going to help your business to just raise your value. How do you do that? Who do you need to know? How do you need to change your business to do that? But let's take the middle. We talked about the high ground. We talked about the low end, the middle, the middle. I would tell you on the average and in when I say the middle, I'm talking about this is, uh, the agents that are the top 5% of the market. Okay? So you go to any market, 12,500 agents out of 15,000 realtors in Orlando, aren't doing that great. But the top 2,500 are making 100, 200, $300,000. And all you guys remember to pay your taxes. That's it. Thanks for joining us. We'll talk to you guys. And by the way, I did another video that if you are considering real estate, and I'll link it right here, right here, check it out. If you're thinking about getting real estate, you got to do this first, make sure you're going to be successful. We'll talk to you real soon. Thanks for watching.


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ยฉ 2021 Jared Jones Real Estate Team. All rights reserved. **Commissions are not set by law. All commissions are negotiable. There are no standard commission rates. Each seller decides total commissions paid. Commissions may vary. Call for full details.