Do real estate agents deserve big commissions ? - Posted by Steve R

Posted by Houserookie on February 24, 2002 at 12:05:18:

Hi Nate,

Seems to me that the MLS is good only for buying homes and finding great deals.

I have yet to experience problems in selling. My homes get sold in 10 days or less using the auction approach. But then, I don’t deal with fixer-uppers.


Do real estate agents deserve big commissions ? - Posted by Steve R

Posted by Steve R on February 19, 2002 at 21:36:48:

Just tossing this around while we are working tonight. What is the history behind the percentage rate (4-6%) of a sale.

Does an agent actually earn the money he makes on a sale?
ex: sell a home for $249,000 @ 6% for $15,000 commission.
For about 10-20 hours work. ($750/hr).

It seems to us that the lawyer and lender do more work for much less money. We understand about co-broking, mls listings etc.


Spouted off-Sorry - Posted by NCPaul

Posted by NCPaul on February 20, 2002 at 21:40:43:

I may have been a bit harsh in my last response. If it hit too hard, I apologize. I still mean what I said but after I pushed the “post” button I looked at it again and I think I came across a bit hard. I probably should have toned it down some.

YES! God Bless America & Capitalism! - Posted by NCPaul

Posted by NCPaul on February 20, 2002 at 21:32:55:

God Bless America that an agent who can produce a sale and earn a big fat commission can do it! The market economy, capitalism, is what sets the commissions. If the agent isn’t worth a big commission the sale will likely get fouled and the big fat potential will turn into a waste of time. The agent’s commission is directly related to what the market will bear. The last people who should attack R/E agents for having a big fat 6% commission is a group of investors who flip properties for a living. The reason you as an investor can identify an undervalued asset, lock it up with an option contract and flip it for a nice profit to another buyer is a function of our Capitalist system at work. The same function that allows the agent to earn a big commission. The fact that the ordinary, non-investor, John Q Public sees what you do and wonders why you make so much money for so “little” work doesn’t mean that you didn’t earn the money does it? Nevermind that Mr. Public didn’t see all the work you did to earn that money, from his point of view you didn’t do anything and now you have 10, 15, 20k or more. Mr. public might see that and get mad that you “didn’t do anything” and made more on one or two deals than he made in a whole year punching a clock! What seperates people like us from people like John Public is ambition, drive, and a will to succeed. The fact that we decided to work smarter than he did doesn’t entitle him to anything we have earned regardless of whether he sees the value in our work or not. It’s still a free country and Mr. Public can turn his jealous, green eyed monster self around anytime to make a better life for himself if that’s the path he decides to follow. Like I said, God Bless America and Capitalism! So in the meantime, keep your eye on what will close your deals and stop worrying about real estate agents making a living even if they do make a big commission.

Good Luck

heres one way to do it - Posted by EWest (MI)

Posted by EWest (MI) on February 20, 2002 at 18:36:52:

The only way I can see you making good in that business is to do it the way my girlfriends mother is doing it. Her and her husband have been in real estate for 10 years now. they both have thier brokers license and own thier own business(not a franchise). He is the broker, she is the agent and they clear over 100k in pay a year and in the area they work in 100k-200k are very top end.

btw, they bust thier butts…they make good money but put in a lot more hours than your average worker.


Fat Commissions, Starving Agents - Posted by Frank Chin

Posted by Frank Chin on February 20, 2002 at 08:21:46:

Hi Steve R:

You asked a very good question, and I often wondered about the paradox of the apparent high commssions and the legions of starving agents out there.

Let me explain.

While you mentioned property values in your area is 249K, 2 family houses in NYC runs 500K, and in San Franciso that I visited in June last year, asking prices for some homes were 899K to 999K. So is someone getting a fat 60K commission???

Yet, when I ask some agents who has “member of $1,000,000 club” on their cards what it means, they mentioned that they sold one million dollars worth of property. Usually its split four ways, between buyer an seller broker, then broker and agent. So a one million dollar agent earns 15K a year.

But it gets more interesting.

A friend of mine who retired to Florida got a RE license and became a $1,000,000 agent. He told me he made 25K before expenses as some sales are only split two ways. But after gas, phone bills, advertising he paid for himself, he made less than 20K. Its OK for him as he’s collecting two pensions.

But he says only more than half of the office DID NOT MAKE the $1,000,000 club. So, most don’t even make 20K/year. In fact, I was renting a house recently, and I spent several hours with a local agent in a open house, and she mentioned the same thing to me. Most agents are lucky if they make 30K to 40K a year, in the high price New York area. Many poor performers don’t even make that.

I thought it was pretty funny that she mentioned that she’s been in RE sales for over 10 years, and couldn’t quite figure out how to make money in RE.

When I look around my area, and I see a dozen Realty offices with a half mile radius of my home. Whenever I walk inside, I see the average agency employs a good 10 agents, based on bulletin boards on who’s “in” and who’s “out”. Then there’s hundreds of realtors in the county, checking the phone book.

But I don’t see several hundred houses for sale at a given time to support all these brokers and agents. Its more like several dozen.

So I think all the monies going to mostly the brokers, MLS fees, franchise fees (Century 21, Coldwell Banker, Prudential) ,and rents for all these hundreds of offices throughout the county. Far too many.

Its a very inefficient system if you ask me.

Frank Chin

Re: Do real estate agents deserve big commiss - Posted by Steve R.

Posted by Steve R. on February 20, 2002 at 02:23:28:

Now you think we were bashing real estate agents? Why if you compare this business to others the price seems to be dependant on home many mouths are being fed. (agent,broker,listing broker,franchise,big gorilla under my desk). In my machine shop business if we screw around making something that ends up costing us 3-4x the quote we eat the costs. We can’t just say to the other customers “hey we got bills to pay, you owe us a living”.
If I assist an agent (find a seller, do all the negotiating, finance chasing) why should I have to pay the same as someone that just says “sell my house”? But I guess you pay what the market can bear like anything.

Re: Do agents deserve big commissions ? - Posted by Tim Fierro (Tacoma, WA)

Posted by Tim Fierro (Tacoma, WA) on February 20, 2002 at 01:07:34:

Some deserve it, some don’t. Some work for the money, some don’t. Some will work all the time for nothing, so it nice to see them get a slam dunk now and then. :slight_smile:

Re: Do real estate agents - Posted by Nate(DC)

Posted by Nate(DC) on February 19, 2002 at 23:58:07:


I am both an agent and investor, so I’ve been on both sides of the table, so to speak.

In some markets (DC right now comes to mind) where stuff sells very easily, the listing agents do make a killing. Put the thing in MLS, hold one open house, get a contract, collect 3%. Next.

However - it’s not always like that, and when it’s not, being a listing agent is a LOT of work. And oftentimes, as Brent stated, that work is for nought because the deal will not close due to the failings of some other party.

On balance, I’d say that most agents do earn what they make.

And don’t get me started on buyer’s agents. Those people earn every dollar they get several times over. Particularly in a market like DC where there is such intense competition for properties.


Re: Do real estate agents deserve big comm? - Posted by Steve R.

Posted by Steve R. on February 19, 2002 at 23:23:13:

We were just looking at how much effort is put forth to sell a house. Why should an agent/broker/listing broker/mother-law get a full 6% (or whatever) for a slam dunk deal. In this day of ever-increasing property values the actual price tag of these commissions is way beyond it’s value on 80 % of the sales. I think most of these poor b**tards selling out there sigh and live with it.

Re: Do agents deserve big commissions ? - Posted by Brent_IL

Posted by Brent_IL on February 19, 2002 at 23:00:53:

RE agents earn a high hourly rate on most of the deals that close. Many, many deals never make it to the closing table. A doctor gets paid whether his treatment or surgery is successful or not. A RE agent only gets paid for the ones that close. They get nothing for carting around disloyal buyers, lookey-lues, and 3-hour free seminar investor wannabees. If you divide the actual number of hours worked into an agent’s annual income, and average it out over a housing cycle or two, the income isn’t that hot. That’s why they have high turnover.

I hate paying the commission, too, but they’re part of the system and probably here to stay.

Re: - Posted by Carey_PA

Posted by Carey_PA on February 19, 2002 at 22:38:43:

I think it depends on the agent. some agents earn their commission and some just show up to collect the check after everyone else has done all the work :slight_smile:

just my .02


Do real estate agents deserve big commissions - Posted by Fern(SoCal)

Posted by Fern(SoCal) on February 19, 2002 at 22:33:55:

Don’t forget that agents do have a split with the broker they work for. And they only get 6% if they double end the deal. And its more than 10-20 hrs of work on each deal. And they are practically on call.

Re: Do real estate agents - Posted by Zack W

Posted by Zack W on February 19, 2002 at 22:23:13:


Some do, some dont. There are alot of “behind the scenes” stuff that they do that us as investors or retail buyers dont see.

My agent [who visits this site] is worth ten times what I pay him. Dont get any bright ideas Ed.

Zack W.

You’re WAY off. - Posted by Redline

Posted by Redline on February 19, 2002 at 22:16:18:

Lawyers do more??? In a typical residential transaction, the lawyer does hardly anything and charges anywhere from $800-1200 here. It’s a total scam. Realtors do WAY more work than attorneys in typical residential deals.

Lenders get paid for exactly what they do.

Realtors sometimes work real hard for that 4-6%, and sometimes they get a gift transaction - so it really depends. But don’t tell me the lawyers are doing alot on these deals - because they’re NOT!

Just my opinions.

Re: Do real estate agents dese? - Posted by Paul S

Posted by Paul S on February 19, 2002 at 21:57:54:

Let me say first- I am NOT an agent or a broker. In a word, my answer would be “Yes”. Real Estate agents do earn their commissions. Now, this isn’t to say an agent is efficient for an investor with knowledge- but for some beginning investors and most of the general public who have no intention of becoming educated about what it takes to make a successful deal- I’d say agents are a good buy.

Re: Fat Commissions, Starving Agents - Posted by evelyn

Posted by evelyn on February 20, 2002 at 20:54:17:

I know what you mean. I recently thought of becoming an agent myself…as my mother is an agent/owner of a real estate firm. Think she made less than 45k last year. I thought, "well, at least she is making more than me, and I just CAN’T do this CRE thing!!!

plus she says this investor/cre stuff just won’t work here(FLORIDA)…or anywhere else for that matter

Oh the fear that I must overcome!!! Please Lord, help me!!!


GOOD post!!! - Posted by tang-0-rang

Posted by tang-0-rang on February 20, 2002 at 14:27:01:

Frank, man, good post. It sure gave me something to think about.
just my thoughts
Todd Williamson(CO)

Re: Do real estate agents - Posted by evelyn

Posted by evelyn on February 20, 2002 at 20:57:42:

when you post to Sharonda, send me a copy of the e-mail as well, as I thought of becoming an agent too.


Re: Do real estate agents - Posted by Sharonda(NO VA)

Posted by Sharonda(NO VA) on February 20, 2002 at 15:56:51:


I’d greatly appreciate it if you could e-mail me offline re balancing being an agent and an investor. I’m currently in the process of getting my license and don’t know many people who are doing that.