There is a perception that REAL ESTATE agents make to much money for what they do. So today I generated an infographic on the breakdown of the typical NET commission income to a listing Agent in Franklin.
First the buyers agent is to be compensated and although this is negotiable as is all commission, the common marketing method is to pay the buyers agent 50% of the gross commission. Afterall, the purpose here is to generate activity on your home for sale and the majority of the buyers are working with an experienced real estate agent to help them navigate their home purchase (it is not just about opening doors). This is money well spent to attract the attention of a buyers agent and to have them submit offers on your property.
Next is the brokerage split. The agent is in business for themselves, however, state law mandates that they work for a Broker and that the Broker have a commercial place of business. The agent needs a place to conduct his or her business meetings, and common business services like a printer, copier, desk, etc. Also the broker has to maintain document retention guidelines and handling of escrow funds as dictated by TN state law. The broker supplies these things and much more for the agent.
Taxes are obviously going to be paid and as a Self Employed individual, we have to pay the employer portion of the taxes as well. Enough Said on that, there will be taxes.
To provide top level service to the clients we must belong to a local Board of REALTORS and then pay our MLS dues and keep up with current state licensing and Continuing Education. So even though this is not associated with each deal, this fixed annual cost does impact the NET from each transaction.
As a self-owned business there are expenses that the broker does not provide. Things like our car to get to and from appointments and to show properties. I also rely heavily on my technology and so there is a good expense there that I have to assume like a smartphone, iPad, Laptop, cellular service, and web presence. These overhead items are also necessary to be a leader in the market place and I personally pride myself in being ahead of the pack in this regard so this is also money that has to be spent to generate the business and to follow through on the transactions.
Finally there is the Profit and the marketing cost for each listing which after all of the above items is about 9%. So I use that to effectively and aggressively market the property for sale, including my efforts in online marketing and social media presence. You might ask, how much that actually leaves me to NET and since my Median home sale is $360,000 the 9% nets me about $2000 per home sold.
REALTORS don’t get rich by doing a few deals a year, they can make a substantial living if they work at it full time and diligently considering the risk involved in their career of people buy and sell one of their most expensive assets and navigating both the marketing, and legal aspects of this task.
The Grumbles Team is the only Relocation Engineer in Franklin, Tennessee 615-587-5843.
EXIT Realty of the South | 1227 Lakeview Dr. Suite 1 | Franklin | TN | 37067 | 615.550.5555 Each EXIT Office Independently Owned and Operated