We have about 3,300 real estate agents in Ada County.
Those agents closed a total of 5,350 residential transactions in the past twelve months, which works out to an average of 1.6 closed transactions per agent per year.
But, those numbers don’t even begin to tell the story.
If you take our median sales price of roughly $200,000 X 3% each (assuming a 6% total commission shared by two agents), that works out to about $8,400 gross commission per agent.
But the buck doesn’t stop there.
Most agents split their commissions with their broker and a typical commission split is around 50/50 to 60/40 for all but the most experienced agents.
If their broker is generous enough to let them keep 60% of their earned commissions, that works out to $5,040 in net earnings for the agent over the past twelve months.
From that, the agents get to pay their own expenses including auto, telephone, advertising, insurance, etc.
By the time they’re done, they didn’t even break even let alone come close to a poverty level income.
There are only 1,728 agents in Ada County who have closed one or more transactions in the past twelve months, leaving about 1,600 agents who haven’t closed even one transaction in the past year.
Then there’s the fact that about 10% of the agents (the really competent, established ones) are doing about 90% of the business that’s being done.
Winter is just around the corner and we all just received our annual dues statements.
This is the time of year when many of those agents are asking themselves if it’s worth it to remain in real estate.
I have been through many markets worse than this during my 36 years in real estate, including times when interest rates were 21%.
I will still be around when the dust settles.
I actually do better in difficult markets like this one because my clients want/need someone who knows what do do when the going gets tough.
Data pertains to Ada County single-family homes on lot/acreage for the period of 12/1/07 to 12/1/08.
December 3rd, 2008 Posted in Inside Real Estate | Print This Post
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