Hug a Realtor Day

Palm Coast Observer
Opinion

Many real estate practitioners don’t work full time. But those who do end up spending a lot of time and effort working with clients, knowing that much of that time will be spent without any reward. Meanwhile the expenses keep coming. I proclaim this “Hug a Realtor Day.”

With few exceptions, real estate brokers and sales associates are paid only when a transaction closes.

The commission percentage is negotiable, but the most typical rate is 6% of the selling price. Most brokers agree to share the selling commission with cooperating brokers. If a selling agent from another real estate company brings a buyer to the table, the listing broker usually pays half the commission to the selling broker. That split is determined by the listing agreement.

Most real estate agents are not employed by their brokers. They operate as independent contractors under the brokers’ direction. The independent-contractor agreement between each agent and broker specifies how the commission is split between the two.

For example, a house sold for $150,000 listed at 6% commission would generate $9,000 commission. Under the typical co-broker agreement, the listing broker and the selling broker would each receive $4,500 at closing. Each broker splits the share with the agent based on the independent contractor agreement. Assume the agents each negotiated a 60-40 split. They would receive 60% of their broker’s commission. So each broker ends up with $1,800 and each agent with $2,700.

What does all this mean in real dollars? Some real estate practitioners are more successful than others. I spoke with one the other day who earned well into six figures last year. But that is the exception, not the norm.

In 2010, 1,438 homes were sold through the Multiple Listing Service in Flagler County, for a total of $235,480,753. That generated $14,128,850 in commissions (at 6%). That’s $18,838 for each of the roughly 750 Flagler County Realtors.

But Realtors sell more than houses. What about condominiums and lots? The 263 condominiums through MLS in 2010 generated $61,344,219 in sales, which generated about $3,680,653 in commissions — enough for $4,907 per Realtor. The 298 lots sold for a total of $14,679,953 generated another $880,797 commission — $1,174 per Realtor. (I kept the math simple to make a point.)

Flagler County’s Realtors shared roughly $18,690,300 in commission from 2010 property sales. That’s about $24,900 of revenue per Realtor — that’s revenue, not profit. Like any business people, Realtors have expenses: advertising, insurance, MLS and association fees, and other expenses.

Realtors are hard workers and deserve a hug every now and then.