Realtor Income and Commissions Explained – Video Crash Course
Realtor income depends on several factors which involve surrounding conditions of the real estate market as well as personal ability to succeed in real estate. Let’s take a quick look at most important variables which affect the bottom line or what any realtor, whether agent or a broker, can deposit into their bank account.
Factors Affecting Realtor Income
Major contributors to the income of realtors are:
- Market Conditions
This is a very important contributor to realtor income potential. When market is slow not only it reduces the number of real estate transactions realtor can generate but also results in realty price reduction which affects the amount of commissions that can be generated by realtor. Realtor income is influenced by the state of real estate market and often requires changes in advertising, prospecting and specialization in real estate. Those who adapt to economic slowdowns tend to survive and go on with their business while realtors who are unable to create necessary changes cease to exist.
- Geographical Area
Premium real estate locations offer significantly higher real estate potential due to premium real estate prices. Since in some high-priced real estate areas one transaction can bring as much commissions as five transactions in low-priced real estate locations this certainly is a big factor affecting realtor income. However, selling premium real estate takes more skills and knowledge as well as salesmanship than an average $350,000 home. Networking is very important to realtor’s success when you are dealing with multimillion dollar properties because buyers usually pick an agent who was highly referred by a satisfied client. Also, realtor must realize that often these transactions may take longer to complete. To be successful, one must have the highest reputation, expert knowledge of the market and exceptional sales skills.
- Real Estate Agent Commission Split
If you are a real estate agent who is getting 50%-70% commission split, you certainly want to work towards a full 100% commission agreement with your broker. This will help your income potential. Your commission split is especially important and even critical during real estate market slowdown like the one we are experiencing now. Realtor income in terms of commission split varies from broker to broker and reflects real estate agent’s experience and success. Top producers usually do not have problems encouraging their broker pay them full commission split. Our brokerage pays full 100% to all agents helping to maintain the highest realtor income potential. This encourages realtors to perform their best in today’s market conditions.
Personal professional qualities of a real estate agent are critical to maintaining income at highest levels. Knowledge of real estate market conditions in your area, tireless and effective prospecting, top salesmanship, dedication to your clients and boundless energy are essential to realtor income growth. Being a realtor means being flexible in your approach to changing market conditions and reinventing yourself to stay on the top of the market. This is where broker can help an agent with expert advice and guidance.
- Marketing and Promotions
As a realtor you understand that your success largely depends on the exposure and reputation you create in your local area. Tracking realtor income trends shows that the top earners are very skilled in self promotion, marketing and advertising in their local areas. Special attention should be paid to Internet marketing since it has become the most powerful channel in finding potential clients.
As a real estate professional, you should always pay attention to these factors and carefully analyze the current situation you are in. Can you improve your current income level if you make some changes in your career? Can you benefit from changing your work load and marketing approach? Can you find better working conditions? Many realtors, and it is unfortunate do not realize that they are in business of selling real estate and it is not a job where you simply continue with your daily routine while your bosses make important decisions which will affect your income. Ultimately, setting aside all the external factors that one cannot change, realtor income level depends on the realtor itself.