By Mike Bodeen · 21 August 2017
Many assume that real estate is an easy gig which pays big bucks. It can pay big bucks, if you work very hard for a long time and have a good business model, but the reality is for most agents it ends up being quite a disappointment. In fact, depending on which study you look at it, it seems about 75% of agents will quit within their first year of real estate, and 85 to 90% within the first 5 years.
Realtors Increasing in Number – When real estate values move upwards, more folks join the real estate sales market, and vice versa. In Arizona we seem to be adding an additional 6% of new licensees each year. It’s interesting to me that last year our prices rose – about 6%.
At its highest point in history, membership levels at the National Association of Realtors (NAR) hit 1.37 million in October of 2006, and has declined by nearly 30 percent, yet in states like Arizona, the number of Realtors per capita is tremendously high. According to NAR, the top 10 states with the most Realtors per capita are:
Arizona, where 1 in every 168 residents is a Realtor
Hawaii, where 1 in every 173 residents is a Realtor
Florida, where 1 in every 175 residents is a Realtor
D.C., where 1 in every 193 residents is a Realtor
Nevada, where 1 in every 200 residents is a Realtor
New Jersey, where 1 in every 201 residents is a Realtor
Connecticut, where 1 in every 229 residents is a Realtor
California, where 1 in every 241 residents is a Realtor
Colorado, where 1 in every 257 residents is a Realtor
Idaho, where 1 in every 267 residents is a Realtor
How much do Realtors make? Over the past year there has been 94,564 total closed listings through ARMLS, an 8.7% increase over the 86,975 in the year before that. In addition pricing has increased so that the total annual dollar revenue is running at $27,417,112,220, up from $23,616,060,825. The revenue is up 16.1%, which would tend to indicate that commissions are also up by a similar amount.
Average dollar volume sold per agent is currently $794,169, up from $723,088 this time last year. This is an average of 3 home sales per year, or about a gross of $24,000 per agent, per year. If you factor in that about half of the commission which goes to the broker and expenses, the average per agent income is about $12,000. Translation? The vast majority of agents are part timers or newbies.
I’m often asked about someone’s odds of successfully making it in real estate. My definition of “successfully” means it’s a person’s full time job making enough money to support themselves and their family. The truth is that there are very few that fall into that definition. My response to these queries is first, do you have other income, either yourself or spouse to support you the first 1-3 years while you build up your business? Also, do you have a large sphere of possible clients? Success in real estate starts with who you know.
– Mike