The current statewide real estate agent numbers are in. And based on the swelling ranks of folks getting into our industry, business must be good! We now total just over 30,000 compared with 28,000+ one year ago. If you or someone you know is considering a real estate career in Arizona, you might have them look at the chart below. But first we need to make some clarifications to the chart.
(Chart Removed for proprietary purposes, original article written for clients only)
At the far right is the average commission based on a 6% commission per agent. It’s actually closer to half that as a 6% commission is split 50/50 with both the buyer’s and seller’s agent’s. So the average commission per agent is more like $23,000. Gross. Now a portion of that fee goes to the company, usually anywhere from 10% to 50%. Let’s assume an average of 25% fees go to the company. This will leave the agent’s share (75%) at $17,250. Gross.
Expenses. Ah yes, remember as a real estate agent no one will pay you a salary. You’re an independent contractor working solely on commissions and are responsible for all your own expenses. The good news is that you’re your own boss. The bad news is that you’re your own boss!
Expenses are, in a word, “expensive.” First there are National, State, and local Realtor association dues (assuming one belongs to a Realtor board), and many of us do. Then there are the MLS dues, which we pay for the privilege of having access to the database of all homes, lots, rentals, etc for sale. These easily total a grand per year, so now the agent’s share is down to just over $16,000.
Then we have marketing expenses including but not limited to listing expenses, photography expenses, printing expenses, errors and omissions insurance (E&O), internet/website expenses, utility (cell phone) expenses, and oh yea, auto expenses, entertainment expenses, ad nauseam.
Taxes. As an independent contractor you pay the full Self Employment tax, which is another 8+% compared to your employee brethren. And you’ll need to pay your taxes quarterly. Long story short you can figure expenses to be about half of your gross income after paying your broker/company. In our example here, let’s err on the generous side so you’ll figure your annual take home pay before taxes to be $8,500.
The number of real estate agents has increased 7% this past year which means that with sales increasing about 4%, this will leave agents with a smaller piece of the income pie.
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