Reality Check: The real truth behind being a Realtor.
So I have been a Realtor since 2001 and to say I’ve seen more than my share of interesting situations or even been involved in them is just scratching the surface.
What I say and write here is not necessarily the case for everyone – it is meant as a generalization with typical practices as I am aware.
A Realtor is not an employee of a company, we are independent contractors – with no benefits for health insurance, 401k, or otherwise. We are charged expenses whether or not we make a sale, which can include office fees, desk fees, or other associated fees. We also pay for our own marketing, advertising, promotion, continuing education, dues and anything else associated with operating our business. When we get a listing, we are responsible for all costs associated with the marketing of that property and only “make that money back” if the property sells. At the time a property sells, we earn a GROSS Commission, this is the total amount of the commission charged to the client and paid to our Broker. The Broker then will take their percentage (which can be as much as 50% depending on the agreement) and or other fees OFF THE TOP and the balance is our NET Commission. We receive a 1099 at the end of the year and the amount indicated is the Gross Commission earned but in no way reflects what we actually “made” for the year. Tax laws apply to Realtors as they do any other business or person and our filings are typically subject to tighter audits than individuals or most other small businesses. It has been said that a good rule of thumb, Realtors should see a 22% profit from their business.
What does that mean? Well where you see $20,000 as Gross Income you fail to see the expenses, stress and balancing act so many Realtors actually have to face…all for a resulting $4,400 “profit.”
Treating your Real Estate Career as a Business is the first step to building your own future while helping others to build theirs!