By Jay O’Brien
Do your clients view your commission as hard-earned income or a jackpot paycheck? I would be willing to bet the majority view a REALTOR®’s income as the latter. In fact, we constantly hear about the bribery and illegal kick backs awarded to those referring clients in the way of their friends or family. The idea of this should really raise the red flags. Are there actually consumers out there who feel comfortable earning a credit solely in exchange for doing business with a certain “professional”? Sounds more like a multi-level marketing philosophy than a legitimate sales technique. Why are so many real estate agents quick to offer their compensation to someone else? In simple terms, they need the cash.
Consider these staggering statistics:
- 90 percent of agents complete no more than 3 transactions a year (Orange County MLS 2012)
- 65 percent of agents sell zero homes a year (Orange County MLS 2012)
- Only 1.8 percent of agents sell a minimum of one home per month (Orange County MLS 2012)
- The median real estate income was approximately $39,140 last year (BLS.gov / May 2012)
Now consider this:
According to a 2013 MIT study, for a single adult, the least required annual income to survive in Orange County (before taxes) is $27,284. For a family of 4 to keep their heads above water—or above the poverty line—one must earn no less than $50,390 a year.
Assuming an average commission of 2.5 percent earned (excluding taxes and brokerage splits), this means only 11.6 percent of agents can afford to live off their income.
Enough with the jargon, here’s the real question: Continue reading »