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7/17/13

Becoming a Real Estate Agent

Q - I have been thinking of changing my career and becoming a real estate agent.  I heard of an agent who earns 100% of the commission.   Is that a possibility for a new agent?

A - The short answer is 'probably not'.

Commissions have 2 sides.  The listing brokerage, through the listing contract, negotiates the commission with the seller.  This commission is then shared with another brokerage, the selling brokerage.  The commission offered to the selling brokerage is usually 50% of the total commission -- but not always.

The agent you referred to who was getting 100% of the commission usually means that he is getting 1/2 of the total commission - either the listing end or the selling end.  It is possible for the agent to get the entire commission if he listed and sold the property -- often referred to as 'double ending'.

Agents who  receive 100% of the listing or selling commission do so because they are paying the brokerage a monthly fee.  This monthly fee is often referred to as a 'desk' fee which enables the agent to use an office and all the services provided by the brokerage.  Private offices and other special services dictate the monthly fee.  This could range from $1000 per month or more -- usually more.  It is the well experienced agents who opt for such a compensation package.  They have calculated that their expenses of $12,000 plus, over the course of the year, will be considerably less than sharing the commission on a percentage basis with the brokerage during the course of the year.  Splits between the brokerage and the agent vary depending on the agent's experience and the training available from the brokerage.  The agent's share can range from as little as 40% and moves up from there.

Becoming a real estate agent is a good profession if you understand the positives and the negatives of self-employment.  There is an axiom that states 20% of agents do 80% of all business.  If you are in the 20%, then you are doing well.

To become an agent, you will have to take the real estate training course and write an exam.  Speak to several real estate companies to see what they might offer a new agent.  Most importantly, be sure you have enough money set aside, for at least 6 months, so that you can support yourself while you are building your business and can also meet the monthly real estate expenses that you will incur.



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