JES,
Lets take an average transaction of $600,000. Average fees these days are about 4.5 to 5% not 6%. That gets split in half with 2 to 2.5% going to the listing agent and 2.5% going to the buyers agent.
That is $12,000 to $15,000 for each agent. The broker the agent works for typically gets 50% to 30% off the top leaving $6,000 to $10,000 for the agent. The average agent does 2 to 4 transactions a year while good agents do 8 to 12 transactions a year. There are a handfull of top agents that do more than that (maybe 5 to 10%).
So a very good agent working their tail off earns $80,000 to $120,000 in gross commissions. These are the folks you see providing neighborhood updates every month who have been doing so for the last several years or longer. They are the names and faces you recognize if you have lived somewhere along time. Health insurance for a family runs close to $10,000/year. Out of pocket expenses run $10,000 to $20,000 a year. Liability insurance, MLS fees, license fees etc add another $5,000 a year. Both sides of SS is around 12%+. Combine a 60 hour plus work week with nights and weekends. Bottomline is they are making the equivalent of a job paying $50,000 to $70,000 and taking the risk of earning NOTHING! Does that seem like a lot to you for someone that is very successful at doing something they have been doing for 10 years?
If you assume prices fall by 30%, they will take a paycut of $25,000 to $35,000 and will then be netting $25,000 to $35,000 before taxes if they are successful. Does that sound like a job you want?
