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How Much Do Real Estate Agents Make? (Realistically) | How They Get Paid

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i want to see other people win

we're so focused on ourselves in the

beginning that we forget about other

people but to build an empire

you can't do it with one person what's

up everybody bc here

wanted to get back and do uh some more

real estate videos i'm gonna be bringing

them on as we go on

uh if you can hear they're actually

doing construction in our office right

now

but i'm gonna speak louder to drown out

that noise so we apologize but this is

the only time we have to film all right

let's start how does a real estate agent

get paid

and what does that process look like

this can be for a consumer this can also

be for an agent

i will not use any profanity in this

video so feel free to share it okay so

when i go through the youtube settings

i'm not gonna put

profanity anymore i'm gonna say no

profanity are you proud of uh are you

proud of me

i know i am right let's start a real

estate agent does not get paid per hour

or salary

and this is for the traditional real

estate agent okay i'm not talking about

people who work for redfin or some of

these other companies

which have now created separate pay

structures where now they're employees

you're an independent contractor as an

agent yes you technically work under a

broker

however you are an ic an independent

contractor

which means you're going to get paid

based on the money that you collect from

commissions

okay period so the commission

now when a real estate agent like let's

say me i go meet with bob smith

and we get together and we decide to

list his home when we list his home

there is a commission that is set on

that agreement so for the sake of this

video

let's keep it simple and say it is six

percent right

so we took a listing at six percent

all of the money from the transaction as

far as fees for the agents

that's going to be divvied up whether to

that broker right because there is the

chance that you may double end it like

they say

where you uh have dual agency meaning

that listing agent represents the seller

and the buyer okay

so we'll do seller and buyer but in most

cases right

it's going to be divided between two

agents bro both agencies are going to

distribute that typically they'll cut it

down the middle so it'll go three

percent to brokerage a

three percent to brokerage b okay that's

how it is it's decided up front

from the listing agent so again if

you're working with a buyer and you're

watching this as a consumer

or you're getting your real estate

license and you're wondering where the

money comes

if you ever have an agent ask you again

if you're a consumer or you're an agent

and you don't know

you don't pay them anything okay if

somebody's asking you for money

they're scamming you okay if someone's

asking you oh to show a home or to work

with me

i'm gonna charge you ten thousand

dollars and they ask for like money

under the table that's a scam i'm just

letting you know

okay so let's break this down now we got

it at six percent

let's say that uh the home was five

hundred thousand let's keep these

numbers simple right five hundred

thousand dollar home

right 500k if you can't read my writing

too bad right

500k now you have a split

as an agent with a brokerage meaning

that let's say it's 80 20 like i'm with

exp realty

80 20 would designate that i'm keeping

80 of that gross

commission we have gross and net gross

which is what's made from this

so if that agent at three percent

a five hundred thousand that would equal

fifteen thousand

gross commission okay 80 of that

we're going to give to the agent 20

will go to the brokerage if this is the

split keep in mind

splits can vary it can be 50 50 80 20 70

30 60 40.

they're all over the place i started

they're doing construction again

i started at 5050 and there's another

thing too called

a franchise fee exp realty

the company that i'm with does not

charge a franchise fee however i started

with century 21 as an

example and they had an eight percent

franchise fee so they apply that eight

percent to the total amount

not what you keep so let's say for the

sake of this that

i'm on a 80 20 and let's say that i also

have an 8

franchise fee that means 28 of that

commission

is going to go to the company 20

directly to the broker 8 percent

to century 21 and then i'm gonna be

keeping 72 percent in my pocket

let's do the math real quick for you

guys all right so three percent of that

is going to be 15

000. i want to keep this simple now

that 20 remember we have that 20 percent

that went to the company

and the 8 that's going to the company as

a whole

20 going to your individual broker that

works with you so if that's twenty

percent that's three thousand dollars

and the eight percent franchise fee

would be an additional twelve hundred

dollars

okay so if you subtract forty two

hundred from this that means

ten thousand uh 800 will go to the agent

so assuming you had a 80 20 split and

you had an eight percent franchise fee

follow me here

this is what you would walk away with

net

okay this is what you're going to be

taxed on not that because that's the

check that's going to be cut to you the

initial check

will be cut to your broker your broker

will do these subtractions

then they will send you this so if it's

me brian casella or if i run it through

an llc

like the current llc s corp that i have

is team bc llc

that's when i get paid for uh through

this check is gonna be made to that

and that's what i'll be taxed on okay

now i'm gonna do another video

where i break down what you need to do

with your checks to make sure that

you're smart with your money

okay but we'll save that for another

video this is basically what you're

going to walk away

with so you have your split you have

your franchise fee now

if we add something else which a lot of

brokerages now are going to require you

to have a mentor

okay when i started they wanted me to

have a mentor most places are going to

have somebody go with you

as an example on a listing appointment

or to work with a buyer

because maybe you don't have the

confidence yet to work a client on your

own

have the know-how to do the contracts

and go through the whole process so now

typically that's a 50 50.

okay so 50 50. so if we divide that by

two

what is that five thousand four hundred

dollars

now typically people and companies are

going to have you have a mentor for your

first one two three four deals again

some of these uh variables will change

guys some of you may not even need a

mentor you may not want one that's fine

but i want to give you a reality right

because some consumers think well

man you made three percent of you know

uh 500 000 that's 15 grand well

we walked away with two thirds of that

and that's assuming people aren't

lowering their commission which a lot of

people do in this industry

now at a mentor that's 5400. so the

public thinks you're getting a rip of 15

000 but you're actually getting a third

of that

so in reality these people think you're

making if you sell 10 homes they think

you're making 150 grand

well no if this is what your take home

is and you have a mentor for every deal

you only took home 54 000 so there's a

big difference there

based on the reality versus the

perception now

we have finders fees and other things in

this business as well so i'm not going

to cover all those little nuances

but this is what you want to do and you

have to remember an escrow

right i only get paid if it closes so we

could be a day before closing and if the

deal falls through

this money is gone you only get paid

when it closes and typically escrows

unless it's like a cash deal

real quick closing a couple days no

contingencies no inspections

it's going to take 30 days and right now

it's very convenient for lenders during

this whole coronavirus thing to say

oh we're slow because of the coronavirus

now you just added another 15 days

so if you're working with a seller and

it takes a couple weeks to put the home

under contract

then it takes another 30 to 45 days to

close it

you're looking at a two-month turnaround

from signed contract

to getting a check assuming that it

closes

okay now i'm making this to give you a

reality on what it's really like to be a

real estate agent

okay there's a lot of pieces to this

puzzle now i know this is

really a lot that i wrote here and

that's why i really wanted to

walk you through it step by step but

this is a formula that

is pretty simple but a lot of people

don't get it so

again this is for the public but also

for the people who maybe are newer who

haven't gotten paid too much yet

this is what you want to know all right

this is the reality so now when you're

planning

especially if you're an agent and you're

planning

you can plan accordingly you're not

gonna walk away with that fifteen

thousand

okay some brokerages will offer you a

flat fee right and they'll only charge

you 500 bucks a transaction

but then maybe they don't offer training

versus another one where

they're offering you training you might

only walk away with that 5400

but for you as an agent you need to

think okay which one makes more sense

where i'm going to have some help

or where i'm not going to have some help

because if i was an agent i would rather

close

10 deals or more at getting 5 400 even

with a mentor let's use that extreme

scenario where they're using a 50 50

mentor on every deal

i'd rather close 10 of these than you

know three or four like this and

struggle all year

because i'm not going to make much more

money here overall but imagine the

experience

selling 10 homes that you're going to

gather versus selling three or four

and feeling like you have to fight tooth

and nail for every check

so this is also going to be able to

teach you some responsibility with money

which again we'll cover on a different

video

but these are some of the harsh

realities about this guys and many of

you may be coming in with these huge

illusions of grandeur that oh man

i'm going to make a lot of money and i'm

going to sell five houses i'm going to

make 15 grand

if i only sell six or seven houses i'm

at a hundred grand uh-uh because even if

you don't have this

you have to sell ten houses to get to

that not

six so this will help you plan more

accordingly and again if you're a

consumer

and maybe you don't like realtors you

can find out that you know we don't make

as much money as you think a lot of

times

and then you know this isn't taxed by

the way right for those of you who stay

to the end of the video

you have to take out for taxes right so

i'm taking at least

let's say i make the ten thousand eight

hundred i'm taking at least 25 30

of this right so we'll say that's a flat

three grand

for taxes and i'm gonna put in a

separate account and put away i only

walked away with seven

and this is higher than the average

price point in the united states

i think in the united states the average

price point is half of this

and i'm walking away with seven clear

after setting aside for taxes

so if i sell one house a month what is

that eighty four thousand dollars a year

that's pretty good but it's not

spectacular

like they would make you think when you

watch these shows like million dollar

listing where they're making three

hundred thousand dollar commissions

that's reality tv this is real life okay

so hopefully this video helped you

if something like this is what you like

and you would like for me to break down

some more facets of real estate

so you understand it and it's more uh in

a simple fashion that way you can really

really understand it very quickly then

let me know

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