There is a debate in the world about the usefulness, and alleged obscene amounts of money earned by some professions.
We are aware of the fact that real estate agents are not the most trusted professions in Australia.
The Australian Reader’s Digest produces an annual list of most trusted professions.
Here is where Real Estate Agents ranked in 2011:
38. Celebrities
39. Sex workers
40. Journalists
41. Taxi drivers
42. Real estate agents
43. Car salesmen
44. Politicians
45. Tele-marketers
I can see why the public has ranked us this way and I’m going to make it my mission in this article to expose the truth and show how rich we really are!
Are real estate agent overpaid?
The truth is that the average real estate agent only makes a modest income of $47,457 p.a. See independent resource Pay Scale below;
There is difference between a real estate agent and a real estate agency which fuels the myth of individual Real Estate Agents earning big money for selling a home.
The individual agent would only earn a portion of the commission for each sale with the balance going to his / her agency.
It would be common for an individual agent to earn 1/3 of the commission for the sale and the balance going to the agency he/she is working under.
How many hours real estate agents actually put in?
Just like any self-employed person you will need a passion for what you do, a crazy work ethic and have some of the same insecurities as us real estate agents (no work — no pay).
On a regular basis many of us work 12 hour days including Sundays.
We sometimes work with clients for 2 years or more before making any money out of the relationship and some we may still be helping 3 years down the track without having done any business.
Risk VS Reward
How many trades people would do all the prep work and put everything in place to complete the job, having paid for everything needed to get the job to the starting line, only to have to wait perhaps weeks, months or years to realise any form of payment, if at all?
And what if, after all that work and outlay, the whole thing goes pear-shaped and falls over due to something that the real estate agent can’t control?
If a real estate agent clocked in and out each time they worked on a particular property, kept a detailed list of associated expenses and then did the math from the final commission paid over the time taken to earn it, the rate would work out to be close to the minimum $/hour as defined by the powers that be, in the majority of cases.
I want you to ask yourself this: how many people would work with no retainer, no car allowance, and every weekend, some nights, supply your own stationery, business cards etc and you only get paid if you get the results.
Now that’s not to say that some sales don’t calculate differently
Those homes that are listed and sold quickly after only a short relationship are obviously, far more profitable from that viewpoint, however, they are the exception, rather than the rule.
Most people take around 6 — 18 months to sell their home from the moment they get the idea and start checking into it until the day the house settles.
So if you work it out, here is the mega commission you think a real estate agent earns for a sale.
The commission cut up
Let’s say an even $10K for the purpose of this exercise and we’ll use all the lowest common variables: $10K commission for 6 months work (180 days),
Let’s say at 3 hours per day,
3 days per week (just for arguments sake) = 216 hours = $46.30 / hour (approx).
From that, you need to take the Franchise Fee (if applicable) @ 10% = $41.67 / hour and then take out the cut that the agency you work for gets — for an average agent, that’s 50% = $20.84 / hour maybe a referral fee.
At this stage we haven’t even taken the taxes, fuel, car, phone, training and other overheads out yet.
I don’t see many of us retiring to Hawaii anytime soon on those numbers.
The reason agents are paid so much is the risk, how many people would go to work 10–12 hours a day 6–7 days and possibly not get paid?
Seriously think about who would go to work do their job, be on call, get dragged away from their family and then at end possibly not get paid.
The average agent earns $60-$80k per year working hours that most would have their unions shut down a workplace if they would forced to do, let alone at the risk of not getting paid.
Some agents not worth the money
A real estate agent will earn in direct proportion to the amount of work they put into their job.
Yes, there are a large number of agents who aren’t worth putting out if they were on fire; that’s why you need to interview a few before you decide who to work with.
The Good
Just like anyone that is good at their job they are in high demand.
- They have methods, know online/offline marketing, systems, and a track record of success.
- You will see their marketing and sign boards everywhere on a regular basis.
Yes, a lot of agents go for price reductions as their only option to sell property — but not good agents, they know how to do the job properly and they can;
a) Price the home correctly in the first place with a clear proven strategy in mind and
b) Will find the real reason why the property isn’t selling (put all B.S. to the side); it’s not always because of the price.
I will agree, some agents have egos larger than the known universe; they need some inherent belief in their own abilities to be able to get up each day and be told to ‘rack off’ by the next 40 people they speak to and keep coming back for more.
The Average
It’s the old 80/20 rule. 20% of the agents make 80% of the money.
A good real estate agent will continue to learn and hone their skills over their career: others will plod along, lasting maybe a year in a job they were never suited to but were drawn to by the promise of unlimited earning capacity, total work/life freedom and other shiny concepts that can’t be delivered without massive effort and constant hard work.
This is why we have a massive influx of Gen Y’s entering the industry but they are lucky if they make it past the 12 month mark.
We also have one of the highest churn rates of new staff and broken dreams as an industry (there is always fresh meet for the grinder in the real estate industry).
- These agents don’t have a clear plan, methods, they have no idea about online/offline marketing, limited systems, and struggle to show a track record of success.
- You will not see their marketing and sign boards on a regular basis.
The bad
When you interview these agents they fold easily when you quiz them about their negotiation abilities. 
They will resort quickly to commission cutting to get your property listing.
There is an old saying “Price Is Only An Issue In The Absence Of Value”
Good agents spend a lot of time and money learning negotiation so if an agent cannot negotiate his/her fee what will they do with the price of you home? HHHmmm… I wonder…..
These agents are best characterised by;
- No clear method of negotiation and resort to commission cutting to sign you up.
- Lazy and want to belt the price to below the land value.
- Don’t bother with decent signage, then forget to advertise the open house and wonder why no one turns up but use the excuse to say “your price is too high”.
- Use of particularly bad photography thus targeted by buyer agents on the hunt for easy/cheap deals.
Real estate agents are worth it for most sellers.
A good agent earns his/her fee.
As for the top earners?
Yes there are a few who earn $500,000 a year, just as there are salespeople in other fields that earn that sort of money.
But for every $500K earner, I will show you another 500 salespeople who earn less than $60,000, particularly after deducting their vehicle
and phone costs.
Successful people earn good money, unsuccessful people do not.
That is how the free enterprise system works, people!
As for people selling their own homes, remember that the skill of a good Real estate agent is to get the buyer up in price, negotiate the deal.
The average person does not have this skill and gets less for their home.
What some people must understand is that most people do not sell and buy a terrific amount of houses in their lifetime.
For the majority they may sell 1 or 2.
For the most part sellers are very emotional when selling and at times temporarily insane.
Therefore you need an objective party handling the negotiations.
The personal sacrifices
The thing is… real estate agents can be as wealthy or as poor as anyone, but what people forget is the amount of sacrifice of personal time and energy that goes into successful agents. 
To those of you who say they don’t deserve what they earn, I challenge you — agents make the choice to either work their guts out to make the most they can, or they can cruise by and
do the bare minimum…therefore earning the minimum wage.
In today’s world where even the smallest commodities come with huge price tags, most people have to earn as much as they can to support their families and lifestyles, but oh boy does it come at a price.
Leaving before 8am and getting home at 9pm, kids school events missed, weekends full of open homes and negotiation, and that bloody phone that can never be turned off!
Real estate agent “working like a dog”.
You say they’re always out at lunch?
Most likely it’s a meeting with a client, or a negotiation.
Swan into work whenever they want?
Well sure, they’re mostly out of the office on the road closing deals, doing inspections or visiting homes for appraisals.
Real estate agents live and die by the work they do and absolutely deserve what they earn.
They give up a lot to achieve success, going from absolutely nothing to a thriving career based on their own hard work and tenacity.
Looking rich is all part of good real estate agent marketing
Would you trust your most valuable asset with an unsuccessful looking real estate agent?
At this stage you may be asking yourself how come real estate agents own expensive cars, watches, and offices? As you probably have already realised agents are all about personal promotion.
Blake Garvey, action real estate agent good looking and on The Bachelor.
To even get an interview as an agent you have to already look the part (especially for me as Gen Y with no experience at the time).
For me that meant I had to get a car loan and buy a late model car, nice suit, watch and cufflinks (all on credit card).
I know many real estate agents that don’t really care about what car they drive, such as Leon Gietzmann a Seven Hills real estate agent but unfortunately we live in a materialistic society.
He drove an old ford for many years but he realised he had to eventually buy a car that looked good.
Sellers make judgments whether we like it on not on such things, either it be subconsciously or consciously.
Because we look successful, people have preconceived notions that we are living it up but in reality it’s all good marketing.
I often ask the agents around the office “How was your weekend?”
The usual reply is “Aaaarrrr I was in the office for most of it”.
End of conversation.
Why do I need an agent to sell my home when technology helps me do it so easily?
You may still be thinking if someone WANTS to buy a house THEY WILL, and the Real Estate Agent him/herself will have absolutely nothing to do with that decision!
This is true to some extent but at what price?
If you think real estate agents are a dying breed and you think you can sell you own property for top dollar, I think you should, but just make sure;
- you don’t hold back on the marketing,
- have a system of negotiation to get the best offer,
- flexible work hours for buyer meetings
- and do your best not to get emotional.
Although there are many owners who have the ability to sell their own homes, there are millions of others who are petrified at the very thought.
Here is one example that I have seen a few times:
The “Sale by Owner” vendor has had what he considers to be an excellent inspection with Mr and Mrs Jones.
They are making good buying noises, or so he thinks.
They say “We will get back to you”.
Two days go by and not a word!
What does the private seller do?
Does he phone them?
The thought crosses his mind that if he does that, he might risk appearing as an anxious seller!
Does he even have their contact details? Does he start to doubt his assumed ability to be able to spot a definite buying signal?
Hmmm! Maybe this is not as easy as I thought!
A good agent doesn’t have to worry about these things.
He is not embarrassed to phone Mr and Mrs Jones. That is his job!
A good agent is also a damn sight better in spotting buying signals than the average home owner. 
If Mr and Mrs Jones had been making genuine buying signals the good agent would have had them back to his office negotiating and filling out an offer! That is the difference.
Sellers that get emotional during the selling and the negotiation process usually make irreversible bad decisions (unknowingly), that cost them more than an agent would have.
I have seen it almost on a daily basis and I will admit I have made many of the bad decisions when I first started.
This is why good agents spend thousands of dollars on coaching and training of selling systems.
This human element of selling a property is why real estate agents will always be needed.
Editors Note: This article has been republished for the benefit of our many new readers
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'Are All Real Estate Agents Rich And Overpaid?' have 44 comments
February 19, 2020 Jenny
I enjoyed the article. As someone who has just sold a property through a local agent, a weighed up the advantages of agent vs selling myself. The agent had a database full of potential buyers, organised everything and had the house sold at a price I was happy with in just 5 days. Sure I could have done it myself, but so glad to have the expertise of the agent and their skills – absolutely happy to hand over the 2.5% commission that saved me time, energy, stress and potentially a lower sale price.
February 19, 2020 Michael Yardney
Well said Jenny
February 9, 2020 Morgan
Your figures appear to be a gross distortion of the truth. The figure is closure to $200k/ annum. Salary estimated from 366 employees, users, and past and present job advertisements on Indeed in the past 36 months. Last updated: 30 January 2020 ref: https://au.indeed.com/salaries/real-estate-agent-Salaries
February 10, 2020 Michael Yardney
Morgan – those figures are very interesting but very inaccurate. A small sample
Having been in the industry for a number of decades and working with selling agents in 3 states I can tell you that while there are some very high earners (and they deserve it) most agnets don’t earn anything like the figures you quoted
December 27, 2019 David Hart
Well written article Michael
December 27, 2019 Michael Yardney
Thanks David – have a great Xmas
August 31, 2019 Jeanette
Most of us are not concerned with all the work an agent puts in but does not get paid. The 6% he or she earns just to sell my house is a lot of money.
August 31, 2019 Michael Yardney
Jeannette – the normal commission os somewhere between 1.5% and 2.5% – NOT 6%
August 25, 2019 Darius
Hey Michael, so would yous say that the more successful agents are the ones that work hard, and try there best to sell houses at the best price will be getting a lot more money? And how do agents acquire houses so they can sell them, does the company recommend an agent to the house and then they now work for the seller? or do the agents acquire houses themselves? and can you describe what a successful agent looks like?
August 25, 2019 Michael Yardney
Darius
In my mind the most successful agents are the ones who achieve the best price For their clients in selling their homes at the highest price with the least fuss.
In general these agents more than just order takers, They are great negotiators and have good people skills
May 1, 2019 Chris Arnold Real Estate Mayfield
Hi Michael
Most of the people have misconception regarding real estate agents that they loot the innocent clients but I agree with the article that this is not true all the time. Thank you dear for written on such great topic. Really appreciate it.
December 17, 2018 mick
The most successful agents in our area are nice people and they are also salespeople and negotiators. they are always successful and I know they would get me the best price for my property. I dont know if i would feel the same way buying but if you’re selling and you ask your agent not to push for the highest price all power to you. If not you want the best, and the best drive BMWs and live in nice houses. their success is your success.
December 17, 2018 Michael Yardney
well said Mick
July 1, 2018 Duncan
This article is nonsense. Agents get paid a lot of money for a profession that contributes very little to society.
The architect who designs the properties you ‘sell’ doesn’t make half as much for designing and constructing a property as you do. Real estate agents are greedy vultures.
July 1, 2018 Michael Yardney
Intersting thoughts Duncan – have you had a bad experience with an agent? Most people don’t feel that way
June 26, 2018 Gwadar Central
Well written this article. keep it up
March 23, 2018 David
Well, I find the arguments put forth fallacious. Like what many people have said, most properties sell themselves. Paying someone in excess of 10k to do an open home, take some pictures and print out some brochures does not justify the cost. It isn’t like paying a chiropractor or physiotherapist who spent years of rigorous training to become qualified, decent amount of money to help you rehabilitate. Never can I imagine how you can justify the expense for such a low skilled position.
It really is just a system and culture we’ve come to accept as a society, that when one wants to sell their home, they do it through an agent.
March 24, 2018 Michael Yardney
David – having bought and sold hundreds of properties and have dealt with both good and bad agents representing the seller, I can assure you that a good agent can earn their client (the vendor) tens of thousands more in a final sale price, just like a bad agent can cost then tens and tens of thousands
August 6, 2018 Tracey Maguire
Real Estate Agents sell their souls and that’s why they get paid more. The Worker in Me By Tracey Maguire will enlighten you.
April 5, 2017 Tom
Hi there, fantastic read!
I am currently a university student in Melbourne and was wondering whether to pursue a career in this profession. I have a few questions to ask:
1) How easy is it for a student to come out from a course and find work immediately in this industry?
2) Does the agent’s salary only get determined on the commission or does the company he/she works for pay the individual extra?
3) What percentage of agents who are committed to their jobs earn a high salary $100k plus and how does experience and years of practice effect this?
Thanks
April 5, 2017 Michael Yardney
Tom
There are always opportunities in real estate for hard workers – you start at the bottom and work your way up.
Usually you get paid commission on results but few agents earn $100k plus as they don’t persist.
Those who do can earn much, much more than this
March 25, 2017 Patrick
Hi There,
Amazing article, really provided a helpful insight. Just a couple of quick questions, to follow up:
1. Do you guys think real estate agents will become redundant in the future? due to new technologies and other factors.
2. Also, overall what do you think the median salary is for a real estate agent in Sydney/Australia? Are we looking around 50ish or closer to 70/80?
Thanks!!
March 25, 2017 Michael Yardney
Patrick
The real estate industry is going through digital disruption, but there will always be room for good agents who help there clients.
Top agents earn very high incomes, but the median salary is low because there are many underperforming agents who eventually leave the industry
March 25, 2017 Patrick
Thanks for the response!!
Would be it fair to assume the median/average is really as low as 45-50?
Thanks again.
March 26, 2017 Michael Yardney
Patrick
If you’re planning to become an estate agent and that’s all you’re aiming for, don’t even bother. It’s a commission only job and many people leave the industry after a few months, on the other hand those top performers who help their clients make a very good living
February 4, 2017 Ali
Warren, how many properties do you think an agent needs to earn 6 figures a year?
20,30,40? or even as little as 10? I have read different articles, all giving different perspectives. Some think to believe agents earn easy money, conversely articles like this make me believe otherwise.
Thanks
February 4, 2017 Michael Yardney
Ali
Agents usually keep between 25% and 50% of the commission on the sale of a property – the balance goes to their office or the owner of the business.
In the cut throat business of real estate agency some agents are substantially discounting their commissions to get listings – so they get a small percentage of a lower fee.
However, as in every industry there are top performers and the rest. Real estate can be a rewarding career for those who are prepared to put a lot of hard work in – the problem the job is very disruptive to your personal life, with a lot of after hours and weekend work
December 21, 2016 Morris
Biased – what a joke – a property sells itself these days and that’s why the future of agents is fast declining – self sell products and could robot agents will do the selling – the owners just open them up. The industry is already a sausage machine – agencies and franchisees are making the money corporate over head is why it’s $10k poor agent – how about the screw the corporate overhead!
December 21, 2016 Michael Yardney
Morris
Selling property is easy- selling property for a top price is difficult
December 8, 2015 Hannah
Good, comprehensive article, Jhai.
Real estate, like all industries, has agents with a large range of abilities, so I like that you focused on the average salaries and commissions, not just the highest ones (the 80/20 rule). There are so many things that agents deal with that most people don’t realise.
Thanks for this article!
January 22, 2015 Jeff
A couple of things here. How the commission is split between the salesperson and the agency is irrelevant to the vendor. It’s all just commission to them. If the salesperson is a skilled negotiator perhaps he should start with the deal he gets from his employer. Also, after reading Jais article, and please, I mean no disrespect, these are just my observations, what exactly is a fair commission. If the best agent is the one who gets the highest price (Michaels view), the idea that it’s a fee for a service doesn’t really apply. And how do you know at the outset who that might be, or even after for that matter. Lastly, I don’t think there are any straight forward answers to this. Maybe it just comes down to better communication and treating fees on each listing individually.
January 23, 2015 Michael Yardney
Thanks Jeff – you make some good points
January 20, 2015 Jeff
The image of agents has been created by the agents themselves, not those who perceive them. There are properties that sell easily and those that take a lot of time and effort. Are they really worth the same commission? It’s around this issue and about what is a fair and reasonable that fees become hard to fathom. I agree with Michael that the agent that gets you the highest price is the cheapest but you simply cannot determine this at the outset, or even afterwards for that matter.
January 20, 2015 Michael Yardney
Jeff you make some good points
Choosing a good agent is very, very hard as they’ve all be trained in how to do “listing presentations” to impress you and win your business
Then, as you say, the proof is in their performance.
So how do you choose an Agent? Recommendation form a satisfied client is a good start. That’s also why Vendors Advocates are springing up
March 31, 2017 Simon
So Michael, tell me why it costs 3% to sell a $300K home ($9K commission) and 3% to sell a $1M home ($30K commission) ?
Does the $1M home take 3.3 times longer to sell with 3.3 times the effort ?
March 31, 2017 Michael Yardney
Simon, I’d want a much better negotiator to sell my $1million home and Id be prepared to pay for his or her skills cos they could easily get me an extra 5% for the value of my home
March 31, 2017 Simon
Michael, the same person is selling the 2 different priced properties!
The Real Estate industry survives by instilling fear into the Vendor. If you don’t sell with me your going to lose money … when in actual fact most agents want to turn the property around as quickly as possible before their contract period is over, they’re not so concerned about the extra $50K that could be achieved as that’s only another $1.5K to them in commission but $48.5K to the Vendor. I’m not in the industry but I’ve worked for enough agencies and heard all the backroom chat to know how it works.
March 31, 2017 Michael Yardney
Simon. The concept is that you would rent where you want to live, but can’t afford to buy and then but an investment where you can afford it, in a cheaper area
July 4, 2018 rick
if you’ve been in a carer for a long time you tend to be worth more (pay rises ect) if youve manage to last long enough in real estate (where your on commision only and so many people are unsuccessful) that your selling million dollar homes or more then your no newbie and would have put years into your profile to be picked by that vendor as the sales agent and you must be bloody good.
Now if you have the same person sell a smaller house for 300k (does that even exist lol) yes he makes less money on that job because he could have been selling that house without having such a big profile, if you get this same person for the smaller house then awesome your probably getting good expertise for a smaller cost. although i wonder which place they will put more time into if they’re flat out wich they 100% will be if they’re a top agent… for example if they needed to have both these places open homes at the same time…they might for example personally be at the million dollar place and have a personal assistant at the 300k.
January 19, 2015 Jim
“Looking rich is all part of good real estate agent marketing”
How true, know agents who sell only a few houses a year but drive new BMW, Jaguar, Mercedes, don’t know where the money came from though, must have baked bean and instant noodle every night !
September 19, 2014 Hari Yellina
Good article. I have friends who are agents. They work so hard and earn very little. I know why now. You have nailed it.
Thank you.
September 19, 2014 Jeff Gregg
The article was obviously biased and self serving. With lower commissions there would be fewer better agents and this perception of agents would change for the better. I have a friend who has worked in both full and discount commission agencies and is making far more sales and thus earnings now at the lower rate of commission.
September 19, 2014 Michael Yardney
Thanks for your comment Jeff
I see it differently – like every other profession / job /service there are good, bad and indifferent providers.
In my eyes the cheapest agent is the one who gets you the highest price – and that is often the best performer who usually charges a higher commission
September 19, 2014 Sam
Hit the nail on the head with this article. Well written.