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Real Estate News and Advice |
July 10, 2009 |
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 How Much Money Can I Make In Real Estate?
by Blanche Evans
According to the "2001 National Association of Realtors Member Profile" study of its members completed in 2000, the NAR says that the longer you stay in the business, the more money you're likely to make. How much money? That depends on a wide variety of factors from your gender to your educational level, from your adoption of technology to your age. What does it take to make money in real estate sales? Here are some truisms to keep in mind:
According to the NAR, the typical Realtor, the 800,000 brokers and salespersons who are members of the NAR, earned a median gross personal income of $47,700 in 2000, the latest that income figures are available. The bull real estate market of the turn of the new century created buoyancy in incomes; 23 percent of NAR members had incomes over $100,000, compared to only 10 percent in 1996. Brokers had a 16 percent increase in gross personal income from 1995, to $73,400. Thirty-six percent of brokers earned more than $100,000 in 2000, compared to 16 percent in 1995. Agents, salespeople representing the brokers, saw a $4,000 increase in gross personal income to $34,100, a 13 percent increase from 1995. Fifteen percent of agents earned more than $100,000. If this sounds like good money to you, be sure to factor in the following: The figures above represent gross personal income. Net income is another story. Realtors have high business development costs compared to other professions because they most often work as independent contractors. For example, the typical Realtor spent $6,600 or 14 percent of gross personal income on business-related expenses, which can include everything from continuing education, to membership fees, to paper clips to advertising. That drops the median income from $47,700 to $41,100. Therefore, your ability to make money will depend largely on your ability to control expenses. Twelve percent of Realtors reported less than $1000 annually in expenses, while a similar number reported over $30,000 in expenses for 2000. A typical Realtor with a gross personal income of over $100,000 spent $26,300 on business-related expenses. A majority of this expense is for self-promotion. Can you improve your chances of making money? While some things may be out of your control, you can improve your income in other ways. Gender While broker and agent salaries were on the rise in 2000, disparities arose in results between males and females. Fifty-six percent of Realtors are female, with women entering the profession at a faster rate than men. However, 54 percent of brokers are male, but that is a lower percentage than previous generations. In 1978, only 21 percent of brokers were women, so women are making headway in real estate management. However, they are far behind in earnings. In 2000, males earned $57,100 while female Realtors earned $42,900. The growing number of female brokers suggests that there is not a glass ceiling for women in real estate, so the disparity in incomes could be attributed to some of the same causes as other professions. While some pockets of prejudice may exist that prevent female Realtors from rising to management positions within franchises or brokerages, the difference in income may also lie in the choices made by females. Females volunteer more often to be the family caretakers, causing them to leave the workforce and reenter at a later date or to take part-time or stay-at-home work as opposed to full-time employment while caring for families. There are also differences in business styles and attitudes between males and females, with males typically showing more aggressive behavior than females. This can be an important difference in real estate sales where a lot of income-earning opportunities are based in competition for listings and buyers and in farming activities. Education Just as brokers earn more than sales associates, better educated Realtors earn more money. According to NAR, 88 percent of Realtors have some college education, compared to 51 percent of the general population. Twenty-six percent of Realtors have a Bachelor's degree, while an additional 19 percent have a graduate degree or some graduate work. Twenty-three percent of brokers have some graduate study or a graduate degree. Forty-one percent of sales agents have a Bachelor's degree, and 16 percent have taken some graduate courses. Realtors with Bachelor's degrees have incomes that are 30 percent higher than those without such degrees. NAR affiliates which offer educational and skill development as well as designations to Realtors in specialties such as property management, residential sales and buyer's representation, also earn more money than agents who don't belong to the NAR's subsidiaries, councils and societies. Seventeen percent of NAR members belong to a NAR affiliate, and holding an affiliation can result in 72 percent more income than other Realtors as a result of the training, networking and knowledge shared by these organizations. Experience The typical Realtor has been in the real estate business for about 13 years, with brokers having twice the tenure as salespeople. Experience matters, as Realtors with 16-25 years experience earn $38,600 more in gross personal income than other Realtors. However, age may take a toll as those with 26 years of experience or more tend to earn only $17,700 more than less experienced Realtors. Sales agents with 16-25 years of experience earn `68 percent more than agents with only one to five years of experience. Related to experience is whether a Realtor works part-time or full time. The more hours put in, the higher the income. Realtors working 20 hours a week or less only earned $9,000 in gross personal income while those working 60 hours a week of more had a gross personal income of $99,300 in 2000. Internet technologies Internet technologies can be used by Realtors for managing their contacts and businesses, communicating with prospects, and to market themselves and their listings and other services. It's clear that some Realtors are better at utilizing the Internet and its tools than others from the following results. While 75 percent of Realtors report using e-mail, Realtors who report using e-mail earn $16,200 more than those Realtors who don't use e-mail. Similarly, Realtors who reported using the Internet for business, earned $8,700 more than their counterparts who don't use the Internet. Returning to the topic of marketing, Realtors who used the Internet for marketing by having a Web page on the World Wide Web, earned more money in 2000 than agents who didn't have a Web site. Realtors with personal Web pages earned a median gross personal income of $68,500, or 85 percent more money than agents who don't have a Web page and don't plan to have one soon and were content to earn $10,275 in 2000. Published: August 21, 2002 Use of this article without permission is a violation of federal copyright laws. 
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Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68.
