I’ve had some people end up on my blog after Googling phrases about “being a Realtor®”. Apparently they are thinking about getting into the business.
The first step to becoming a Realtor® in OHIO is to take 130 hours of specific classroom coursework. Then a broker must agree to have the person associate with their brokerage. (agents are self-employed, not employees) Once a broker has agreed to have the person represent them, the person can take the State licensing test. If they pass the test, they are now considered a licensed real estate agent. The person doesn’t become a Realtor® until they join the National Association of Realtors® and agree to abide by their Code of Ethics.
According to the Ohio Association of Realtors® 2007 OAR Member Survey …
- The typical Realtor® in Ohio is female. Females make up 65% of the membership in Ohio. Nationally, women make up 54%.
- The median age of an OAR member has continued to trend upward, reaching 54 years in 2007.
- The overall GROSS income in 2006 was in the category of $35,000-$50,000.
- Respondents to the survey who were in their first year reported gross incomes of less than $10,000. (it’s a hard business to get into)
- Respondents who considered their work to be full-time had a median gross income between $50,000-$75,000. Those who worked part-time reported gross incomes between $10,000-$25,000.
- 84% of the respondents claim to work full-time.
Notice that the income earned is a GROSS amount. We’re self-employed so we are responsible for paying our own income taxes, FICA, health insurance, etc. We also …
- pay all the professional association fees (NAR, OAR, CBR) and our licensing fee.
- pay the broker a monthly fee in addition to the broker’s split of the commission.
- buy our own lockboxes and electronic keypads to open the lockboxes.
- must buy the yard and open house signs (depending on the broker).
- buy business cards, promotional materials, office supplies, paper, envelopes, etc.
- buy all techie toys which are essential such as a phone, fax machine, computer, computer programs, PDA’s, printers, scanners, etc.
- pay for continuing education classes (30 hours every 3 years)
Generally, a person should plan on spending $3000-$5000 just to get set-up in the business in their first year. An agent should really have a web site and those costs vary considerably, from $500-$10,000. The agent should also pay to have Showcase listings on Realtor.com which start around $500 for a few listings up to thousands of dollars for many listings.
When the person is lucky enough to get a listing, all the advertising expenses are paid by the agent. These costs can range from $500-$1500 per listing, depending on long the home takes to sell.
So how much do we make when a home sells? Well, first of all the commission is split 4-ways. The seller pays the commission to the listing broker. That broker then pays the buyer’s broker. Then each broker pays their respective agents based on the particular split the agent is under. On the sale of an averaged priced home selling for $200,000, an agent could gross as little as $3,000. That’s not much money for several months of work and lots of marketing expenditures during that time.
A “newbie” agent should either have a spouse that can support the family the first-year or so, or have a year’s worth of living expenses saved to live on until they are able to sell some homes. They should also plan on working at least 6 days a week and most likely 12-14 hour days. We’re like baby Dr’s … we’re always on call in case a contract comes in. We work when our clients do and we meet with the clients when they’re NOT working.
It’s a great business to be in because we meet so many nice people, and we help them at a very important and thrilling time in their lives.
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