{"id":12050,"date":"2010-05-24T08:44:32","date_gmt":"2010-05-24T15:44:32","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=12050"},"modified":"2010-05-24T08:49:37","modified_gmt":"2010-05-24T15:49:37","slug":"is-this-normal","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/12050\/is-this-normal\/","title":{"rendered":"Is This Normal? (What Seattle Real Estate Agents Earn)"},"content":{"rendered":"

We’ve spent plenty of time trying to figure out what’s fair to pay Redfin agents<\/a>. As part of that exercise, we analyzed the gross commissions for all Seattle-area (King County, to be precise) agents who closed at least one transaction over the past year (May 12, 2009 to May 11, 2010). The data surprised us, so much so that we thought we’d ask this community if we’re making any obvious mistakes.<\/p>\n

We sorted the agents by gross commission, assigning percentiles to each. When we didn’t know the commission on a deal, we assumed it was high: 3% for each side.<\/p>\n

Agents at the 50th percentile of pay earned $29,820 in gross commissions. Agents at the 75th percentile earned $75,018. You don’t hit $100K in commissions until the 82nd percentile. Then we graphed the data, showing the gross commissions on the vertical axis, and the percentile of the agent earning those gross commissions on the horizontal axis. The result was a hockey stick:
\n\"\"<\/a><\/p>\n

But then we reasoned that a lot of part-timers are closing one or two deals on the side while working another job; so we excluded all the folks who earned less than $25K in gross commissions. This shifted the graph to the right a bit, but otherwise we still saw a very small number of agents earning a huge proportion of the total commissions in a market:<\/p>\n

\"\"<\/a><\/p>\n

Then we asked ourselves how much money a good agent — say, someone earning $100,000 in gross commissions — has to shell out in costs each year:<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Type of Expense<\/th>\nTraditional Agent, Annual Costs<\/th>\n<\/tr>\n
Brokerage fee<\/td>\n$10,000<\/td>\n<\/tr>\n
Health insurance<\/td>\n$10,500<\/td>\n<\/tr>\n
Marketing<\/td>\n$10,000<\/td>\n<\/tr>\n
Social Security, Medicare Taxes<\/td>\n$6,500<\/td>\n<\/tr>\n
Transportation<\/td>\n$3,600<\/td>\n<\/tr>\n
Cell service<\/td>\n$1,200<\/td>\n<\/tr>\n
Equipment<\/td>\n$1,000<\/td>\n<\/tr>\n
Dues, education<\/td>\n$783<\/td>\n<\/tr>\n
IT<\/td>\n$1,000<\/td>\n<\/tr>\n
Total<\/strong><\/td>\n$44,583<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

All told, the data left us scratching our heads. In a fairly wealthy market where sales volume has been increasing, a good agent — someone among the top 15% of his peers — is probably netting less than $60,000 per year.\u00a0Does that sound right?<\/p>\n","protected":false},"excerpt":{"rendered":"

We’ve spent plenty of time trying to figure out what’s fair to pay Redfin agents. As part of that exercise, we analyzed the gross commissions for all Seattle-area (King County, to be precise) agents who closed at least one transaction over the past year (May 12, 2009 to May 11, 2010). The data surprised us, […]<\/p>\n","protected":false},"author":40,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[12,5,27],"tags":[],"class_list":{"0":"post-12050","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-ask-the-broker","7":"category-real-estate","8":"category-redfincom","10":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":258,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/258\/sleaze-versus-sleaze-we-didnt-get-this-awful-reputation-by-accident\/","url_meta":{"origin":12050,"position":0},"title":"Sleaze versus sleaze: We didn’t get this awful reputation by accident . . .","author":"Greg Swann","date":"August 28, 2006","format":false,"excerpt":"Give a glance to these excerpts from this article in today's Arizona Republic. 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Here is Mr. Kelman's remark:Thanks for this thoughtful comment Greg. Many\u2026","rel":"","context":"In "Blogging"","block_context":{"text":"Blogging","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/blogging\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":772,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/772\/almost-famous-businessweek-on-excessive-buyers-agents-commissions\/","url_meta":{"origin":12050,"position":2},"title":"Almost famous: BusinessWeek on excessive buyer’s agent’s commissions . . .","author":"Greg Swann","date":"December 15, 2006","format":false,"excerpt":"Eagle-eyed Kevin Boer of Three Oceans Real Estate was the first to catch it: BusinessWeek.com quoted me in an article on \"supersized commissions\":There's nothing wrong with incentives, even sizable ones, if they're disclosed and buyers fully understand what's motivating the agents who are showing them around. But in many states\u2026","rel":"","context":"In "Blogging"","block_context":{"text":"Blogging","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/blogging\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1283,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1283\/who-pays-the-buyers-agent-once-weve-divorced-the-commissions-we-can-stop-worrying-about-it\/","url_meta":{"origin":12050,"position":3},"title":"Who pays the buyer’s agent? Once we’ve divorced the commissions, we can stop worrying about it","author":"Greg Swann","date":"April 9, 2007","format":false,"excerpt":"Joke Number one: Q: If you came upon the Buddha in the guise of a hot dog vendor, what should you say? A: Make me one with everything. Joke number two: Q: Top Drawer Listing Agent, why do you charge a 7% commission to list a home for sale? A:\u2026","rel":"","context":"In "Blogging"","block_context":{"text":"Blogging","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/blogging\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2202,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2202\/a-consumers-guide-to-the-divorced-real-estate-commission-cataloging-benefits-starting-with-a-complete-catalog-of-available-homes\/","url_meta":{"origin":12050,"position":4},"title":"A consumer’s guide to the divorced real estate commission: Cataloging benefits — starting with a complete catalog of available homes","author":"Greg Swann","date":"November 10, 2007","format":false,"excerpt":"Part IV: Divorcing the real estate commissions will result in benefits not just for buyers but also for their agents and for the real estate market as a whole The National Association of Realtors is embroiled right now in a protracted anti-trust suit brought by the United States Department of\u2026","rel":"","context":"In "Marketing"","block_context":{"text":"Marketing","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/marketing\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":978,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/978\/a-different-perspective-on-the-value-of-realtors\/","url_meta":{"origin":12050,"position":5},"title":"A Different Perspective on the Value of Realtors","author":"Cooksquared","date":"February 1, 2007","format":false,"excerpt":"Has anyone ever wondered why the price of real estate agents has been 5-7% for what seems like an eternity? 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