Real Estate Feast

How a South Florida real estate agent makes money

People always say to me “Wow, you make a lot of money with that six percent commission, right?  I mean, six percent of $600,000 is like $36,000.”   Six percent of the sale price on a $600,000 house is indeed $36,000.  Would that I put that in my pocket, but, alas, this is not how real estate works.  The way it works is this:

First, the commission is usually split equally between the listing agent and the selling agent.  So the agent who brings a buyer to my listing and sells it gets three percent and I get three percent.  “But still, that’s $18,000,” you say.  Yessir, that’s $18,000 but my brokerage takes $8,100 of that, leaving me with $9,900.  OK, you say “But that isn’t too bad, I mean almost ten grand for sticking a sign out front and waiting for the phone to ring.”

But of course, it’s much more than that.  Here’s what I’ve spent so far on my latest listing in South Miami/High Pines:

Staging decor, silk plants, candles, etc.                $344
Mulch and plants                                                       22
Had the house professionally cleaned                     200
Professional photography, virtual tour, links           274
“Just Listed” 4 color jumbo postcards                      130
Ad for EWM flyer                                                       100
Food and drink for brokers’ open                               57
Total to date                                                         $1027

Next month I’ll have the house cleaned again and send out more postcards and do more ads.  And none of that counts my time spent answering the phone and holding open houses and providing reports to the seller and blogging about the listing. So you can see that what looks like big, easy money usually ends up being not so big and not so easy.

Also, don’t forget that $600,000 sales don’t come along that often.  The median sale price for a single-family home in South Florida is about $235,000 now.  Admittedly, I wouldn’t spend as much money or time on a smaller listing but I still invest what is appropriate for the projected income.

Lastly, in this market, no matter how hard you try, some homes just don’t sell.  My track record has been pretty good, but in the last year I’ve had two that didn’t sell.

If you’d like to know more about South Florida real estate, homes in easy-living South Miami/High Pines or Coral Gables, you can reach me at 305-401-8058 or bishopric.r@ewm.com.

This entry was posted on Friday, December 19th, 2008 at 10:11 am and is filed under Real Estate News, Selling a Home in South Florida. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1. Bob Bishopric said at December 20th, 2008 at 4:47 pm

   I would like to add that spending money to clean a house and to spiff it up with some plants and mulch is a business decision to help it sell faster. People think their house is clean but, usually, it’s not. When I have a house cleaned, the windows sparkle and the floors shine. Also, there are many other things agents pay for like office fees and Board fees, but they are generic outlays not related to a specific listing.

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