Why Real Estate Agents Make Less Than Minimum Wage (Part I of IV)

Many think that real estate agents roll in the dough. After all, they walk away from closings with checks in the thousands. That's why I think so many enter the profession.

I know of what I speak. In one of my many career incarnations, I was a real estate agent.

According to a February 2007 article in The San Francisco Gate (Real estate seminars aim to give agents the edge in a competitive field), "In 2006, the National Association of Realtors boasted membership of more than 1.25 million, up 63 percent from 2000."

I wonder how many of them realize that being a real estate agent is no walk in the park - and the pay can be less than minimum wage, for the following reasons:

1. Commission Only: The vast majority of agents work on commission. Eg, if they don't sell anything, they don't get paid.

Compounding this problem is the length of time from when you first get a customer, to the time the deal closes. This can be as quick as a week, or as long as six months - even more.

NO agent, no matter how good, can predict when a house will sell, or when a buyer will buy.

On the listing (seller's) side, agents conduct market analysis which tell them the average days on market. Eg, this means on average the length of time it takes fro a property to sell in a certain geographic area.

Again, this just gives them and the seller a measuring stick by which to predict a sale. Nothing is guaranteed in real estate - ever - nothing!

On the purchasing (buyer's) side, you never know when they're going to buy. You can't force them into buying - even if you've shown them what they said they want. You can show them 10 houses and they like three, or 100 and they like none.

The point is, it's up to them when a purchase takes place - not you.

As days drag into weeks and months, you're still without a pay check - because a transaction hasn't' taken place.

2. Out-of-Pocket Expenses: Realtors pay listing fees, membership fees, advertising fees, association fees, lock box fees - and on and on and on.

Thinking you'll just forego these? Well, to hold onto your license, you can't. Real estate agents are highly regulated.