What if we told you some people are making $661 per hour, but it wasn’t who you thought? Well, turns out it’s true. Meet the real estate agency.
It all adds up
In 2019, 5,340,000 real estate transactions took place. Now, since a buyer and a seller are on either side of the transaction, this should be doubled to reach a little over 10 million home transactions occurring.
For these 10 million home transactions, approximately 2 million real estate agents were involved. These agents were selling homes that, according to the National Association of Realtors, were selling in the American market for an average value of $385,000.
These agents typically charge 5% – 6%. On average, if an agent charged 5.5%, that would mean sellers paid out $105 billion.
Can you imagine the real estate community making $105 billion from sellers? That’s a huge amount of money. In fact, it’s one of the largest asset classes in the country, comprising 13% of America’s GDP.
It’s driven by people
We can break this down more practically. How much do agents, themselves, actually make per hour from such transactions?
Nationwide, the average agent makes approximately $42,000 a year. There’s approximately 10 million transactions from about 2 million agents, so the average agent closes about 5.5 homes a year. That means that an average agent isn’t even selling a house every other month. The National Association of Realtors said that real estate agents work an average of 16 hours per client. They are averaging working 1.75 hours per week.
Can you imagine working 1.75 hours per week? Of course, there’s much networking, business development, and more not counted in these hours. But, in a sense, if you’re the seller, you’re paying for all of that.
It impacts revenue
For the sellers, based on the average sales price and how much agents make, the math works out. If you’re selling your home on average for $385,000, you’re actually paying $661 an hour.
This is why it’s so shocking. When you have an attorney that goes to law school for four years or a surgeon who goes to school for six to eight years, either might make $350 or $400 an hour. It took them years to get that highly paid position. If you have this in perspective, maybe you wouldn’t tell your kid to be a surgeon or attorney. You’re going to have to go to school for years for that, and they’re likely going to make way less than a real estate agent.
It matters to you
But what does this mean in the end?
Yes, if you’re a real estate agent, you can get your license in two weeks, and you’re going to get paid somewhere around $661 an hour. But, maybe that’s not right.
At Scout, we very clearly understand the impact to the seller. And we have a model that is starting to bring things in line. If you’re looking for better solutions, we have just that.