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This is the second report in a two-part series on the results of Inman’s second-annual Agent Appreciation survey. Read the first part of the series here.
Sean Preston has basically been working as a part-time teacher.
Preston is an agent with Unlimited Sotheby’s International Realty in the Greater Boston area. He’s been in the industry for about nine years, and took the plunge into real estate after a first career in the corporate world.
Preston has done well in real estate, but the last year threw a major curveball in the form of a global coronavirus pandemic. And that meant Preston has had to step in and spearhead his young son’s education while schools shut down.
“I now have a part-time job,” Preston told Inman, “which is as a surrogate first grade teacher.”
Preston’s experience highlights the strange and unanticipated challenges of working through a health crisis; suddenly real estate agents didn’t just have to worry about leads and sales and showings, they had to worry about doing entirely different jobs like teaching.
It’s remarkable then, that through all of this upheaval industry professionals who took Inman’s recent agent appreciation survey — which elicited more than 400 responses — reported high levels of satisfaction with their jobs.
There are no doubt many factors that contributed to these findings, but one of the biggest is probably that agents appear to be doing well financially. In fact, this year’s respondents appear to be making more money than people who took a similar survey last year, and they are apparently more satisfied with their income than respondents were at the beginning of 2020.
To start off, a significant plurality of respondents to this year’s survey, or 35 percent, indicated that in 2020 they made more than $200,000 in gross commission income. Another 29 percent said they made between $100,000 and $200,000. Together, those findings reveal that nearly two thirds of respondents, or 64 percent made at least $100,000.
By contrast, a combined 24 percent of respondents took home $75,000 or less.
These results represents a significant jump compared to last year’s survey, when fewer than half of respondents indicated they made more than $100,000 in gross commission income. (Last year’s survey didn’t have exactly the same answer choices, and grouped any income above $100,000 into an “other” category).
After an initial dip during the beginning of the pandemic, real estate bounced back in a big way, with both sales and prices up in many North American markets. So it makes sense that agents’ incomes would also be up. These surveys are also not scientific and of course include responses from self-selecting Inman readers.
Still, though, the fact that the number of respondents making more than $100,000 jumped from fewer than half to nearly two thirds suggests that there were ultimately many agents who closed more deals at higher values in 2020.
In that light, it’s also not surprising that agents appeared to be slightly more satisfied with their pay this year than they were last January, with 59 percent indicating they were happy with their 2020 gross commission income.
In early 2020, only 55 percent of survey respondents indicated they were happy with their gross commission income from 2019. While the shift is not huge, it does support other findings from the surveys that suggest agents’ happiness with their careers is rising.
The survey also asked agents about their volume. To that question, nearly half of respondents, or 46 percent, indicated they did between $5 million and $20 million in volume in 2020. Another 23 percent did between $1 million and $5 million.
Other findings from this year’s survey show that the vast majority of respondents, or 87 percent, work for commissions rather than on salary or via other compensation models; that real estate is the primary source of income for 91 percent of respondents; and that only about a fifth of respondents indicated they had an income-generating side hustle.
Of the agents who work on commission splits, 64 percent indicated that they get to keep 70 percent or more, with the rest going to their brokerage. Only 5 percent of respondents reported that more than half of their commission goes to the brokerage, and another 3 percent indicated they split their commissions 50/50.
This is significant, if at this point not entirely surprising, because in decades past brokerages often kept half or more of the commission. That started changing in the 1970s thanks to innovations that RE/MAX popularized.
Overall, agents who took this year’s survey appear to be relatively satisfied with their commission splits. Asked to rate their splits on a scale of one to five, with five being the best, 49 percent selected five, 30 percent selected four, and 21 percent selected 3 or lower.
The survey also showed that many agents have seen their commission splits move in their favor, with 49 percent of respondents indicating that they keep more now than they did in the past. Only 5 percent of respondents indicated their split as shifted in favor of their brokerage.
Agents this year also indicated high levels of satisfaction with the leadership at the brokerages, with two thirds describing leaders as “very responsive.”
Taken together, all of these findings shed light on why agents are happy with their careers right now. They’re making more money, their splits are gradually improving, and their leaders have on the whole successfully guided their companies through the ongoing COVID-19 crisis.
Jerry Allen, a Keller Williams agent in the Dallas-Fort Worth area, was among those who saw his income rise this year amid a flurry of buying and selling activity.
“I’d get one phone call and it’d turn into two or three deals,” he said. “I was doing 15, 16 deals in a year, and last year I topped 38.”
Allen works on a 70/30 commission split, in his favor, with a cap. He likes that arrangement, and altogether his gross commission income went from between $90,000 to $120,000 in prior years to over $200,000 in 2020 — making him something of the quintessential respondent for Inman’s latest survey. He added that his income also benefited from price appreciation, and the outlook for 2021 is strong right now.
“Last year was more than phenomenal and this year doesn’t look like it’ll be any less so,” Allen added.
Heather Scott, of Forest Hill Real Estate in Ontario, Canada, was similarly upbeat about her job over the last year. Like most agents, she works on commission and wouldn’t be opposed to getting more money. But overall, she said she’s happy to do a split because she understands what it pays for.
“I’ve got a broker and a brokerage and I like to work out of an office,” she said. “Somebody has to pay for that so I have to have some kind of split.”
Working on commission can also of course be more stressful than having a fixed and steady salary. But Scott captured a seemingly widespread sentiment in real estate when she explained she doesn’t mind the incremental nature of commissions because it directly ties her income to the work she does.
“I like being able to earn as hard as you work,” Scott concluded.
In Preston’s case, he said working on commission can be stressful because it has “peaks and valleys.” But in his case he budgets and saves carefully, and as a result the challenges of working on commission haven’t dampened his enthusiasm for real estate.
“It’s just being disciplined with your cash flow,” he added.
Sandy Stewart, a Coldwell Banker agent in Vacaville, California, also told Inman she is happy working in real estate.
“It’s the best decision I ever made,” she said, adding that she began working in the industry more than three decades ago.
Asked about income, Stewart described the irregular nature of working on commission as “the hardest part” about being in real estate.
“Sometimes the money comes all at one time,” she said “And then all of a sudden you don’t have a paycheck for 30 days or 60 days. I think for agents that work strictly on commission, the hardest part is to find that consistency.”
As a veteran of the industry and a consistent top agent in her office, Stewart is sometimes called on to advise newer members of the industry. And when it comes to pay, she tells them to “always be looking forward” so that the money lasts even when there are no sales. And, she added, agents have to really throw themselves into the profession if they want to succeed.
“If you really truly want this as a career,” she said, “it’s impossible to do it part time.”