The Average Realtor® Salary Is Below The Poverty Line

While many real estate agents think that getting into the industry will be all about chasing exciting deals and getting big paychecks, surveys continue to show that this is far from the truth. While shows such as the Property Brothers and Millionaire Real Estate Agent glamorize the profession, the reality they portray is very different from the reality that Realtors® experience. This has been the case for years, if not decades, and the trend does not show any signs of changing. According to the most recent member survey from the National Association of Realtors®, the average Relator® with less than two years experience will earn less than $10,000 in gross commission income. That figure does not account for expenses such as member dues, multiple listing service fees, technology fees, phone, Internet, marketing, etc. It does not take an advanced math degree to figure out that the average Realtor® starting out will make next to nothing for the first two years.

Overall, the average Realtor® with a decade or more of experience is not doing much better either.

The median gross income for Realtors® was $42,500. Again, this is before accounting for expenses. While many solo agents can run businesses with profit margins around 75%, those numbers are for agents with higher gross incomes. At the median gross income level, overall profit margins are much more likely to be closer to 50%, which means the typical Realtor® with a decade or more experience will make a net income of $20,000 to $30,000. Another important thing to remember is that since most real estate agents are independent contractors, they are also responsible for the roughly 7.5% of Social Security and Medicare tax that is normally paid for by employers. Does it get much better for Realtors® with the most experience? Are they likely to have big six figure incomes? Not really according to the same survey. Barely a third of Realtors® with 16 years experience cracked the six figure gross income less. The median gross income level for such Realtor® was $78,850. Remember these numbers are gross income figures so actual net income figures at these levels will be 25% to 50% less after accounting for expenses and taxes. What about super agents with incomes of over $250,000 like those portrayed on reality television shows. Less than one percent of all real estate agents will make it to this level. Other reports and surveys about the incomes and success rates of real estate agents are even grimmer. According to the real estate coach, Tom Ferry, 87% of real estate agents will fail within the first five years. While the Pareto rule states that 80% of the effects come from 20% of the efforts, this rule seems to be even more lopsided in real estate. In fact, it appears that over 90% of the results in real estate come from less than 10% of the real estate agents. With such a high failure rate and low income for those whole do fail; it is even more important than ever to have a plan for what to do as a new agent.

The Costs of Failing as a Real Estate Agent

Before we look at what things you should be doing as a new agent, I’d like to look at what the costs of failure are, both for the agent and the clients. Most people will easily be able to identify the direct costs born by a real estate agent that does not succeed. The agent will lose money spent on marketing, Realtor® dues, MLS fees and other administrative and technological expenses. The agent will also lose time and energy that could have been spent on another activity or job to generate income. While the direct costs of failure are painful, the indirect costs to the agent can be just as bad or worse. These costs are often not as noticeable and are felt by others as well. Indirect costs can include: loss of confidence, frustration, stress, not being able to provide for others and more. This can have consequences that bleed into other areas as well. There are also costs that a failing agent will bring to other real estate agents and the general public. When real estate agents do not succeed or perform well, it hurts the entire industry. The public perception or real estate agents have been historically low. The last thing Realtors® need is for that to get worse. One of the reasons I wrote The HyperLocal, HyperFast Real Estate Agent was to help elevate the industry by [hopefully] helping agents perform better. When real estate agents fail it is also potentially damaging to their clients and prospects. An agent that generates fewer leads is going to be more error prone. There is a greater chance that a low volume agent will make a mistake that a higher volume agent will not. This can cause an agent’s client to have more stress and/or lose time and money. A lower volume real estate agent is also more likely to pressure a client into a decision that is not the right one for them. A Realtor® that does five transactions a month will be impacted much less by the loss of one transaction than a Realtor® that does only one transaction a month. These are just a few of the reasons why I think real estate agents owe it to themselves, their loved ones, fellow agents and clients to do everything they can to succeed. Failure simply comes at too high of a price for too many people.

How To Join The Ranks of Realtors®

According to the National Association of Realtors® Member Profile, in 2016 less than 20% of all Realtors® made over $100,000. Only ten percent of Realtors® made over $200,000, and less than two percent of Realtors® made over $250,000. By doing the things to join those ranks, you will not only benefit yourself, but you will be in a better position to help those around you in your family and community and create value for your clients. stp framework for realtors

Pick Your Strategy and Execute It

“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat. Many new real estate agents fail because of one of two reasons. There are those agents that spend too much time on strategy but never take action. They may do a lot of research, go to seminars, read books and come up with great ideas, but for whatever reason, they do not take action to implement them. If you find yourself in this category, figure out what the main block is and remove it. Is it fear of calling prospects? Is it fear of rejection? Is it not having a big enough why? Success will not come until you figure out what is stopping you. Prior to my career in real estate, I served as an officer in the US Navy aboard the USS TENNESSEE. When submarines are on the surface they do not appear very big and they operate relatively slow. This makes contact management challenging if you are trying to avoid getting run over by larger merchant ships. Because it took a while to turn the submarine, I learned that you do not have to have the perfect course solution to give the order to turn. If you could figure out the general direction the submarine needed to go, you could quickly give the order to turn. Getting this order out quickly gets things moving in the right direction. While the ship is turning you can assess the contact situation and dial in on precisely the best course and then give that order to the helmsman. In order to remember this throughout my real estate career when I am trying to make a strategic decision I will write the words, “READY, FIRE, AIM!” on the top of my whiteboard. This reminds me to take action and make course corrections along the way. There are also those agents that are full of action, but none of it seems to be focused. These agents look and feel busy, but they usually have few sales and little clients. They are doing an activity, but it is not properly aimed in an area that will produce results. The lack of results makes them think that they need to take more action and so they do, but because the actions are not coordinated to achieving specific results, they continue to fail in producing results. If you find yourself in this category, begin spending time tying your actions to specific goals and results you want to generate. In the HyperLocal, HyperFast Real Estate Agent, I detail a process I used called STP, which stands for segmentation, targeting and positioning. I used this process during my first year in real estate to sell over $22 million in volume and generate over $500,000 in gross commission. If you spend a little bit of time planning your strategy with this process and then focus all of your actions to execute you will avoid the two common problems that cause real estate agents to fail and be well on your way to success.


First, you must segment your market. Simply put, this requires deciding how you will divide your market. Some common strategies are: geographically, economically, profession, lifestyle and people you know vs. people you do not. For me, I started out by segmenting the market geographically, but that does not mean that is the right answer for everyone. Once you decide how you will segment your market you need to decide which segment you will target. In order to do this properly, you must know the size of each segment and the likely turnover in it. This will help you analyze the potential size of each segment. The segment you decided to target cannot be too big or too small. If it is too big your actions will have little effect and not gain momentum. If it is too small there might not be enough transactions to support your business. If you gained 100% market share of a segment that had two transactions a year, that would be a big problem. Finally, you must develop a plan of how to position yourself to your target segment. Ask yourself the following question: What unique value can I bring this segment that no one else can and how can I communicate that value to the segment? Perhaps you have grown up in that area your entire life and know it better than anyone else. Maybe your segment is a profession that you used to be a part of and so you are better positioned than others to know their needs and wants. These are just a few examples. When I started selling real estate in Arlington, VA I chose small geographic segment. I started with the condo building I had lived in for several years and then as I began to have success I expanded into the surrounding buildings and neighborhoods. Eventually, I expanded to six different metro stops and their surrounding neighborhoods. These metro stops were all along the Orange Line metro, so I chose to brand myself and later my team as the Orange Line Living Team. The famous quote from Ralph Waldo Emerson that says, “Build a better mousetrap and the world will beat a path to your door,” is a flat out lie. Just because you pick a segment and offer them the best value proposition possible, does not mean you will get any business. If no one knows about your value proposition, it will not matter. You must figure out how to communicate that value proposition to the segment. Most likely it will require using several marketing channels to break through. This can be the expensive and time-consuming part, which is why it is important to not make your target segment too big, especially when you are starting out. It is much easier to get a message through to 300 people than it is to 3,000. The same can be said about 3,000 people versus 30,000 people, and so on. So pick several different ways to get through to your target segment and stay consistent with your message. A few examples include:

  • Direct mail
  • Direct email
  • Signs
  • Open Houses
  • Social Media
  • Targeted Online Advertising
  • Fliers
  • Craigslist
  • Seminars

Another great way to target your segment is to find the gatekeepers. There will always be people that interact with the segment and know who is considering a move. It might be the concierge in buildings, HR directors, property managers or the neighborhood dry cleaner to name a few examples. Get to know these people and get information from them to find out who is moving before anyone else does. If you can be the first mover in the market you have a huge advantage. Finally, when you start communicating your message to your target do not give up too soon. Far too many agents drop a marketing campaign after a few months. Many times they probably quit right before it is about to start working. Be consistent and stay the course. It only takes one deal or one listing to start building momentum.

Get Financially Stable

When you are starting out, get as much financial stability as possible. You can do this by saving money or by having another source of income. The strategies I have outlined do work and they do not take forever, but they do take a little bit of time. Do not put yourself in a situation where you are desperate. This will prevent you from putting your clients’ interests first and limit your ability to create maximum value for them, which will, in turn, limit your chances for lasting success.

Get Help

One of the reasons I have continued to grow and have success is that I have never stopped investing in myself and never stop learning. In my first five years in the real estate industry, I have sought help from coaches, including Tony Robbins, attended over 3 dozen training seminars and read over 100 books. Learn from both within the real estate industry and from outside of it as well. You can have an unlimited amount of indirect mentors throughout your life. I consider an indirect mentor to be anyone you learn from whether it is by reading their book, taking their course or attending a seminar. You can have far less direct mentors in your life, but they can make an even bigger impact. A direct mentor has a professional relationship with you. To be most effective they must have a vested interest in your success. Usually, they will have regular coaching sessions with you and help you create the systems, structure, and accountability you need for success. Whatever you choose just remember that hundreds of people have had tremendous success before you so use those experiences to your benefit. If you want to learn more about coaching from myself and/or Keri Shull, send an email to

Pickup your copy of The HyperLocal HyperFast Real Estate Agent for hundreds of strategies and tactics that I used for explosive results in my real estate career.

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