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Thread: How Much Do Property Agents Earn

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    Default How Much Do Property Agents Earn

    How Much Do Property Agents Earn?

    By Aktive Learning | Propwise.sg – Mon, Jun 25, 2012






    I was recently invited by the Institute of Estate Agents (IEA) to be one of the panel judges for the Realtor of the Year award. Along with my fellow judges, I was given the task of interviewing and identifying a suitable candidate who embodied the values of a model realtor. Apart from being top performers (in terms of commissions earned), they also had to be professional in conduct and provide warm and personable service.
    From the judging session, one thing I noted was how much these agents earned. As all of the shortlisted candidates were top achievers in their agencies, almost all of them earned commission amounting to more than several hundred thousand dollars. Seeing this, one of my fellow judges even commented in jest that he should consider a career switch.
    This got me thinking and I started to wonder – how much does a property agent really earn? We often hear or read about certain agents making million dollar commissions, but is that the exception or the norm? That piqued my curiosity.
    Working out the average commission
    Based on the caveats lodged with the Singapore Land Authority (SLA) in 2011, the number of private residential, commercial, industrial and resale HDB transactions were about (1) 32,903, (2) 1,411, (3) 2,241 and (4) 22,683 respectively. The total value transacted for residential, commercial, industrial and resale HDB amounted to about (1) $50,448,013,709, (2) $4,087,529,191, (3) $4,528,320,789 and (4) $9,695,739,615 respectively. Based on these figures, the total amount of property transactions for 2011 worked out to be about $68.76billion.
    If we work on the assumption that the commission for each HDB resale transaction is about 2% and about 1% for a private residential, commercial and industrial transaction, the total commission generated by the real estate industry would amount to about $785million.
    Based on this figure, what is the average commission each agent can expect to make? According to a Channel News Asia report, dated 30 Jan 2012, the number of agents in 2011 was 34,300. Assuming everyone gets an equal share, the average commission each agent would get is about $22,873 (or about $1,906 per month).
    I admit that simply taking the average may not be very reflective of the actual situation and a more accurate form of approximation, such as the Pareto Distribution, should be applied.
    Applying the 80-20 Rule to figure out what the top agents make
    Vilfredo Pareto was an Italian economist who lived in the early 1900s. Through his research, he discovered that 80% of wealth was held by the top 20% of the population. Over time, the 80-20 distribution was found to be highly accurate in approximating income distribution and it became an accepted economic principle, hence the “80-20” rule.
    If we were to apply Pareto’s “80-20” rule to how the commissions are distributed, we find that the top 20% of property agents would have made an average commission of about $91,493 annually (about $7,624 per month). In comparison, the majority would make an average of $5718 annually (about $477 per month)
    Based on MOM’s website, the average employee made about $4,334 per month. Putting things into perspective, we can conclude that those who do well (i.e. within the top 20%) do make a fairly comfortable living. On the other hand, those who are not doing as well would just be scraping by.
    Million-dollar agents are more the exception than the rule
    More importantly, this analysis also suggests that agents who make million-dollar commissions annually are likely to be exceptions. Even if they were able to do so for one year, it would be very difficult for them to sustain their performance, as there is simply not enough commission to go around. For the figures to add up, in order for all practicing realtors to make commissions of $1million or more every year, there can be no more than 785 agents, which is a small fraction of the total number of registered agents.
    We often hear stories of top property agents making a good income and walk away with the impression that there is easy money to be made in the real estate industry. This analysis shows that for every million-dollar property agent, there are many others who do not make it and eventually fall out of the game. Hence, it does not come as a surprise that the real estate industry has such a high turnover rate. Perhaps this is why about 3,700 (more than 10% of the total agent population) decided not to renew their license and we are down to 30,600 agents in 2012.
    Like any job, those who put in time and effort will do well and rise to the top. The ethics of hard work apply to the real estate market as well. For those who are thinking of making a career switch to become a property agent, you must be prepared to invest the effort to do well. Otherwise you may just add to the statistic of agents who eventually drop out of the realtor game.
    By Getty Goh, Director of Ascendant Assets, a real estate research and investment consultancy firm.Posted courtesy of www.Propwise.sg, a Singapore property blog dedicated to helping you understand the real estate market and make better decisions. Click here to get your free Property

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    They do not just earn their income via commission but investing in property too. You can see lots of flippers few years ago.

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    Quote Originally Posted by DC33_2008
    They do not just earn their income via commission but investing in property too. You can see lots of flippers few years ago.
    Today flippers are extinct!!!

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    Thanks for the article. How about rental? Might be quite significant.

    Some sleeping agents also.

    Quite a huge range: one says 11K a month, another 3-4K.

    It depends.

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    Just to share my past months experince with some agents.

    Call to make enquiry (to buy), some of the funny answer/replies.

    Please call my partner at this number...
    Dont know/forget the blk nos/the floor..
    Sold already, but i have a XXX unit still for sale
    (same day AD put up).
    Seller put sale on hold, but i have a XXX unit for sale.

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    Firstly the commission is wrong.

    For every HDB transaction a total of 3% are paid.
    For every Private tranaction a total of 2 % are paid.
    Also not all transaction has a caveats lodged. Meaning the numbers are actually higher.

    Further more the rental comm is not added into the calcuation. Which is a significant sum considering the number of rental HDB and apartment in SG. Also lets not forget the perks. Being in position to pick durian when it drops.

    Really silly to write an article and not get the basics right.

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    There are also other perks like referral fees from banks and lawyers. Every done deal bring in extra $ on top of the really sinful commission.

    I still cannot phantom why commission is still at 2% for private property. When quantum was low in the past it was justifiable due to the overheads. Now condo easily 1 mil and above, and the 2% commission basically gets pass on to the buyer when seller does their math.

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    they earn a LOT of money i tried many years ago to beome one but never made it.....nevermind...its not my cup of tea...

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    Quote Originally Posted by xtink
    There are also other perks like referral fees from banks and lawyers. Every done deal bring in extra $ on top of the really sinful commission.

    I still cannot phantom why commission is still at 2% for private property. When quantum was low in the past it was justifiable due to the overheads. Now condo easily 1 mil and above, and the 2% commission basically gets pass on to the buyer when seller does their math.
    actually everything is NEGOTIABLE...

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    Quote Originally Posted by radha08
    actually everything is NEGOTIABLE...
    I thought for private is 1%? The last time I sold was 1 %.

    If 2% might as well sell without agent.

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    For private, 0.5% also have, for those hungry agents.

    Quote Originally Posted by sh
    I thought for private is 1%? The last time I sold was 1 %.

    If 2% might as well sell without agent.

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    Quote Originally Posted by teddybear
    For private, 0.5% also have, for those hungry agents.
    Although it is 2% commission for private properties, the norm is usually 1%. Like what Teddy Bear wrote, some agents indeed do undercut for want of business.

    In cases where agents do not get exclusive rights to sell the property, many agents will be marketing this one pty. Advertising costs, transportation costs are incurred with no guarantee of success. In cases, where sellers are asking for way above prices, its difficult to close deals. Sometimes, agents will request for sellers to reimburse them such fees. You dont need to be a rocket scientist to guess their response. I have heard of agents trying to sell units for more than 6 months and then give up.

    Admitedly the $ value of properties are much higher now, agents cannot represent both the buyer and seller like before, hence the need to co-broke.

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    Quote Originally Posted by sh
    I thought for private is 1%? The last time I sold was 1 %.

    If 2% might as well sell without agent.
    Its still 1% but many agent ask for 2% for private. If quantum is high its a lot. 1% is more reasonable if >1M prop.

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    Very simple, ignore those asking for 2%, as there are many who are willing to take up the job or sell for you for 1% or even less.

    Quote Originally Posted by minority
    Its still 1% but many agent ask for 2% for private. If quantum is high its a lot. 1% is more reasonable if >1M prop.

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    Quote Originally Posted by teddybear
    Very simple, ignore those asking for 2%, as there are many who are willing to take up the job or sell for you for 1% or even less.

    totally agree.
    i notice that every time someone mentions 1% for private property, invariably someone will come in to try to reset it to 2%. this may have been the norm in the past, though every agent that my friends and i have come across always quotes his commission as 1% - who wants to lose potential customers.

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    2% is ridiclous!

    Even as recent as last year when I sold one PC, I told the agent 0.5% take it or leave it... and he took it.

    At $1M, 1% is already $10K... if you work out the man hours an agent gets paid more than a doctor. There is hardly any skill involved, the selling point is the product which is your house. If you have a good property, it sells by itself, don't give into those greedy agents

    Quote Originally Posted by minority
    Its still 1% but many agent ask for 2% for private. If quantum is high its a lot. 1% is more reasonable if >1M prop.

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    Have you counted the overheads like advertising, car, namecards etc? What about the days without sales?

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    All the costs you mentioned below are not high for the kind of work they do and the amount of time they put in... the agents main attrition in pay goes to the agency he works for. This is for working off their company licence and address to legitimise the whole affair. These property company themselves are crooks and they take a big cut and this translates to their agents also asking for bigger commissions from house sellers.

    Property agencies don't come out with money to buy houses and let their agents sell. Unlike used car agencies, they actually buy cars and let their agents re-sell them, they also need to rent big spaces to store and show their products. These are real overheads and they cost much more.


    Quote Originally Posted by hyenergix
    Have you counted the overheads like advertising, car, namecards etc? What about the days without sales?

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    Quote Originally Posted by howgozit
    All the costs you mentioned below are not high for the kind of work they do and the amount of time they put in... the agents main attrition in pay goes to the agency he works for. This is for working off their company licence and address to legitimise the whole affair. These property company themselves are crooks and they take a big cut and this translates to their agents also asking for bigger commissions from house sellers.

    Property agencies don't come out with money to buy houses and let their agents sell. Unlike used car agencies, they actually buy cars and let their agents re-sell them, they also need to rent big spaces to store and show their products. These are real overheads and they cost much more.
    Advertising costs can be quite high. You forgotten the high risk of clocking no sales for months. Some bros here who are shrewd property investors themselves tried and gave up.

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    If an agent can clock in an average of 6 sales in a year at an average price of $1.5m each, at 1% commission, the takings for the year is $90k.

    What the agents earn depend on how much cut the property company gets and minus the other associated costs.

    Yes it may not sound like a lot of money if you are a private banker with a degree in economics but what if your highest academic qualification is only 3 'O' level passes? for selling just 6 properties in a year?


    Quote Originally Posted by hyenergix
    Advertising costs can be quite high. You forgotten the high risk of clocking no sales for months. Some bros here who are shrewd property investors themselves tried and gave up.

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    Quote Originally Posted by howgozit
    If an agent can clock in an average of 6 sales in a year at an average price of $1.5m each, at 1% commission, the takings for the year is $90k.

    What the agents earn depend on how much cut the property company gets and minus the other associated costs.

    Yes it may not sound like a lot of money if you are a private banker with a degree in economics but what if your highest academic qualification is only 3 'O' level passes? for selling just 6 properties in a year?
    I would rather not do this type of job that swings from feast to famine easily. Perhaps you might want to give it a shot!

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    Well ... I would rather not do this type of job either but that doesn't mean it should be well paid.

    To expect for 2% commission does not commensurate with knowledge, skill, risk, complexity and time required to sell a property. This is especially so at today's quantums of transactions.

    Quote Originally Posted by hyenergix
    I would rather not do this type of job that swings from feast to famine easily. Perhaps you might want to give it a shot!

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    1%. You co-broke become 0.5%

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    Do you know that commission is negotiable ?

    You really dont need to pay 1% commission.

    If you property is a desirable one, do shop for a decent agent, chances are you will pay much less.

    One way to work out with the agent (who will always sound pitiful that they need to pay all the ads (which is like $35 per ad)), is to give them 0.75% but bear all the ads cost.

    Put up ads for one month or so to see response, no good, call off the selling.

    Cant give u more details here, but do take note its all negotiable.

    DKSG

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    i think if you borrow on credit and flip here and there..
    can be millionaire instantly during the past few years..

    don't even need too much capital to start with but with the right strategy & smart move.

    too bad i wasn't into property until recently.
    I took the road less traveled by, and that has made all the difference.” - Robert Frost quotes (American poet, 1874-1963)

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    Quote Originally Posted by roly8
    i think if you borrow on credit and flip here and there..
    can be millionaire instantly during the past few years..

    don't even need too much capital to start with but with the right strategy & smart move.

    too bad i wasn't into property until recently.
    Nowadays not easy to flip with the SSD. Must wait 4 yrs then can flip. Investment capital stucked for years and returns not necessary promising. So better buy for own stay, got $$$ take, no $$$ forget it and enjoy yourself.

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