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Updated about 9 years ago, 10/23/2015

User Stats

111
Posts
17
Votes
Jessica Martin
  • Real Estate Investor
  • Houston, TX
17
Votes |
111
Posts

Commissions. After all the splits and expenses, profit seems low?

Jessica Martin
  • Real Estate Investor
  • Houston, TX
Posted

Hi and thanks for taking them time to read and hopefully comment.

I'm taking my real estate license course for Texas. After reading about how the typical 6% commission is split(Between co-brokerages 50/50 and then the 50/50 split I hear new agents do with their sponsoring brokerages) and given the expenses involved for gas, marketing, exc... the profit left seems very low. Especially considering I read the typical agent sells about 12 homes a year? 

So the scenario playing in my head is this:

I am an agent in a transaction for the purchase of a home for 100k. Commission is 6k. The co-brokers split this 50/50 so my broker is now left with 3k. My sponsoring brokerage and I now split that 3k 50/50. I now have $1,500 for the 100k transaction I was involved in... now expenses to obtain this deal through self-promoting and marketing(if seller side) and gas when commuting and trips to the property for various reasons, rent, yearly memberships and such associated with being an agent, and even daycare($400 month) for me to go back to work vs staying at home like I am now... this almost seems like very little money if any would be made... and this is assuming I had 1 sale a month... which I dont expect to have right off the bat as a new agent... 

Please tell me I'm missing something here? This is all from an IC scenario. 

Maybe I'm not correct about how expenses are split between an agent and a brokerage in an IC situation?

Would anyone recommend if a new agent should do IC vs salary/hourly?

I think some personal stories from agents about their experience and how things worked starting out would really help clarify some things for me.

Any information or personal experiences would be VERY appreciated. 

Thank You

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