Why do agents make so little on average?

[Tyco Bronye]

I understand agents make 20k to 40k per year on average. I'm wondering why exactly this is?

If your a buyer's agent and your client is preapproved to buy a house, it seems like there would be around 100 percent chance of making your 3 percent commission. I can understand there are occasions where your client gets laid off suddenly and therefore can't buy a house, but overall it seems once you've secured a client and they sign a contract with you what else would prevent this sale?

I'm guessing it must be an issue with lack of clients?

[J Scott]

Most real estate agents fall into the industry not because they are attracted to real estate or because they have real estate experience, but because the barrier to entry is low and idea of earning commissions with flexible hours is enticing. Of course, what they find once they get into the business is that -- because of the low barriers to entry and the allure of easy money -- there is LOTS of competition from other like-minded individuals.

They soon realize that to stand out and make a lot of money, they need to work harder and smarter than the competition, they need to master sales, marketing and real estate skills, and they need to dedicate themselves to real estate as a CAREER, not just a hobby. The problem is, most agents got into this business precisely because that's NOT what they wanted, so they don't devote themselves and don't rise about the competition.

Then, there are those agents who recognize that most of their competition is lazy and looking to make a quick buck, and they realize that if they are one of the few who truly devote themselves to the business, they will make a lot of money. So, they devote themselves, turn real estate from a hobby to a career, and go on to be very successful. They are the 5%.

Meanwhile, the rest of the agents who aren't willing to make the effort -- the other 95% -- bemoan the fact that they can't compete with the big agents and quickly move on to the next "easy money" or "get rich quick" idea...