Real Estate Production, and What They Don’t Tell You About Top Achievers
Real estate agents are one of the few groups of people who have our photos on our business cards. The origins of this bizarre practice are shrouded in mystery, but I have a theory (a charitable one) that at some point we started doing it because we’re going into peoples’ homes all the time, so it helped to identify who we were.
Some less charitable interpretations are:
- So we won’t forget what we look like (or)
- In case there’s no still pool of water to gaze longingly into (or)
- So clients can tell which of the five agents they drove around with we are.
How Many #1 Agents Do You Know
Richard Robbins, a real estate trainer, has a joke he tells at seminars about how there are an awful lot of “Number One Agents” out there. 
That’s because the other thing about Realtors® besides the fact that we want people to have a handy photo of us on our business card is that we want everyone to know what superstar producers we are. Yet the requirements for being a top achiever in terms of performance aren’t always that strict, and the averages are downright dismal.
To give Sacramento County their due, the Masters Club requirements are still pretty reasonable. At four million dollars in closed transactions, a Master’s Club member needs to generate about $100,000 in gross commission volume or thereabouts. Actually the rule is eight closed ends and $4,000,000 or 30 closed ends.
On the low end of the expectation scale, the El Dorado County Board of Realtors® recently changed the criterion for their Top Achievers award to $1.5 million in closed sales. Working strictly in El Dorado County, where the average home sold this year for $516,076, in order to be an El Dorado County Top Achiever, you needed to sell three houses in 2007. At an eighty percent split, an El Dorado County Top Achiever could make about $33,000.
OK, so if you’re top achievers sold three houses (or more) in El Dorado County, how well did your average agent do? Well, not everyone works in the County where their board membership is, but for the sake of simplifying the numbers, we’re going to treat El Dorado County as a little island. Estimating a bit to fill in the end of the year numbers and working from an approximate count of the number of Realtors® belonging to the El Dorado County Board as of November, we get 1,733 homes sold in El Dorado County, by 1,043 agents. So, we get a total sales volume of $859,149, and an approximate total yearly commission volume of $23,626. Assuming an average split of 80%, the average agent made $18,901 per year before taxes. (We’re excluding land and residential income properties in our analysis, but it gives a general idea).
Let’s try running the same numbers for Sacramento County. Of course there we have a lot more homes selling (estimated volume this year of 10,843), but they sell for less, and we also have a lot more Realtors® (approximately 7,068) competing for them. When we work it out, the average ends up being $583,698 in sales volume per year for each Sacramento County agent. Using the same 2.75% average as above, that means the average Sacramento County Realtor® generated a total of about $16,052 in commission volume, for an after-split (gross to agent) income of something like $12,841. To put that in perspective, working forty hours per week for fifty-two weeks at California’s minimum wage of $8.00 per hour, you’d make $16,640, and you wouldn’t have to pay self-employment tax.
Now you know the origin of the expression “real estate broker“.
