If you want to get wealthy fast, you better not go into the real estate business. People who enter the industry with a get-rich-quick mentality may be frustrated with immediate earnings that are nowhere near their million-dollar expectations.
“The reality is it’s not a get-rich-quick scheme,” said Gary Malin, COO of Citi Habitats. “I think that a lot of people need to recalibrate their expectations and realize this is a job.”
The Real Deal talked with industry veterans and found that in real-estate-related jobs, salaries run the gamut from $30,000 for a new appraiser to $30 million for a savvy developer.
Even within individual professions, salaries are disparate depending on function and seniority. Education seems to matter less than experience, and many professions employ a commission-based pay structure — plus bonus.
Following is a look at the salaries of practitioners in different real estate jobs.
Residential rental/sales agent
Rental agents can earn as much as sales agents — though not top sales agents — if they can close 60 to 100 transactions a year.
Barbara Fox, president of Fox Residential Group, a high-end boutique brokerage specializing in sales, said one of the two rental agents working at her firm is actually a top producer in her 40-person company.
The rental side is the way to go for people who need money more immediately and cannot wait the usual few months before generating income from a closed sale.
“In terms of earnings, becoming a rental agent is a quicker fix in terms of starting to earn money,” Fox said.
Based on the customary 6 percent sales commission split 50-50 between firm and agent, however, a rental payout generally amounts to less money than a sales commission.
For example, if an agent with an exclusive sells a $500,000 apartment, that generates a 6 percent gross commission of $30,000. If the agent has a standard 50-50 split agreement with her brokerage, she’ll get $15,000. If the deal is co-brokered with another agent at a 50-50 split, each agent would end up with $7,500.
To make roughly that same amount on the rental side, based on a 15 percent commission on the first year’s rent, a rental agent would need to lease six exclusive $3,000-a-month apartments. That would generate $32,400 in gross commissions, with $16,200 going to the agent. If the six deals are each co-brokered with another firm, the agent would end up with $8,100.
That amounts to $2,700 for each rental deal, or $1,350 a deal for a co-broke.
If a broker can sell 10 apartments each worth $1 million in a year, that would amount to $600,000 in total commission, $300,000 of which would go to the broker if not co-brokered, $150,000 if co-brokered.
It would be very hard to earn this kind of commission on the rental side — it would take renting 110 apartments, each at $3,000 a month, to make that amount. Of course, renting more expensive apartments would generate that commission with fewer transactions.
Armed with a prudent reserve and an extensive Rolodex, a sales agent should be good to go.
“When someone starts as a sales broker, it’s not what you know anymore, it’s who you know,” Fox said.
A sales agent starting out should earn between $50,000 and $80,000, Fox said, unless the person is well-connected. Fox generally teams up junior and senior agents to give the newer agent more credibility. The average broker, she said, makes between $50,000 and $100,000.
In a company like Citi Habitats, known for its rental business, a rental agent “can come in and hit the ground running,” said Malin of Citi Habitats. “Rental turnaround time is 30 to 45 days maximum.” But, as Fox said, it requires volume to make a good earning in rentals.
In the first year, Malin said, a rental agent could earn between $50,000 and six figures, but “most will earn $50,000 to $60,000 because they haven’t gotten themselves fully into the game plan yet.”
Citi Habitats encourages its employees to be hybrid agents, working on rentals and sales. “You can start making good money in the rental market and sustain yourself” while working on sales, he said.
However you slice it, for the most part sales result in larger commissions.
“The fact is if you’re a very prolific rental agent, you could make a few hundred thousand dollars,” Malin said, but “you have to meet with a lot of people to generate those commissions.”
Claudia Saez-Fromm, executive vice president of Mark David & Company, also said her average rental agent makes $50,000, and the top 20 percent — who work in rentals and sales — make in excess of $100,000.
From an earnings standpoint, Saez-Fromm said it is better to be an agent than a manager. Unlike in some brokerages, Mark David managers do not do their own sales.
A manager earns salary plus a percentage of the office’s profits. Depending on the level, Saez-Fromm said, managers can make a total of $75,000 up to more than $100,000.
“Always your sales agents are making more than managers,” she said.
Commercial leasing/sales broker
At a traditional commercial brokerage, it’s predominantly commission-based, and brokers generally receive their checks within a year of doing a deal, said Kenneth Krasnow, executive vice president and director of brokerage in the tri-state area for Trammell Crow Company, which recently merged with CB Richard Ellis.
As one would expect in a leasing transaction, “the bigger the deal, the longer the term, the more expensive the rent, the higher the commission,” Krasnow said. “It’s a declining sliding scale based on the rental obligation that the tenant is paying.”
The job of a novice broker today is different than that of a junior broker years ago. Before, brokers were relegated to knocking on doors to drum up business and they earned commission only, Krasnow said.
Today, a newcomer at Trammell Crow serves as more of an apprentice, assisting a more experienced broker for six to 12 months. She earns a salary of between $40,000 and $50,000. Once she has her feet on the ground, she works within the commission structure.
By the third year, an agent should be in the six figures, Krasnow said.
There are more leasing agents than sales brokers in commercial real estate. Indeed, there are probably 30 percent fewer sales brokers than leasing brokers because “it’s much harder to get into the sales side of the business than it would be to get into the leasing side of the business,” Krasnow said.
Not everyone is fit to work in commercial real estate.
“You’ve got to know you’re getting into it for the long haul. The success rate is probably 20 percent. They usually fizzle out within the first three years,” Krasnow said.
Managers who do not close their own deals do not earn as much as senior brokers, Krasnow said. As purely a manager, Krasnow earns a flat salary plus bonus.
A mortgage broker is a salesperson, said Jeffrey Appel, a senior vice president at Preferred Empire Mortgage Company. As with an agent, a mortgage broker’s earnings depend on the number of deals she closes. But, unlike real estate agents, mortgage brokers are taxed as employees.
“This is a real, pure sales business,” Appel said. On average, a mortgage broker’s commission-based earnings range from $50,000 to $150,000, Appel said. The average commission on a deal is around 1 percent.
Five percent of the brokers in New York City are considered good producers, bringing in $50 million of business. So after a 50-50 split with the company, they would get $250,000.
Mortgage brokers do not receive bonuses, Appel said. The old adage is, “Here’s the bonus: close more business and you make more money.”
Steven Schnall, president of the publicly traded New York Mortgage Company, separated the mortgage business into two broad categories, sales people and administrative/operations employees.
Loan officers work on straight commission — 50 percent or more of the revenue they generate — and the administrative employees earn a salary.
The average earnings of a Manhattan loan officer are $100,000 at New York Mortgage, Schnall said.
The highest earners at New York Mortgage are the sales managers that supplement their income by running a branch. They are paid a salary plus an override on the volume originated by the branch and then often a percentage of the profits, Schnall said. Most of them also get commissions on their own deals. Earnings could run from a few hundred thousand dollars up to $1.5 million or more.
With mortgage volumes shrinking, firms are trying to entice brokers by increasing their commission split to as much as 70 percent or offering high sign-on bonuses. “There’s a lot of that going on right now,” Schnall said.
Estimating market value on an apartment is an intricate process that involves understanding how the property fits into a neighborhood, said Jonathan Miller, president and CEO of appraisal firm Miller Samuel. The idea is to “basically emulate the thinking of a buyer,” Miller said.
An appraiser, who requires a license from the state, performs due diligence, conducts an inspection of the apartment and building, does an analysis and prepares a report.
“And then hopefully we’re paid,” Miller said.
Miller Samuel’s 10 full-time appraisers annually inspect 4,000 to 5,000 Manhattan apartments. “The fee is based on complexity and time,” Miller said. Fees can run from $400 to $2,500, he said.
Jerome Haims, president of appraisal and consulting firm Jerome Haims Realty, said people coming out of school start off at his firm with a salary of between $30,000 and $50,000. The newbies do a lot of leg work, research, analysis and accompany senior appraisers to sites.
A mid-level employee earns up to about $75,000, said Haims, whose firm appraises residential and commercial properties.
Depending on how an appraisal company runs its business, employees can earn a straight salary, salary plus bonus or a percentage of the fee.
Real estate attorney
Over the last five years, the real estate legal industry has not changed much, said Marshall Cohen, founding partner in the boutique real estate law firm Cohen & Perfetto, which largely handles commercial real estate deals.
He bills most of his clients on a monthly basis while other clients keep him on retainer for a flat rate, plus an hourly rate for large deals.
An attorney’s rate depends on age, seniority, firm size and overhead. Most senior real estate lawyers in New York City charge an hourly rate of between $450 and $750. Cohen charges $450. A junior lawyer, or associate, charges $200 an hour, he said. A paralegal charges $160 an hour.
In terms of compensation, a starting lawyer at a large firm would likely earn a salary of $140,000, Cohen said. A partner in a law firm is entitled to a percentage of the firm’s profits with a fixed draw. “The real money is in the profits,” Cohen said.
For residential closings, lawyers generally charge a flat fee.
An attorney who specializes in landlord and tenant matters, Jamie Heiberger-Jacobsen, president of Heiberger & Associates, said she works on a flat-fee basis (between $2,500 and $5,000) except when she represents a client in court. Then she charges a $250 hourly rate.
A non-principal at a small firm for 10-plus years could earn between $85,000 and $175,000. A one-man-show attorney could earn $200,000 or $250,000, she said.
Heiberger-Jacobsen said that a principal in a small (not more than 15 lawyers) to mid-size (not more than 50 lawyers) firm could earn between $125,000 and $1 million.
New development marketer
Earnings in new development sales depend on function.
Michael Shvo, president of Shvo Marketing Group, said pay at his firm ranges from as little as $40,000 for a secretary up to seven figures.
A salesperson, earning a salary and bonus, could pull in $75,000 to up to three-quarters of a million dollars a year, depending on the project and sales volume, he maintained.
Marketing new development over resales can affect earnings because with a new development you are given an exclusive product to sell rather than chasing down listings. But, “at the end of the day, if the project doesn’t sell, they don’t make money,” Shvo said.
Elan Padeh, founder and CEO of the Developers Group, said he pays his development and marketing employees between $40,000 and $170,000, depending on experience and job function.
There is more money to earn on the brokerage side. “Most of our jobs — we make our money on the brokerage side of the business,” Padeh said.
Brokers who work in-house for developers selling apartments typically get paid 1 or 2 percent commissions, less than resale agents. Another major difference is the time frame for commissions getting paid — new development sales don’t close until the units are occupied, meaning that an agent has to wait until a project is built to get a paycheck.
Commission-based, a first-year broker earns an average of $100,000 a year, and it goes up from there. Earnings can range as high as $600,000 for senior personnel, Padeh said.
Developers do not always start out earning money and in some markets lose money.
“You have to withstand at least a couple of years of putting in money,” said Jason Muss, vice president of the Muss Development Organization, because there is no cash flow until a project is completed. He added, “It’s not your typical job. You’re an entrepreneur.”
The majority of Muss Development’s 100 employees are salaried, but he has sales agents that make a blend of salary and commission.
Josh Guberman, CEO of the Core Development Group, said a new developer could earn anywhere from $150,000 to $30 million on a project. A junior person in field or project management could earn between $50,000 and $150,000.
At Douglaston Development, a recent college graduate could earn as little as $30,000 a year, said Jeff Levine, the company’s president. But, in a short period of time, he said, it can grow to hundreds of thousands of dollars a year.
Architects are in high demand now in New York City, said Karl Fischer, founder of Karl Fischer Architect.
“This has been a very good time for most of the design professions,” Fischer said. Furthermore, he said, most people in the larger firms say that this is probably the best time ever.
But architects still do not earn as much as people in other real estate-related fields.
Just starting out, an employee could earn a salary of $40,000 to $50,000 plus a bonus, Fischer said. After about five years, he said, the salary would be bumped up to between $60,000 and $70,000. With a license — which is not required by law — an employee could earn between $65,000 and $75,000.
He said he doesn’t have anyone on his 36-person staff that earns much more than that, other than one employee who earns $110,000.
Some places pay senior architects between $70,000 and $140,000.
“As a salaried architect it’s [financially] limited,” Fischer said. Yet, he said, “It’s probably one of the most demanding jobs because of safety and liability issues.”
Brad Perkins, founder of Perkins Eastman Architects, echoed Fisher’s comments. “It’s traditionally been a poorly paid position,” Perkins said, despite a five- or seven-year college education.
Scott Ageloff, principal of design firm Ageloff & Associates and dean at New York School of Interior Design, said architects and interior designers fresh out of school earn between $40,000 and $50,000.
Most firms work on a straight salary, but Ageloff pays his 10 employees on an hourly basis. “In my own firm, it would be unusual to pay someone much more than $125,000 unless they are a partner in the firm,” Ageloff said.
Real estate assistant/shower
For a fledgling agent, becoming an assistant allows them to work under the tutelage of a more seasoned agent and receive a more consistent income.
“They learn the business from a master, from a pro,” said Fox of Fox Residential Group. “It’s a very difficult job to get.”
Some assistants with a real estate license, coined “showers,” solely show property and host open houses on behalf of more senior agents. Only licensed agents can show property.
While a straight secretary/assistant at a real estate firm is paid by the company, an agent’s individual assistant is generally on the agent’s payroll.
While it may not be the normal case, Fox pays her assistant a small percentage of her commission in addition to the company salary he earns because he performs other tasks for the company.
Depending on the arrangement between the assistant and the agent, an assistant could receive 1 to 10 percent of his boss’ commission cut, Fox said.
Tim Cass, an associate broker at the Corcoran Group, wants to focus on his sales business, but he also has a large rental business.
So he hired Bibi Brown to show his rental properties.
A licensed sales person, Brown makes a 25 percent cut of the commission on Cass’ exclusive listings. If she works with the client, Brown gets 75 percent and Cass gets a 25 percent referral fee.
The advantage for an assistant is the increased business. “She doesn’t have the connections to bring in the listings,” Cass said.
Brown likes the arrangement.
She became an assistant after three years as an independent sales agent. She took a significant pay cut in order to be relieved of the stresses of weathering the ups and downs and consistently generating her own leads.
In her new post, Brown expects to earn between $45,000 and $60,000 a year.
“I enjoy real estate,” Brown said. The new arrangement, she added, has “allowed me to still enjoy it without the hectic pace and the schedule.”
Looking to make an apartment more saleable? Call a stager.
“If they’re priced right and it’s professionally staged, the apartments typically sell more quickly and get a better price,” said Nairn Friemann, a real estate stager for the tri-state area.
For a consultation, which includes a room-by-room analysis with recommendations, she charges a fee of $300 to $500.
“Quite often the seller can do the work themselves from that,” Friemann said.
People without the aptitude or time may want Friemann to make the changes for them. Her company, Ingenuity & Pizzazz, supervises tradespeople (painters, floor people and handymen, for example), edits and changes the inventory in the apartment and showcases (moving furniture and art, bringing in lights, etc.). She charges $1,500 to $2,000 per day for two stagers. Some stagers charge by the room.
Lest people mistake staging for decorating, Friemann said, “It’s hard work and there’s a lot involved. I’m not a decorator. I’m here to help market the property.” Friemann, like some other professional stagers, is certified, but such accreditation is not required, and interior decorators and brokers stage on the side.
Like much of the real estate industry, the staging business is seasonal.
“We don’t have consistent business,” Friemann said. In a busy month, she will get five full staging jobs and 15 consultations.
But her outlook is bright.
“With the market slowing down and getting more competitive, the staging business will be better than ever,” Friemann said.