From the winter issue: Now that the frenzy of sales activity has quieted, South Florida’s residential agents are working overtime for their money.
Fewer buyers, more product coming online and the impact of Hurricane Irma made 2017 a particularly challenging time for residential sales, which have become ultra-price sensitive.
Star sales brokers may continue to pull in eye-popping commissions, but they’re also paying out a growing share of them to the teams of assistants, marketers and other agents who help them find buyers. It’s an increasingly necessary expense, given that buyers are much harder to find today than they were in years past.
So, how much do they really make?
Luxury sales agent Karen Elmir leads a team of six in the Elmir Group for Cervera Real Estate. The team sells luxury homes in Coconut Grove and divvies up their commissions. “Everyone has a role: Two people do the showings, another does business development,” Elmir said. “I am the leader in front of the client, making deals.”
Each team operates with a different model as to whether and how they share commissions, but that isn’t the only thing that’s cutting into a broker’s bottom line. The cost of marketing tools also chips away significantly at take-home pay, brokers said.
It’s crucial to direct cash toward mining referrals, launching targeted marketing efforts and publicizing successes so that buyers see you as a specialist in their area and seek you out, said agent Rachel Herbert of Coldwell Banker. Those expenses, combined with the cost to make a house photograph- and internet-ready, come out of profits. “Usually, the investment does pay off,” she said.
Jill Eber, one half of the power duo behind the Jills, said that in the current market, in which luxury homes are taking longer to sell, some owners are cutting their prices, which also means a smaller commission for the real estate agent.
Most agents split their 3 percent commission 50-50 with their brokerage. However, top agents are able to negotiate better terms with their firms for a larger split for themselves.
“Some agents won’t show homes if the commission is under 3 percent,” said Michele Diamond with United Realty Group in Plantation, who works the middle market, homes priced between $200,000 and $600,000. In that price range, demand now exceeds supply, which has made the dynamics challenging. And some sellers want to cut out the agents altogether and sell properties themselves, or offer only 2.5 percent to the agent, Diamond said. In South Florida’s new condo developments, developers pay their in-house sales agent 1.25 percent of the unit’s sale price, sources said.
Many sales agents also work the rental market. Some agents, however, exclusively handle rentals. The annual income of a rental agent is drastically less than a sales agent’s. A single rental for $2,000 a month — a $24,000 annual lease — might earn the agent a $1,000 to $2,000 commission in total (one month’s rent, or half that if the agent has to share with the landlord’s agent). The upside is that deals get done faster. “A beginning agent just starting out may do all rentals because the money is much quicker to come,” Herbert said.
The Bureau of Labor Statistics shows the average annual wage for a residential real estate broker — sales or rental — in the tri-county area was $73,000 in 2016. Residential agents, who must work for a brokerage to close a deal, earned slightly less, with an average income of $72,380. But that was an increase from the year prior, when the average was $68,610 in South Florida.
Click here to read more of “Making bank?” from The Real Deal South Florida’s winter issue.