Featuring real estate articles and information to help real estate buyers and sellers. The Nest features writings from Georges Benoliel and other real estate professionals. Georges is the Co-Founder of NestApple and has been working as an active real estate investor for over a decade.
Some Make a lot, But It’s Not Money Alone That Drives Them. So what real estate agents really make in NYC?
Every fan of the Bravo Channel’s hit cable TV series, Million Dollar Listing New York, knows it. Being a top-producing real estate agent in the City is not only glamorous but incredibly lucrative too. When you’re not hosting a wild, celebrity-packed open house event at a $20 million penthouse apartment, then you’re closing multi-million dollar deal in some swank high rise condos.
That’s the Hollywood version of real estate agents in New York City. The real picture remains a little bit different. There are, of course, high flying Upper East Side and SoHo agents who are celebrities in their own right. And they do close multiple eight-figure deals with some frequency. However, for most agents, the reality is quite different.
Most work-a-day real estate brokers and agents do not host glitterati packed open houses. Nor are they closing multiple million-dollar deals every week. Moreover, most aren’t model handsome. Nor are they wearing Armani suits to work every day.
Nationally, the average income of a Realtor in 2017 totaled a measly $39,900. The amount of their deals remains small as well, as are the number of closings they attend. Typically, they do eleven “sides” per year. This means they are part of either the “sell-side” of the deal representing the seller or the “buy-side” of the transaction representing the buyer. But what’s most shocking is their age. The average age of a Realtor is 54 years old, and most are women.
What do real estate agents make in NYC? New York City Realtors fare much better than their colleagues working in the rest of the country. According to the Quarterly Census of Employment and Wages published by the State of New York, New York City real estate salespersons averaged an income of $75,800 in 2015. Today’s average is probably slightly higher. This is a lot better than what they were making in 2008, at the start of the financial crisis. Then, their average compensation was a little over $57,900.
Real estate agents, because they are independent contractors, not salaried staff, usually lose out on benefits. Things like healthcare benefits, paid vacation time, and other perks aren’t typically part of their package.
However, some large brokerages do offer “group” health care benefits. By bundling all of their agents together, they can cut a better deal with health insurance companies, which reduces the cost of that coverage for commission-only agents.
StreetEasy, the largest online property listing platform in New York City, estimated that there are perhaps a few hundred “super agents” who do make the big bucks and do, at least some of the time, throw lavish open house events.
Ryan Serhant – one of the stars on “Million Dollar Listing New York” – is one of the most famous “super agents”. His career, like so many others in the real estate business, started small. Shortly after graduating from Hamilton College, Serhant became an actor. When that didn’t pan out, he became a New York City real estate agent. During his first year, his income was precisely zero.
His first big sale was for an $8.5 million unit in Manhattan. From there, his fortunes rose. In 2012, the New York real estate publication The Real Deal ranked Serhant #15 out of the top 100 agents in New York. By 2017, his team closed $838 million in Manhattan real estate, rocketing them to the number one position in the City.
Some folks usually do a quick math calculation in their heads. They realize that real estate agents would make a $60,000 commission on a $1 million sale. For illustration purposes, that’s the median price of a home sale in Manhattan right now. As a result, those folks often want to quit their job immediately and become an agent themselves.
The fact of the matter is that commissions get split between brokers and agents. These commission “splits” quickly whittle down the amount each person involved in the transaction puts in their pocket.
A $60,000 commission gets divided between the sell-side and the buy-side agents and brokers. Each gets 3% of the 6% commission. This 3% or $30,000 gets again divided between the agent who facilitated the sale and the broker they work for. These broker/agent splits vary. A hotshot agent can keep up to 70% of the $30,000 commission. However, most percentages are 50/50, with the agent getting 1.5%, or $15,000, and their broker getting the same. So a $60,000 commission quickly shrinks to $15,000. Furthermore, it would take an agent five deals – or “sides” – to earn the average income of a typical New York City real estate agent.
The current paradigm where agents get paid on a commission basis results in extremely high costs for the few clients agents have. If you’re a buyer or seller and think paying an attorney $500 an hour seems high, your agent earns at least that much, if not more. That’s because you’re essentially paying to subsidize all the “free” work agents do for other potential clients. The typical agent spends over 90% of their time doing work for which they don’t get compensated, from lead generation to working with potential clients who don’t end up closing. You shouldn’t be paying for these inefficiencies if you’re a motivated client, which is why at NestApple, we offer buyers commission rebates, and sellers lower listing fees.
There are several benefits that real estate agents get that are not financial, but that are a very much valued part of the job. Many agents love the fact that they are their own boss. They also like that they alone decide the pace and the number of hours they work each day. Some find the fact that they are responsible for their income – not having to rely on the whims of a boss – as being a fulfilling benefit of the business.Finally, the feeling of accomplishment, many real estate agents get when they close a deal is rewarding. No doubt, the money that comes from that accomplishment doesn’t hurt either.