The Cost of Being a REALTOR

By
Real Estate Agent with Marilyn Boudreaux, Century 21 Mike D. Bono & Co.'s

Most people don't understand how REALTORS are compensated for their work.  We are independent contractors, CEO's of our own business,  and we are paid commission for homes we sell.  Basically we are what the IRS calls 1099 employees.

The Basic Mandatory Expenses for a REALTOR in Lake Charles, Louisiana are as follows:

  • $239.00 Annual License Renewal Fee + Errors & Omission Insurance
  • $415.00 Annual Board of Realtor Dues
  • $600.00 TOTAL ($50 month) for MLS

That Totals $1,254.00

Then there is mandatory Continuing Education and in Louisiana we are required to have 8 hours. 

  • The courses are usually $25 so that is a Total of $75.00

If you have a SUPRA Electronic Key you will be charged a yearly fee plus the cost of the SUPRA Key. 

  • $261.00 TOTAL

With these basics here in Lake Charles, LA,  REALTORS incur a Total of $1,590.00 just to be in business

REALTORS also use their vehicles 100% of the time so there is the cost of the wear and tear on your car and the gas you spend as your drive around showing and listing property year round.

 

 

Every REALTOR has a cell phone, add in the cost of the phone and your cell phone service that is another charge.  Mine plan is combined with my husbands but let's just say your cell phone is $150.00 a month at the end of the year that is $1,800.00

You probably have some computer and tech gadgets to help you in your real estate business and depending on what brand you accessories choose you will incur expenses for:

  • Laptop
  • iPad
  • Printer
  • Software, Router etc.
  • Digital Camera, Tripod, Attachments Accessories
  • Video Camera, Case, Tripod, Microphone
  • Mobile Apps

If you are busy with listings and successful you will also have advertising and marketing expenses:

  • Signage-Name Riders
  • Website
  • Print Advertising- Postcards, Fliers, Magazines, Business Cards
  • Property Domain Sites

Incorporated with your advertising and marketing you will probably subscribe to sites to assist you:

  • Photo site
  • Real Estate Video Show Software
  • ClipArt, Istock
  • IDX provider
  • Contact Management System

As your desire to grow and become visible on Google you will probably attend real estate learning seminars and training:

  • Active Rain Camp
  • RE Bar Camp
  • Agent Reboot

Then there are the local events you sponsor in your community, and the client gifts you give......

This is just a glimpse of the costs associated with being a REALTOR...It can all add up.  So take into consideration that when REALTORS are compensated with an earned commission for a sale, they don't pocket all their earnings!   REALTORSl still incur expenses for listing your home....there will be sign and advertising costs that are out of pocket expenses.  Remember REALTORS are only paid a commission if a house sells!

I wrote this Blog Post Last Year Entitled "Just Another day in Real Estate:

http://activerain.com/blogsview/1644019/fearless-friday-just-another-day-in-real-estate-

 

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For more information on Lake Charles Real Estate, visit my website.  You can search homes for sale in Lake Charles, Louisiana,  and view up to date information on Lake Charles Subdivisions, Neighborhoods

Find Lake Charles Realtor Marilyn Boudreaux Century 21 Mike D. Bono & Co.'s on Google+

If you are planning a move to or from the Lake Charles, LA area, I can help!   I am a full time Realtor licensed by the Louisiana Real Estate Commission and am affiliated with:


Century 21 Mike D. Bono & Co.'s

4410 Nelson Road, Lake Charles, LA, 70605 USA

337-478-1578 or 337-499-9592

CENTURY 21® is a registered trademark owned by Century 21 Real Estate LLC. An Equal Opportunity Company. Equal housing Opportunity. Each office is independently owned and operated.  The information contained in this blog is believed to be reliable and while every effort is made to assure that the information is as accurate as possible, the author of this blog, and its comments are not warranted or implied representation of it's accuracy,  All information is copywritten and the property of the Author, Marilyn Boudreaux.  

 

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 Marilyn Boudreaux Copyright 2012

 

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Anonymous
Anonymous
Anonymous

Marilyn,

Excellent eye-opener for the public!  Always for listings and usually with buyers, I explain what might end up in my pocket after broker split and marketing expenses.  I think they deserve an idea of the value they get vis-a-vis my commission.

Feb 12, 2011 09:35 AM #70
Rainmaker
893,958
Michael Setunsky
Michael's Commercial LLC - Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Marilyn, people coming into the business don't realize what it costs. When I taught real estate classes, I would spend some time on what it costs to get into the business. Most students were surprised. Some thought the broker paid these expenses and you could pay them back when something sold.

Feb 12, 2011 09:36 AM #71
Rainmaker
850,912
J. Philip Faranda
J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY - Briarcliff Manor, NY
Broker-Owner

These are things that many do not consider when they derisively dismiss our commission. 

Feb 12, 2011 09:52 AM #72
Rainer
115,461
David A . Goodridge
Keller Williams, NYC - Manhattan, NY

Thanks Marilyn. I will use this info and create a word or excel document outlining my yearly expenses. I will keep it handy and pull out when commission questions arise.

Feb 12, 2011 10:18 AM #73
Rainmaker
229,218
Susan Jackson
America's Network Realty Group, Inc - Sandy Springs, GA

Great post.  You broke it down quite well.  Don't forget: we pay our own health insurance, no umempoloyment benefits , no paid sick days or paid vacation.  If we don't sell the house we eat the marketing expenses.

Feb 12, 2011 10:40 AM #74
Rainmaker
895,502
Brian Madigan
RE/MAX West Realty Inc., Brokerage (Toronto) - Toronto, ON
LL.B., Broker

It's very easy to forget how all these little things add up. And, if you spend money on print advertising, that can be a fortune.

Feb 12, 2011 11:11 AM #75
Rainmaker
161,596
Mary Pope-Handy
Sereno Group Real Estate - Los Gatos, CA
CRS, CIPS, ABR, SRES, Silicon Valley

On top of that, many of us have specialized real estate designations, all of which cost money on an annual basis (for me, that includes CRS, SRES, ABR and a few more).  And our MLS is about $350 every six months! 

Additionally, many agents in my area pay a "technology fee" (seems to be a new term for "desk fee" but now many don't have desks), and that can run between $3000 and $4000 per year.

It IS an expensive business to be in, and you are exactly right that our clients have no idea where all the money goes.

Feb 12, 2011 11:26 AM #76
Rainmaker
87,937
Scott Petersen
Client First, Realtors - Canton, MI - Canton, MI

That is a good list to show a client who questions a commission.. which is many these days.

Feb 12, 2011 11:46 AM #77
Ambassador
1,097,212
Bryan Robertson
Catarra Real Estate, Inc - Los Altos, CA
Broker, Author, Speaker

Depending on the agency, here in California you have all those fees plus "desk fees' at places like Coldwell Banker that run close to $4000/yr.  I'd say that most agents getting started need to have at least $10,000 to spend just to get started with all the basics and some marketing.

Feb 12, 2011 11:48 AM #78
Rainmaker
1,005,479
Michael J. Perry
RE/MAX Associates of Lancaster, PA. - Lancaster, PA
Lancaster Relo Specialist

Marilyn you have pointed out something that most agents continue to ignore each time they take an overpriced listing. Every business has both FIXED and Variable Expenses. In your example the fixed costs come to $1,590 per year. If you had ten(10) closings this year, you would have $159.00 per side allocated before you started spending ANY money in each transaction( those are variable expenses).

Feb 12, 2011 12:43 PM #79
Ambassador
621,635
Marilyn Boudreaux
Marilyn Boudreaux, Century 21 Mike D. Bono & Co.'s - Lake Charles, LA
Lake Charles LA Century 21 Realtor

Lots of great comments, I am sure we could all add to our list I had a broad outline that did not include everything   Thanks to those who added additional expenses like health insurance, investments and tax preparation! 

True that most consumers don't care what  our expense is they just want their home sold, but every now and then when a listing doesnt sell  it is a good reminder to share with the seller exactly what our investment was  in the deal.

Feb 12, 2011 12:48 PM #80
Ambassador
1,552,211
Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Marilyn you are so correct with ALL those costs to take into consideration. LOTS of them out there.

Feb 12, 2011 01:18 PM #81
Ambassador
1,257,948
Erica Ramus
Erica Ramus - Ramus Realty Group - Pottsville, PA - Pottsville, PA
MRE, Schuylkill County PA Real Estate

The costs do add up very quickly. Most new agents don't understand this until it is too late, and the bills start arriving.

Feb 12, 2011 02:16 PM #82
Rainer
257,137
Charles Edwards Bentonville
Coldwell Banker Harris McHaney & Faucette 479-253-3796 - Bentonville, AR
AR REALTOR, Bentonville Real Estate Agent and Broker

Marilyn, we have to be a tough lot. The business is very challenging and equally rewarding...when things go right.

Feb 12, 2011 10:00 PM #83
Rainmaker
94,849
Marisa & Demarco Fletcher
Remax Kings Realty - Riverside, CA
The Hunter Group

Great post. Many people don't realize what we do as Realtors to get their home the most exposure so it can sell quickly or to find them the best deal as their Buyers Agent. They just know that we are making XYZ dollars. So why not ask us for 1% of our commission because they want to break their lease early or to pay for their moving truck? I always give some type of closing gift anyway, but I just see red when they ask for my commission.

Feb 13, 2011 12:57 AM #84
Rainmaker
1,085,521
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

Marilyn * as a property manager and CPM * I have double those fees as I have to pay for my local chapter AND IREM dues which are VERY expensive....I started culling groups and associations I belong to several years ago and do not miss them.

Feb 13, 2011 08:16 AM #85
Rainer
52,347
Joyce Herr
Prudential Lancaster Real Estate - Lancaster, PA
Lancaster County & Beyond

It is expensive to be a realtor and it is a tough business to make a living.

Feb 13, 2011 08:24 PM #86
Rainmaker
383,053
Morris Massre
Berkshire Hathaway Home Services - Pembroke Pines, FL
Realtor Broward County Florida

The only good news is it's all tax deductable.

Feb 14, 2011 01:22 PM #87
Rainmaker
137,388
Aida Pinto
United Associated Brokers - Downey, CA
Real Estate Broker (562) 916-3237

It's cheap to get in....but expensive to stay!....I think it should be even more expensive....this way it will weave out all those  who get their license because they think being a Realtor is quick-way to get rich.

Apr 08, 2011 02:54 PM #88
Rainmaker
135,423
Susan McLaughlin
Keller Williams Realty - East Monmouth - Red Bank, NJ
Monmouth County Real Estate

I just re-read this when I was trying to make a list for someone new to the business.  Susan (#74) points out two huge items, unemployment insurance, disability insurance, social security matching that we have to pay as self-employed and the enormous expense of marketing for properties that do not sell.  That's why I'm more selective about listings and carrying overpriced listings these days, it's a big hidden cost!  Thanks again, this was a good one.

May 26, 2011 07:37 PM #89
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