Answering the question—
– is a challenging one, since it has no straightforward answer. People who draw their understanding about the industry from watching shows such as “sell NYC” could easily fall for the glimmer and flash the TV portrays. It is easy to reach wrong conclusions thinking that most real estate agents’ income is 6 figures. You should know that the real estate industry, like any other industry has its pitfalls, and it can be challenging but rewarding at the same time. So back on our question—“How much does a real estate agent in NYC make?”—it really depends on the agent.
Our business is strictly commission based. Some time ago, I worked with a lady who was new to NYC and she was not acquainted with the compensation structure of the income of the real estate agents in the city, therefore, once she found out I am not being paid a salary but my income is only commission based, she objected—“this is illegal and contradicting the minimum wage based laws in the jurisdiction of NYC. There is a minimum remuneration that the employee should receive from the employer in exchange for his labor…” and this was when I interrupted her admitting I was technically self-employed, and needless to say further, my status exempts me from receiving salary or benefits. So, this is the hard reality, real estate agents income is not salary but strictly commission based. The security of having a paycheck coming at the end of the month is not provided here. There is a correlation between income and performance and the better you do, the more you can make.
The business can be extremely challenging in the beginning when the agent is trying to figure out the basic trends in the industry and find his own niche. A lot of agents are simply scraping by in the first one year and they live on the edge of poverty barely making it, not knowing if they would have enough money to cover their monthly expenses. However, those who have survived the hardships —the renegades- have repetitive business coming from their referral based networks established throughout the years of hard work. The agent’s success and his income depend on many factors such as personality, social skills, and the ability to relate to others. But the highest value is placed on the old principle which is still at work these days—who do you know in the business and who are you connected to. Of course when you are new to the business you have to be prepared for the worst, and the chances are you might go without a pay check for months if not a year. So if you are intending on plunging into the career of a real estate agent, be prepared that for the first year your efforts might not be compensated fairly at all. Figuring out your niche, getting familiar with landlords and scientifically researching the peculiarities of coop boards can be a long process.
So really “How much does a real estate agent in NYC make?” –Since this is a commission based business—it depends on the amount of commission the agent collects on average per number of deals closed over the course of the year. So how much is the commission then?—Real estate agents in NYC ARE DULY AND FULLY CAPABLE TO determine their commission and negotiate if needed with the client; however, it is usually %6. Standardization of the broker’s commission is illegal in the state of NY since this is considered price fixing and a violation of the antitrust laws; however the traditional methods of working have established a nonverbal agreement between brokerage companies to charge %6.
Lately the notion that broker’s commission is negotiable has become more and more popular. There are people who dare to reason that real estate agents do not perform the volume of work to justify such a large compensation. This is debatable since agents get paid on results not in advance and the marketing, networking and other expenses associated with promoting the property are all out of pocket expense for the agent. Consider carefully that a property can stay on the market for 4-5 months before it sells.
There are highly competitive real estate firms that have implemented a new commission split structure—their agents are allowed to keep %100 of their compensation for a small monthly membership fee anywhere between $100 –$500 depending on the company. Those brokerage firms advocate the belief that the time has come for the industry to experience and forgo the traditional %50 agent/ %50 house split. They propagate that the more the agent is allowed to make, the better quality of service he can give to the clients. Such an arrangement gives real estate agents a much better leverage and they are less constrained and more flexible to negotiate the %6 commission. There are colleagues of mine who are willing to slash their commission down to %4.5, and there are those who are even more creative and offer to collect only a flat fee for having the apartment registered in the agent’s database for maximum exposure, however, all the rest of the work such as handling open houses and screening potential buyers is done by the owner himself.
Agents who follow the traditional commission split model and usually work for the so called prestigious companies such as Douglass Elliman, Corcoran, BHS are willing to stay more firmly behind the %6 implying that the company’s reputation lures better traffic and clients their way. They might even speculate that those agents who are negotiating and accepting less than that are usually brokers who are not experienced and undermine the industry’s trends. It might as well be that the dogmatically indoctrinated in the business older generation agents might feel threatened and incapable to adjust with the changes.
So really –“how much does a real estate agent in NYC make?” — It depends on how creative the agent is and whether he is experienced and willing to negotiate his fees. Recently just to make it more challenging for new agents, some new players have shown up on the real estate stage like a company called — Real Direct. This is a company that encourages people to sell or buy on their own charging them flat fee and offering an array of assistance with staging , promoting , distributing the listing or assisting as a buyer’s broker.
Bottom line real estate in NYC is strictly commission based business and therefore competitive and challenging. Commission however, can be negotiable and it depends on the agent’s negotiation skills. Standard broker’s commission is %6 and once co-broke; the agent goes home with about %3. So for instance, an apartment that sells for 1 Mil, the agent can average $30K and depending on his split with the house, he can make anywhere between 15K-30K. Well, I guess you only need 5-6 deals like that per year to hit a 6 figure income. If you still wonder how much does a real estate agent in NYC make? – It really depends…