"This business is 24/7," said broker Christopher J. Artur, owner of Artur Real Estate in Mayfair. "No one else but you is there to open the door, wait for clients, determine staffing, buy and pay for supplies, and find, purchase, learn about and use the latest technology."
Add to that the costs of errors-and-omissions insurance and its higher premiums if you manage properties, as well; commercial insurance for your office; fees for the Multiple Listing Service and local and national Realtors organizations, and a whole host of expenses "before you even talk about trying to sell a house," Artur said.
Fixed costs consume most of the money a small broker takes in, he said. "I sell low-price housing" in Mayfair and surrounding neighborhoods, so Artur depends heavily on volume.
According to the Bureau of Labor Statistics, real estate brokers and agents do the same type of work. But brokers are licensed to manage their own businesses; agents must work with brokers.
An agent typically provides services to a broker on a contract basis. In return, the broker pays the agent a portion of the commission earned from the agent's sale of a property.
The bureau further says that the broker or agent who obtains a listing usually shares the commission with the broker or agent who sells the property, and with the firms that employ each of them. It recommends that an agent just starting out "should have enough money to live for about six months, or until commissions increase."
"Each month, we start at zero. No salary or any type of compensation other than the sales generated by our individual effort," said Diane Williams, of Weichert Real Estate in Blue Bell. "One has to be strongly motivated and a self-starter - willing to work long hours, especially in this challenging market.
"Each month is different," Williams added. "One must be disciplined financially to plan your spending around an irregular income."
Expenses are hefty from the very start.
