Are You Worth It?

Here's a question I've been thinking about...

If I had a nickel for every time I heard somebody say that Realtors are overpaid, well, I would be overpaid. Salary estimates vary depending on the source, but consider this: the average doctor in Arizona makes approximately $290,000 per year. The average attorney makes $120,000. Nurses? $90,000. Engineers? $110,000. Teachers—oh, this stings—$63,000. Your average, full-time, run-of-the-mill Realtor? $162,500 (according to a recent Arizona School of Real Estate & Business alumni survey). Let that sink in. You went to real estate school for 90 hours, yet the average income rivals nurses, engineers, attorneys and others. Now, in fairness, I know a lot of agents who make less than $160K a year. But I know a LOT who make much, much, MUCH more than that.

A nurse, engineer, attorney or teacher generally receives a salary and, if they are lucky, a raise every year. But that raise probably isn't going to increase their income by six figures. In real estate, you can have a banger year and double or triple your income. The sky really is the limit. I have always said that the best part of real estate is that nobody tells you how much money you can or cannot make. Nobody tells you when to go to work, how long to stay there or when you are allowed to take a vacation. The downside to real estate? Nobody tells you how much money you are going to make, when to work or when to play. That is both the perk and the drawback—and a decent argument to remember when somebody tells you that you are overpaid.

Ask any of my colleagues and they will tell you that I say this to every agent: “Never apologize for the money you make!” This is a tough job, gut-wrenching at times. It sucks the life out of your vacations, your (WTF?) downtime and sometimes your health, family and friendships. It is also an incredibly rewarding job. You get to help people potentially build generational wealth. You help them make financial decisions—good and bad—that may affect them for decades. Your advice about repairs, location, schools and resale potential can have a significant impact. You are, or should be, compensated for that expertise.

But as the years have passed in my career, the conversation about “commission compression” has become very real. The question is: has it really been THAT bad?

Years ago, advertising properties was expensive. A full-page advertisement in Homes & Land magazine cost approximately $1,500. Adjusted for inflation, that would be roughly $2,900 today. Now, we merrily upload 27 photos to ARMLS and the listing syndicates to Zillow/Homes/Realtor and countless other websites, giving that property exponentially more exposure than one magazine advertisement ever could. And the basic distribution cost is included in our annual MLS dues. I am not saying that we no longer invest in our craft. Far from it. Professional photography, video, staging, marketing, technology, licensing and education all cost money. But an argument can certainly be made that our ability to place a property in front of a massive audience is significantly less expensive than it was 25 years ago. Yet our compensation structure hasn't shifted all that dramatically. Oh, and because we are generally paid based on the sales price, we should also acknowledge what has happened to home values. It may be essentially the same job when the house was worth $300,000 and now is worth $600,000—but it produces a very different paycheck.

We have tremendous opportunities in this career to create an amazing life for ourselves and our families. But we should also take a moment to see it from the other side. Sure, we work a lot. Sometimes we work and do not get paid at all. But is that the fault of the person who ultimately does pay us? If you had to stroke a $15,000 check for professional services, what would you expect from the person receiving it? Professionalism? Accuracy? Expertise? How about simply picking up the damn phone? (Yeah, you know who you are.) If you were the one paying the bill, you would expect all of that and more.

Yet many Realtors, let's be honest, are crap. They have never read the contract all the way through. They spell BINSR with a Z and SPDS with a U. They use their cell phone to take listing photos. They never answer the phone and hide behind text messages or Instagram posts. But they look damn good doing it. And somehow, we are all “Top 1%!” I will never figure that one out. But the public is onto you.

So, before you come at me with pitchforks, I have a challenge for you: track your time for one month. There are plenty of apps that can help you do it. Or fine, be old-school and write it down on a sticky note. But be honest with yourself. Did you REALLY put in a ten-hour real estate day? If you had to justify those ten hours to a boss—or not get paid for them—could you? Track everything. Then calculate how many hours you honestly worked. Next, take what you earned in commissions during the last 12 months and divide it by 12 to create a monthly “salary.” Then divide that number by the actual hours you worked during an average month. If you want to be brutally honest, subtract your direct business expenses before doing the math.

I have a feeling the result may gobsmack you. In a good way.

I did this years ago and calculated that my gross hourly rate was approximately $250. That didn't mean every phone call magically put $250 into my bank account. But when my phone rang and it was THAT client—the one who DRIVES ME NUTS—the conversation felt very different when I reminded myself of that pesky little fact. Understanding the value of my time changed how I interacted with my clients. I think it may do the same for you.

So the answer to the question I have been thinking about… Do you know your worth? And is it worth it?

Nicholas Yale

Designated Broker/Owner | Brokers Hub Realty