Realtor Commissions: Not What You Think

There's this perception out there that real estate agents are making money hand over fist.

It's understandable. Consider the average seller's experience: He might speak to the real estate agent a couple of times on the phone; then meet him or her in person at the initial listing presentation, when the real estate agent gets the listing; then have a few more phone calls over the next couple of months. And the next time he sees his agent, it's at the closing table and she's walking away with a check for tens of thousands of dollars. Plus, the real estate agent is usually dressed well, drives a nice car, and seems to be the picture of success.

If you don't see the actual day-to-day work of a real estate agent, and don't see all of the work they end up doing for no pay (and why would you?) then it's perfectly understandable why so many consumers think that agents are overpaid and do no work for the fat paychecks.

The reality is -- as many real estate agents will tell you if you ask -- that most real estate agents work extremely long hours for nothing, and end up closer to the poorhouse than their wheels and threads might suggest. As salespeople, their professional appearance is important, so they invest in looking like a million bucks.

The truth is, the job just doesn't pay that well. The 2009 Member Profile from the National Association of Realtors tells us that the median gross income of a Realtor was only $36,700 in 2008. But that alone doesn't tell the story.