Interesting post on the net earnings of agents from the CEO of Redfin:

http://www.bloodhoundrealty.com/BloodhoundBlog/?p=12050

Very interesting. Thanks for the post. As a former accountant, I think a lot of agents only look at their gross - hire assistants before they should or do expensive marketing thinking they are making the big bucks without really looking what it does to their bottom line.

As we say in the accounting circles - it doesn't matter what you gross it only matters what you net.

I think that data holds true, even in a high end market like Long Island, NY where I work. Very few agents gross over 100K per year and after expenses, most earn very little.

I think that for the most part that is accurate, but say you have a regular salaried job of $100,000. You still will be paying social security and medicare taxes in some form. You will be paying some sort of health insurance although the amount will be lower depending on the companies health plan. Most people still have a cell phone these days including data plans and text plans, You still buy computers and other equipment. I'm not at all sure what IT means. I don't pay for any IT, but I suppose some people need Geek squad to come over. So that could be a normal expense anyways. Also transportation is still a need.

The Dues and education seems low. I'm above that with just dues and insurance

But the beauty of our profession is that alot of these expenses are tax deductable.

So the biggest expense that normal jobs don't have is the marketing and brokerage fee. And that marketing fee seems high. I know I don't spend that. To spend that much you are most likely using expensive print advertising which isn't that effective. But again these expenses are Tax Deductable.

I try to explain that to people who think about moving to areas like ____BLANK____ they get so hung up on their pay rate before taxes and dont have a clue about what is left over after everything is taken out and the bills and taxes paid. So many people never look at the tax breaks of being in a lower tax bracket and another states actual cost of living. Sometimes a 30% pay cut moving to a reduced cost of living area actually puts more money in your pocket.

The NET isn't exactly the end all to be all. If you set up a corp you can WRITE OFF many expenses as business that you would normally pay yourself if you were a worker.

So someone might say they only pay themselves 40k a year to be taxed as personal income but really they make a few hundred K they just funnel the expenses and retirement etc. through the corp.

Don't give the government more money than you have to. They have shown for years and years they can't handle it responsibly anyways.It's like giving more Jack Daniels to an alcoholic........