If 20% of realtors do 80% of the business, how many deals does an avg, or below-avg, realtor close in your town?

Because I will be a new realtor, new in town, with a limited sphere of influence, I’m trying to gauge the average amount of closings I can expect in the statistically likely scenario I’m not a top dog - ever. How many closings do the lower ranked realtors, the 80% of realtors doing the 20% of the business, normally have?

Based on averages in our mid-size community, and by talking to brokers, I have ascertained the median sale here is $169,000 and the average sale around $175,000. After expenses and splits of varying combinations, it appears the average commission falls between $2000-$3000. Does this sound typical for your mid-size town?

It appears from the promotional material of top dog realtors they typically close around 25-40 deals a year. Does that sound about right? No one will come out and say what the average amount of closings are the little guy.

I’d like to figure out the average number of closings for a lower-level realtor in a typical year (not a for new realtor as I understand that averages 0-6 already). I’m wondering about 5 years or so down the road for a realtor near the lower end of the pack who puts in the standard level of effort and work typical of that ranking.

Perhaps realtors who work in mid-size communities such as mine (75-150,000) can let us know how many deals realtors of this level close in their offices, and from this an average can be formed.

As an aside: what percentage of realtors do you see close nothing or near to nothing but stay in the game regardless?

ZERO . . . . unless you count those people who are independently wealthy, by virtue of someone else's efforts.

These are the people who need to define themselves as "something" so that at Church or a Dinner Party or other social engagement . . . . when they ask "What's he do?", it can be said, "Oh him; why he's in Real Estate !"

Everyone needs definition. It's a need to be meaningful. Some define themselves not by what they do; but by what they pretend to do, even if it's phony.

Some of these people are a good source of leads . . . . or "gossip" that allows others to track down leads.

For What its worth

If.... 20% of the realtors did 80% of the business, then if my math is correct, that would mean that the remaining 20% of the business would have to be shared among 80% of the realtors, and unfortunately not a very lucrative picture.

Locally, the drop out rate of realtors in the first two years is not something that is greatly publicized as it discourages new entrants, into the business, which the industries needs to replace retirees, drop outs and the inactive licensees.

During times when the financial rewards are good an agent would be well advised to give some thought to making some revenue producing investments to provide some financial assistants in less favourable economic times and eventually providing income for their retirement.

I'm basing the top 20% of realtors do 80% of the business on articles I've read and comments from agents on this site as well. So I'm wondering, what the 80% of realtors who only do 20% of the total business can typically hope to close since the majority of realtors fall into this category, and it appears the top realtors in my area close an average of 25-40 a year.

What you are describing is the typical schlub. The agent without any particular talent, the agent with limited and frequently subdivided energy, the agent who does what everybody else does and cannot answer the question: "What will you do to sell my house that nobody else does?", because the answer is truthfully nothing. Basically the typical, friendly, nice, lazy, useless, mediocre agent. Such an agent usually closes 4-12 deals a year and makes $20,000 to $60,000 dollars, with the great majority closer to the $20,000 figure than the $60,000 figure.

The agent who sold my home, outside a city of around 90,000, when we moved to a new state offered more marketing than the top agents we interviewed, came with a presentation/plan, was into learning her craft, was a great communicator...always keeping us informed, and made us feel really secure with our home in her hands hundreds of miles away - yet I know she only sold five to seven homes that year. That year was 2008. It was her 3rd/4th year in realestate. This year as of January she has had two closings with three more to close somewhere late May or so, not a ton. I know she puts in a lot of hours and is full-time. She's not in the 20% doing 80% of the business, but certainly wasn't lazy or useless by any means. I valued her. But thank you for the closing numbers - it helps to know that and is the kind of inside knowledge I'm looking for.

Not all low-volume agents are lazy and worthless and not all high volume agents treat their clients well.

This is a funny business that allows idiots to succeed and good people to fail. The cream may indeed rise to the top but in real estate that cream also has a bunch of nasty curdles in it too. LOL

Hi Annmary,

The reason you haven't gotten a straight answer yet is because there really isn't one. Success in real estate (or any entrepreneurial venture) isn't based on averages or statistics; it's based on you, your efforts, your talent and a little luck.

There are plenty of licensed real estate agents who do little-to-no business even after their rookiehood. I know some agents in their second and third years who have yet to close a transaction. Why they stick to it, I have no idea - surely there are careers they're more suited to if they can't make a go of this one by now! But, that's their choice.

Anyway, in today's market, clients and closings don't just fall into your lap if you wait long enough. It's no longer a case of "even a blind squirrel finds a nut sometimes." It's entirely possible to sell zero houses in a year - agents do it every day!

So, if you're asking what the minimum income you can expect in a worst-case scenario, the answer is unfortunately... zero. And plenty of good, hardworking agents are only selling 5-10 houses a year which in most cases, isn't enough (IMO) to justify the brain damage of this crazy career!

Annmary

The man who I call my mentor, started as a real estate agent in 1909 so I like to say I have 100 years of experience. He told me the pie in any area is only so big, and if I wanted a piece I had to grab a piece. It is like a low rent boarding house, jump in and grab a piece or go hungry. No one is going to save and hand a piece to you.

This percentage thing varies from area to area. In one area I concentrated on for years, the percentage got to be 95-5 as the dominant agents took control. So the lesser agents were now dividing up only 5% of the market and there were a lot of agents.

Some would do anything to get a sign up on a home, thus really overpriced listings and deep discount commissions. Some really didn't care because the social life was the only thing that counted to them, and if they fell into a deal even better, they could wave that around for a long time at the local luncheons and other gatherings.

So take a look at your market area, and see how big the pie is, and how much of it is going to the top 5% or 10% or whatever, these are your real competitors. If it was like my area there was no way the 5% I was in, was interested in sharing our 95% of the market with the other 95% of agents. Our goal was to remove that 5% of the market from the 95%, and put those deals on our desks, and then of course keep trying to take from each other.

I remember when one top Realtor who had a very strong client base was dying. It was like the scene from Zorba the Greek, where they were waiting outside a home for the person inside to die so they could go in and strip the place clean, and they did, even the clothes off the dead body. Other agents were mailing to his client base and offering their services now that they really didn't have a broker to represent them presently, or in the future,they wanted to be helpful of course.

Good morning Perky, funny insight. Thank you Brian, I think this area is not quite 5% doing 95%, but definitely the top 30 agents or so do most the business.

A response from Jennifer Allan this morning was completely psyche! Perky mentioned your book. Yesterday I spent around 2:00pm until almost 2:00am reading your blogs for the first time, stopping only to make supper for the family! I became a fan last night, so it’s pretty amazing and ironic to hear from you this am.

In one of your blogs you said you’d never recommend someone new in town jump into real estate until they have a solid sphere of about 200. Being introverted, I still don’t have that, and to put me at a greater disadvantage, I moved to a remote northern city, Duluth, and the area is strongly provincial – generations of people born, raised and working here.

I’m an introverted person, empathetic, do things for others and enjoy one-one-one or small groups a lot. I help coach kids. Your real estate strategy would fit my personality completely, and I’m ordering your book.

I’m thinking that it would be best for me to put real estate on hold, return to nursing for awhile. I have a BA in communications and design, and an LPN license. For the same cost of starting in real estate around $5,000 or so, I can obtain my RN. I could meet people from that career and build up a solid sphere of friends along the way.

The disadvantage is I’ll be older when I enter real estate because I’ll need time to focus on becoming a proficient RN. The advantage is once established as an RN, I could work one day a week if I wanted, and focus on real estate the rest of the time, and have time to build friendships, and a solid sphere.

That is the teeter-totter I’m on after moving to different states three times in eight years (different cities brings it to five times) and being a stay-at-home mom during it (built three homes). Hopefully settled, but with my husbands job I can’t count on it, and returning to work - I go crazy trying to choose a path. At church yesterday I asked for a sign, I think this was it. Thank you.

Wow - sounds as if you had a SOUL-filled day yesterday

There's also a thread on my forum on the subject - maybe that's what you found, but yes, I think it's just too hard to start a new real estate career in a new town where you don't know anyone and may not even know your way around in a difficult economy. Do people do it? Sure they do. But the vast majority fail, even people who were sure they wouldn't. And it's incredibly discouraging (not to mention potentially financially devastating) when that happens.

I think your plan sounds fantastic. Spend the next year or two making money (and socking it away), making friends and learning about your market. There really isn't a downside here that I can see... and plenty of upside!

When I decided to go out on my own, I was working a highly desired job in downtown Chicago. HArd to leave. But I wanted to have more children. To make a long story short I had to work 2 jobs for a while before I made the brake. But mind you, I was doing refi closings and I had another profession. I could have gone back to the downtown tax jib. i also started working on a teaching cert. So I made sure that I had a lot to fall back on. And after all that, I found a love in real estate. I got the Broker's license before i was even considering leaving the tax jobs. I let it sit ona shelf for over 3-4 years before I started usingn it. But I had it and was able to jump on REO oppurtunities when they emerged. That is why I am getting licnesd in other states and working on appraisal license. I kick myself all the time for not getting the appraiser's license in 2000 when i had the paperwor and it was so much easier.