DMS Properties, LLC ... Residential Real Estate Services

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A Career in Real Estate ... Historically Speaking

There are all sorts of real estate companies in Maryland (approximately 1,500 or more according to the Maryland Real Estate Commission).  Most of the real estate brokerage firms in Maryland are just like DMS Properties, LLC ... Residential Real Estate Services ... relatively small companies that have under 10 licensed real estate agents.  Each company has its own business model, fee schedule and commission structure for its agents. 

  • There are large companies with multiple offices and sometimes hundreds of agents;

    • Some Companies are "Franchize" firms, meaning that all of the agents are required to pay a periodic franchize fee or provide a "cut" of every commission over and above their "split" with the Broker.

    • Some Companies have commission structures where agents pay a monthly or yearly "desk" fee or "buy up" their commission split, regardless of their production.  Some of them even charge for every "service" that an agent uses ... printing forms, processing contracts, etc.

  • Small companies with one or two offices and less agents;

    • Smaller companies, we believe, have a greater flexibility in the types of services and commission options (career enhancements) that they can offer to agents who choose to affiliate with them.

Regardless of company size and business model, it is the actual real estate agents that are the focus.  A buyer or seller may choose to work with a large company due to name recognition, but it ultimately comes down to the individual agent and the services they are able to provide.  Not every company is a good fit for every agent.  We see many agents who are struggling and who may decide to not retain their license because the expenses of being in business are not being offset by the commission income.    

There are some interesting statistics about our industry, the agents who hold licenses, and the income that they earn, according to the National Association of Realtors (NAR). Here are some quick numbers:

DMS Properties, LLC Work Space

2013 There were 1.04 million
licensed agents
The average Gross Commission Income was $37,200
2014 There were 1.10 million
licensed agents
The average Gross Commission Income was $36,500
2015 There were 1.17 million
licensed agents
The average Gross Commission Income was $29,560
2016 There were 1.23 million
licensed agents
The average Gross Commission Income was $31,670

What this is showing is that the trend in the number of agents holding licenses is now increasing again after the market crash in 2007 to 2010 when many, many people got out of the business.  Now it seems that more and more people are becoming licensed again.  At the same time, though, there is still a shortage of homes being actively marketed. 

Joe Niego Slide

Real estate agents are now competing for the pool of business and, with more agents going after the same business, the Gross Commission Income (GCL) for licensed agents had been declining, but may be rebounding some now.  NAR also reports that the average GCL for an agent who has been in the business for two years or less is $8,500.  All of these numbers are before the split with their Broker, and also before taxes and before expenses!

It is generally known that it takes approximately five years for a newly-licensed real estate agent to become established in their business ... and earning the "national average" in GCL.  Knowing this means that it is even more interesting to find out that NAR also says that the turn-over rate for real estate agents in the business for less than 1 year is 80%. 

That means that 8 out of every 10 people who gets a license to practive real estate will return their license to the Real Estate Commission and give up within the first year!

The interesting thing about being in business for yourself (and being a real estate agent IS a businesss) is that regardless whether a real estate agent makes $31,670 in GCL or $150,000 in GCL, the amount of most of their fixed expenses are going to be essentially the same!  Every business owner runs their business differently, but the fixed expenses include, but are not necessarily limited to:

  • MLS Quarterly Dues (currently about $130 per quarter in Maryland)

  • Association (NAR, MAR, local board, etc.) Annual Dues (roughly $700 per year)

  • E&O Insurance (varies by company but can run as high as $400 per year)

  • Business Cards (Approximately $100 for 500)

  • Gas and other car expenses per month (varies by person)

  • Cell Phone and Data per month (varies based on plan)

  • Computer, E-Mail, Web Site, Printer, Fax per month (varies based on what is purchased and the plans used)

  • Postage (although many agents don't pay postage for mailings to stay in touch with clients)

  • Marketing (although many agents don't pay for marketing)

  • Continuing Education (about $450 per 2-year licensing period)

DMS Properties, LLC Work Space

It seems that many people who get their real estate license and affiliate with a Broker don't understand that they are running a business.  The first thing a business owner needs to do is generate a revenue stream.  We have come across many agents who don't have any idea about how to generate business and also have no idea what their expenses are for the year.  

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