Are You Thinking About a
Career in Real Estate?

There are all sorts of real estate companies in Maryland.  According to the Maryland Real Estate Commission (MREC), there approximately 1,500 or more.  Most of these companies in Maryland are just like DMS Properties, LLC Residential Real Estate Services.  They are relatively small companies that have under 5 licensed real estate agents.

Each company has its own business model, fee schedule and commission structure for its agents.  There are large companies with many offices.  Some of them have hundreds of agents.  Our Principal Broker, Dale M. Servetnick, started his career in 2002 with a company that had thousands of agents and hundreds of offices.  It was interesting because the office he worked in had about 75 agents, but only about 10 of them were actually doing business. 

Some Companies are “Franchise” firms.  That means all of the agents are required to pay a periodic franchise fee or dues.  Sometimes, they must 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.  They sometimes allow agents to “buy up” their commission split.  Some companies charge for every “service” that an agent uses.  That means they pay for copying documents, printing documents, using company computers, signs and lock boxes, etc.

There are also small companies with one or two offices and less agents.  Those actually make up the majority of real estate brokerage companies in the State of Maryland.  We believe that these smaller companies have a greater flexibility in the types of services and commission options they can offer to their agents.

It’s Not Always About the Company

Regardless of company size and business model, it is the real estate agents that are actually the focus.  A buyer or seller may choose to work with a large company because of its name recognition.  The consumer’s experience, though, 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.  There are many who may decide to give up their license.  According to the National Association of Realtors (NAR), 80% of people who get a real estate license give up even before they have worked for a year.  This is because the expenses of being in business are not being offset by the Gross Commission Income (GCI) that they are earning.  There are some interesting historical statistics about the real estate industry, the agents who hold licenses, and the income that they earn.  

• The average agent with 2 years’ worth of experience averages about $8,500 in income per year.
• The median income for agents who are members of NAR is about $38,000 per year in GCI.

All of these numbers are before the split with their Broker, and also before taxes and expenses!  During 2021, it seems that more and more people are becoming licensed again.  There are currently about 1.5 million Realtors who are members of NAR.  At the same time, though, there is still a shortage of homes being actively marketed.

Real estate agents are now competing for the smaller pool of business.  With more agents going after the same business, the GCI for licensed agents was declining.

It is generally known that it takes about five years for a newly-licensed real estate agent to become established in their business.  At that point, they are likely earning the “national average” in GCI.

Income Vs. Expenses for the Business

There is an interesting fact about being in business for yourself.  Being a real estate agent means you are in business.  It doesn’t matter if a real estate agent makes $8,500 or $38,000 or $150,000 in GCI.  The amount of their fixed expenses are going to be essentially the same!  The fixed expenses include, but are not necessarily limited to:

• MLS Quarterly Dues (currently about $120 per quarter in Maryland)
• Association (NAR, MAR, local board, etc.) Annual Dues (about $700 per year)
• E&O Insurance (varies by company but as high as $400 per year)
• Business Cards (Approximately $100 for 500)
• Gas and other car expenses per month (varies based on activity)
• Cell Phone and Data per month (varies by plan)
• Computer, E-Mail, Web Site, Printer, Fax per month (varies based on each person’s program)
  
• Postage (many agents don’t buy postage because they don’t do marketing)
• Marketing (varies, but many agents don’t pay for marketing)
• Continuing Education (up to $450 per 2-year licensing period)

You can see that an agent needs to be ready to “hit the ground running” to offset their expenses.

Getting Started Running Your Business

Every real estate agent runs their business differently.  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.  If you are thinking about a career in real estate, we think you should speak with us.

You can easily set up a Zoom Meeting with Dale M. Servetnick, our Principal Broker, to get more information.  We can provide you with information that is specific to your circumstances.  The meeting would last no more than 30 minutes.  It would help if you provide a couple of times that you would prefer.  We think this may be a better way to start the process than using just email, texts and phone calls.  We hope you’ll give it a try!