While most of us in the property industry profess to want to help people achieve our property goals, we shouldn’t kid ourselves that remuneration isn’t a driving factor in our choice of career.
So when I get enquiries from real estate sales agents who are considering switching to being a buyer’s agent, one of the big questions is: How much can I earn as a buyer’s agent?
As you are no doubt aware, the answer depends on many different factors. However, a good buyer’s agent should be able to earn around $100,000 in the first year from a standing start. And I have to add the proviso that you can do this if you join a group like Property Mavens, and implement not only the teachings an industry active mentor will provide, but also, if you apply the methodology and implement the business systems available to you. You will also share in the leads we provide.
However, first, let’s look at incomes of real estate sales agents.
Real estate sales agent income range
Across Australia (according to data collected by Seek.com.au), the most common annual salary is from $55K to $65K a year. Seek does not have data for Victoria (although PayScale reports a median income of $50K). In NSW, real estate agents can expect to earn between $120K and $170K a year, mainly boosted by high-priced Sydney real estate sales. And sadly, men reportedly earn an income 35% higher than women.
Of course, this is an average base.
But for the long hours you need to work, you’re earning what is basically minimum wage.
Bear in mind that if you’re working under a major franchise, you’re losing a significant portion of your commission; in some cases, up to 30% after ‘desk fees’ are offset.
How much do buyers’ agents earn?
Because this industry area is relatively new, and many buyers’ agents operate as sole traders, it’s tricky to be able to show definitive figures. However, let’s look at some typical scenarios.
Fees as a percentage of the property cost
While this isn’t a model we recommend, it does make it somewhat easier to calculate earnings.
As an example, say the average cost of the properties you sell is $1 million (the median price of houses in Melbourne). With a 2% fee, you’d earn $20,000. With five clients and five properties a year (easily achievable), you’d earn $100,000. Using the example of a fee of 1.5%, you’d still earn $15,000 less any costs. That’s just seven clients you need to help to achieve their property goals for an annual income of $100,000.
In Ballarat, the median home price is $611,000. If your fee is still 2%, you’d earn $12,200. To earn $100,000 a year, you’d need just eight clients for whom you could source the right property at the right price.
In Bendigo, with the median house price at around $550,000, your fee would be $11,000, so ten satisfied clients – not even one a month – would help you achieve $100,000 in your first year.
Fixed cost fees model
This is the model we recommend as it makes more buyers feel comfortable. You aren’t going to recommend a more expensive property just to boost your fee. It’s a more transparent way of doing business. However, it does make calculating earnings trickier.
As a new buyer’s agent with limited industry experience, you might charge from $5,000 to $7,000 per transaction. To earn $100,000 in your first year, you’d need to complete just over 14 purchases that result in a successful outcome. That’s just over one a month.
With more significant industry experience, and help from a trusted buyer’s agent mentor who is active in all these markets, you might charge around $13,000 to $20,000 for each purchase.
These figures are based on my experience over my many years in business and take into account the level of experience at different stages in your buyer agent journey.
Keep in mind, too, that not every consultation is for a full-service purchase. Often enough, you might be engaged by a property buyer to attend an auction on their behalf, or negotiate with the real estate agent only. In these cases, your reduced fee will reflect the amount of work involved.
What’s the bottom line for buyer’s agent earnings?
The beauty of being a buyer’s agent under a reputable brand is you have leads provided and proven methodology, systems and processes in place that save you time, meaning your hourly rate is increased by default.
A good agent who can implement our processes and systems and use a tried-and-true business formula should realistically be able to earn $100,000 in their first year from a standing start. From there, the world is your oyster.
Once you have momentum, and you’re gaining the benefit of our business formula, systems and processes to streamline your workload, it isn’t unreasonable to assume you could work with several buyers a month, thereby exponentially increasing your earnings.