While MDLNY may present the Hollywood version of real estate agents in New York City, the real picture is a little bit different. There are, of course, high flying Upper East Side and SoHo agents who are celebrities in their own right. And they do close many eight-figure deals with some frequency. However, for most agents, selling NYC real estate is more of a challenge.
The “Real” Realtors of America
Nationally, most work-a-day real estate brokers and agents aren’t hosting glitterati packed open houses. Nor are they closing multiple million dollar deals every week. Moreover, most aren’t model handsome, nor are they wearing $3,000 Armani suits to work every day while driving 6 figure cars.
According to the NAR (National Association of Realtors), the average income of a Realtor was a measly $39,900 in 2017. The amount of their deals is small as well, as are the number of closings they attend. Typically, they do eleven “sides” per year. This means they are part of either the “sell side” of the deal representing the seller or the “buy side” of the deal representing the buyer. But what’s most shocking is their age. The average age of a Realtor is 54 years old, and most are women.
The “Real” Realtors of New York
New York City Realtors fare much better than their colleagues working in the rest of the country. According to the Quarterly Census of Employment and Wages published by the State of New York, New York City real estate salespersons had an average income of $75,800 in 2015. Today’s average is probably slightly higher. This is a lot better than what they were making in 2008, at the start of the financial crisis. Back then, their average compensation was a little over $57,900.
While a $75k income might some nice for a profession that requires no formal degree, there are some drawbacks. Real estate agents, because they are independent contractors and not salaried staff, usually lose out on benefits. Things like healthcare, paid vacation time, and other perks aren’t typically part of their package.
However, some large brokerages do offer “group” health care benefits. By bundling all of their agents together, they can cut a better deal with health insurance companies, which reduces the cost of that coverage for commission only agents.
The “Super Agents” of New York
It has been estimated that there are perhaps a few hundred “super agents” in New York City, who do make the big bucks and do, at least some of the time, throw lavish open house events like the ones you might see on tv. One of the most famous “super agents” is Ryan Serhant who is one of the stars on “Million Dollar Listing New York.” His career, like so many others in the real estate business, started out small. Shortly after graduating from Hamilton College, Serhant became an actor and hand model. When that didn’t pan out, he became a New York City real estate agent. During his first year, he had an income of precisely zero.
His first big sale was for an $8.5 million unit in Manhattan. From there, his fortunes rose. In 2012, the New York real estate publication The Real Deal ranked Serhant #15 out of the top 100 agents in New York. By 2017, his team closed $838 million in Manhattan real estate, rocketing them to the number one position in the City.
Commission Splits: From Big Numbers to Small Take Home
When some folks do a quick math calculation in their heads and realize that real estate agents would make a $60,000 commission on a $1 million sale – that’s roughly the median price of a home sale in Manhattan right now – they often want to quit their job immediately and become an agent themselves. The fact of the matter is that commissions are split between brokers and agents. These commission “splits” quickly whittle down the amount each person involved in the transaction puts in their pocket. A $60,000 commission will be split between the sell side and the buy side agents and brokers, with each side getting 3% of the 6% commission. This 3% or $30,000 is again split between the agent who facilitated the sale and the broker they work for. These broker/agent splits vary. A hotshot agent can keep over 75% of the $30,000 for themselves, however, most splits are 50/50 or 60/40 with the agent getting approximately 1.5%, or $15,000, and their broker getting the same. So a $60,000 commission quickly shrinks to $15,000. Furthermore, as agents are self-employed, they face an incredibly high tax burden as they are responsible for self-employment taxes of over 15% (these are comprised of social security taxes and Medicare taxes) on top of federal and state income taxes. It would take an agent five such deals – or “sides” – to earn the average income of a typical New York City real estate agent.
More than Just Money
There are several benefits that real estate agents get that are not financial in nature, but that are a very much valued part of the job. Many agents love the fact that they are their own boss. They also like that they alone decide the pace and the number of hours they work each day. Some find the fact that they are totally responsible for their income - not having to rely on the whims of a boss - as being a fulfilling benefit of the business. Finally, the feeling of accomplishment many real estate agents gets when they close a deal is incredibly rewarding. No doubt, the money that comes from that accomplishment doesn’t hurt either.