I was very interested in the results when I began writing “So how much do Louisville real estate agents make?“ last year.
It had long been my belief that the majority of sales were garnered by a small handful of real estate agents.
Running the numbers again this year for 2011, I saw similar results. Keep in mind that these charts show sales volume, not salary. If an agent sold five, $1 million homes that would be $5 million in sales. (That would also be an outstanding year!)
But, determining their salary would require estimation.
Let see how this year’s tally concluded. These numbers take into account only agents who completed a deal in the calendar year, not agents with no sales or whose licenses were in escrow.
Chart of Top 20% of Louisville real estate agents portion of all 2011 sales.
Chart of Top 10% of Louisville real estate agents portion of all 2011 sales.
The Top 5%, 130 agents, had just under 1/3 of all sales volume, or an average of $8,359,094 sales each during 2011.
We are now forced to make a few estimates in order to translate sales volume into salary. Understand that commissions aren’t paid directly to the agent, but rather by law to their broker.
Then the broker “splits” the commission with the agent. Splits are negotiated between the agent and their firm. New agents most often start with a 50/50 split, while more experienced agents can negotiate a much better arrangement.
For the purpose of this article, and because there is no public data available on this topic, I’ve chosen to split the total commission 65/35. Using this percentage, I created the following chart.
As you can see from this chart, salaries remain relatively flat until you reach the top performers then increase dramatically.
Under this equation, the top performer in Louisville garnered a $425,146 salary in 2011.
In reality, it was likely much higher as brokerages are driven to bring in the most successful agents, which helps their firm in both revenue and prestige. Those agents can negotiate better splits. Therefore, on a sales volume of $21,802,330, it wouldn’t be unreasonable to guess Louisville’s top agent made more than $550,000 last year!
Please remember that these dollar amounts are gross sales, so taxes, expenses, mandatory fees, and insurance, bring this number down, sometimes considerably.
2011 performed very almost identically to the previous year in the percentage of sales.
2010 2011 Top 5% 30.7% 30.5% Top 10% 45.8% 45.6% Top 20% 63.2% 64.5%
Maybe the Top 5 percent and Top 10 percent couldn’t keep up with last year but the Top 20 percent gain more than a percent.
Also interesting to note, was that 2,737 agents had deals in 2010, while just 2,594 did this past year. That’s a 5.5 percent drop in the Louisville’s real estate workforce.