You've probably heard that being a real estate agent means working on a commission basis. But what if you prefer a more predictable income? Is there a way to avoid the stress of not knowing how much you'll earn each month? Well, I've done some research, and it turns out that while most real estate agents don't receive a base salary, there are some scenarios where they do. In this article, we'll explore these scenarios and discuss the pros and cons of this compensation model. So, let's dive in and find out if a base salary could be the right fit for you.
4 Scenarios that a Real Estate Agent Gets a Base Salary
Scenario#1: Hired by a Real Estate Brokerage
Traditionally, real estate brokerages rarely pay their salespeople a salary. However, I stumbled upon a brokerage called Redfin that is changing the game. Unlike the independent contractor model, Redfin employs real estate agents as salaried employees. This means that in addition to a base salary, Redfin agents enjoy benefits such as premium healthcare, paid time off, and even parental leave. Plus, depending on their terms and production level, some agents may have their business expenses reimbursed. On average, Redfin pays around $20,000 per agent per year. And if you're a top-performing agent, you might even get perks like an annual international vacation for you and a guest.
Scenario#2: Work for a Real Estate Builder
Another scenario where real estate agents can receive a base salary is when they work directly for a real estate developer. These developers may employ sales associates to sell their properties, particularly condominiums and townhouses. For example, I found a job posting from Chesapeake Homes, a well-known builder based in North Carolina. They're currently seeking a New Home Sales Consultant with a salary and benefits like health coverage and retirement plans. So, if you have a real estate license and a few years of experience, this could be an excellent opportunity for you.
Scenario #3: Become a licensed assistant for another real estate salesperson
Many successful real estate agents delegate tasks to their assistants, such as handling administrative duties, marketing, and communicating with clients. Depending on the workload, these assistants can be compensated through an hourly pay or a salary. If you're interested in this type of employment, reach out to top-producing sales agents and see if they're in need of assistance. Remember, they'll likely prefer experienced and reliable individuals, considering they already have a lot on their plates.
Scenario #4: Work for a property management company
While technically still working as a real estate agent, some agents find stability and a base salary by joining a property management company. These agents are responsible for handling rental units, including tenant management, property maintenance, and resolving any issues related to the units. Most property managers are employees of the company, receiving a base salary and additional benefits. So, if you have a real estate license and are interested in rental properties, this could be a great path to explore.
What are the Benefits of being a Salaried Real Estate Agent?
Now that we've covered the scenarios where real estate agents receive a base salary, let's discuss the benefits of this compensation model.
1) Higher average income
According to Redfin, their agents have a median income 107% higher than the industry average. Additionally, the top 15% of Redfin agents earn 28% more than their non-Redfin counterparts. While this may not solely be attributed to the base salary model, it does indicate the potential for higher earnings.
2) The company pays agent expenses
When you work as a salaried real estate agent, the company typically covers many of your expenses, such as license fees, E&O insurance, continuing education, marketing and advertising costs, and even your laptop and phone. This can significantly reduce your financial burden and allow you to focus on your work.
3) Employee benefits
In addition to a base salary, some companies offer health coverage to their salaried agents. This can be a significant advantage, considering the rising costs of healthcare. By enrolling in a company's health plan, you can enjoy discounts on premiums and have access to comprehensive coverage for yourself and your family.
4) Training and support
Real estate brokerages that hire salaried agents often invest in training programs and provide a systematic approach to the sales process. This ensures that agents receive the necessary support and guidance to excel in their roles. By implementing a standardized system, these brokerages can replicate successful practices and help their agents achieve optimal results.
5) Collaboration with professionals
When you're a salaried agent, you can expect to work alongside other professionals who handle various aspects of the business. This means that tasks outside your expertise, such as website development, marketing, and customer relationship management, can be handled by designated staff. This allows each team member to focus on their strengths, resulting in a more competitive and efficient business.
6) Career advancement opportunities
Depending on the real estate firm's size and your performance, there may be opportunities for career advancement. Some companies promote their top-performing agents into senior or executive positions, allowing you to grow within the organization. This can be a great way to take your real estate career to new heights.
What are the Disadvantages for a Real Estate Salesperson with a Base Salary?
While there are several benefits to being a salaried real estate agent, it's essential to consider the potential disadvantages as well.
1) You don't own the business
As a salaried agent, you are not the owner of the real estate practice. This means that you won't have a say in how the business is run, and you won't benefit from selling the company when you decide to exit the industry. Unless your employer provides stock options or a profit-sharing plan, the value of the company may not concern you.
2) Job security
Job security can be a concern for salaried agents. Even if you're an excellent employee, the company may find a more cost-effective way to generate business and choose to let you go. On the other hand, if you run your own real estate practice, you have more control over your future in the industry. You can adapt to market demands and make necessary adjustments to ensure your clients are satisfied.
3) Constantly proving your worth
When a company pays you a base salary, they expect you to make enough sales to justify their investment. While they may give you a grace period in the early months, consistently failing to meet sales quotas could put your position at risk. If you have a slower learning curve or prefer working without the pressure of sales quotas, being a commissioned agent may be a better fit. Additionally, some agents argue that if they consistently bring in significant sales volume, they may as well work on a commission basis to receive a larger share of the revenue.
Final Thoughts
While most real estate agents work on a commission basis, there are opportunities to receive a base salary in certain scenarios. If you prefer a more predictable income and can adapt to the limitations of being a salaried agent, this could be a great alternative for you. However, keep in mind that being a salaried agent means giving up some of the flexibility and freedom that come with running your own real estate practice. Ultimately, the right choice depends on your needs, expectations, and personality. So, weigh the pros and cons, and choose the path that aligns best with your goals.
Disclaimer: The information provided in this article is for general informational purposes only and should not be considered as professional advice. The mentioned companies and products are based on our experience and research, and we recommend them because of their usefulness, not solely for the commissions we may earn from them.
