Where Realtors Really Make Their Money


Being in the real estate industry for over a decade I’m aware that the general image of real estate agents could be much better. Especially now, with all the people who have jumped into the business in recent years, with its low barrier to entry and all the tape peddlers “self-made millionaires” on the television and radio infomercials. Historically the real estate professional has ranked in polls somewhere in the middle of the pack when it comes to professional trust and integrity from the public.

Poll Question: Please tell me how you would rate the honesty and ethical standards of people in these different fields — very high, high, average, low, or very low?





(From Gallup Poll)

Being paid by commission and just being a sales profession are both contributing factors, but some wonder about the scruples of agents. There are agents out there working in the field that will not only represent you well and assist you through each detail, but with their expertise, knowledge and experience, will eventually be worth a lot of money to you and your family.

Nigel Swaby of Salt Lake Real Estate Blog wrote a fantastic post recently asking if Realtors can be trusted. An excerpt:

Let me be real direct about real estate transactions: everyone gets paid for their services. In a normal sale the seller gets paid, the real estate agents get paid, the mortgage broker gets paid, the lender gets paid, the title company or closing agent gets paid and the city, county and state get paid taxes. Everyone gets paid.

That’s the way it works. Consider a different transaction like buying lunch at McDonalds. The cashier gets paid, the cook gets paid, the manager, the manufacturer of the french fries, the farmer that grew the potatoes and the city, county and state get paid their taxes. Everyone gets paid.

He also illustrates the point that the real money being a Realtor is not in selling someone a higher-priced home or by trying to get a higher commission on a deal. The money is in the referrals.


If I surprise and delight one client I will be paid several times from that transaction. Considering the average homeowner moves every seven years I can sell that client’s home and help them purchase a new home three or four times (6-8 transactions). Now, factor in all the people they know at work or church or groups they are in- all the people in their lives- and how every time one of those people begins thinking about buying or selling real estate they will talk about it. They will talk to their friends and their family. They will talk to my client. And now my client will tell these people that they need to call me and they will share their experiences with these people and over the course of a lifetime I may gain another 2-3 clients- all from that first client that I did such a good job for.

If each of those referrals bought just one home with me, that would be a total of 8-11 transactions that I would have as a result of doing a great job for my clients and taking care of them. Now, what if each of those referrals gave me 2-3 referrals? And so on…

This is where the money is in being a real estate agent, or any other service provider. When it comes to personal services, whether it is a landscaper or an attorney or a Realtor- choosing the right person to work with can make all the difference in the world.  In every profession there is good and bad, but one thing I have learned is it’s not the profession, it’s the person.

So how do you choose a good agent? Choose a real estate agent who is a Realtor, which means they subscribe to the code of ethics of the National Association of Realtors, someone who has the experience you want and someone you feel comfortable with. Ask for referrals or testimonials. And ask your agent questions about their experience and how they work so you’ll know whether they are the type of agent (aggressive, easy-going, full-time, busy with business, specialist in a certain area, etc.) that you want to work with. Good agents aren’t going to work with just anybody- they aren’t just looking for a quick buck. They’ll want to work with people who are looking for what they have to offer, people who want to work with them, so they can begin to build a solid relationship with them.

Those are the agents who are successful because they understand where the money really is.


7 thoughts on “Where Realtors Really Make Their Money

  1. Pingback: - Hot R.E. News - Feb 8 - Harper Team Blog

  2. Most people under appreciate realtors. They don’t see them doing their jobs. They don’t know the effort that a good agent puts in. If they would research the agent they choose, most would not be so disappointed. The word should be to real estate agents to study how to market their business and how to best market and sell their listings so that they don’t become the low on the minds of their clients.

  3. Some interesting thoughts Greg. It sure would be nice if it was as easy as you make it sound. Five to seven years between deals with a client is a long time. You’ve got to do something to keep your name infront of that person during that time. Or else they will forget you regardless of how terrific a job you did. And if every client would refer another client to me, it would be terrific. But the reality is that those referred clients may have an agent they already have worked with. Or maybe they are part of this new client creature that wants a part of the commission (since they ‘know’ there’s nothing to being an agent).

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