Imagine if this Run Continues
Imagine if this Real Estate Run Continues….. Get your pen and paper out, because we are going to talk numbers. And I warn you, I might be a salesperson, there may be some selling too…
THIS WEEK Westpac published an economic outlook that indicated that they had an expectation that house prices would continue to rise including double digit property value increases early next year.
Read the article here
So, as an agent, can you expect this current real estate run to keep going?
The agents that I have been speaking to have told me that they are going to have to stay right where they are, which is not really what I want to hear! The reason they give is that because that they are in the midst of a stellar run and they don’t want to it to end. This is a fair statement…. provided the market is going to drop off in the next 2 months. However… if the market continues over the next 2 years, what will be the cost of ‘staying put?’
Independent agent makes no apologies for offering experienced agents a high commission split, and this rate is higher than what you would find at the likes of any other brand. This is because there is not the physical infrastructure that you would expect to see in one of the large corporate brands, and that management and admin all work remotely.
Independent Agent is a real estate agency for people who are capable of working independently and perceive that they are not getting value from the current corporate that they are working for. As the director and founder, I am not trying to take over the world. However I am offering a fair solution or an alternative for those who want it.
But money talks right, so here is some money talk, and where you might need your pen.
Take an example of a real estate agent writing $200,000 Gross Commission per annum (GC) currently. They work for a franchise and there is an 8% franchise fee. They are on a 65% share with their office.
That would result in $119,600 of income to the agent.
Let’s not be too silly about growth and suppose that year on year the growth in residential property remains at 5%.
The agents income would increase to $125580 in the first year (because they are paid on a percentage basis too)
Income increase to $131,859 in the second.
The commission has gone up by $12,259 over 2 years on the basis that the agent is doing the same volume of business.
On the Independent Agent model with the same factors, an agent’s current income would be $161,925 from a $200,000 gross commission. With the same 5% annual property value growth:
Income increase to $170,425 in the first year
Income increase to $179,350 in the second year
This creates an increase of $17,425
The actual difference is of course a lot larger.
Y1 $125,590 vs $170,425 $44,835
Y2 $131,859 vs $179,350 $47,491
$92,326
$45,000 pa pay raise anyone?
In case this run continues, you owe it to yourself to position yourself in such a way that you will get the best outcome you can.
If this sounds like something you need to consider, please get in contact, give me a call, let’s have a catch up. It could be the highest returning 30 minutes of your life.
Because remember, Independence is worth Pursuing.
Matt Jones, November 2020
