Estate agents are generally not being paid fairly for their work, it has been claimed.
eXp UK, in a bid to encourage more agents to adopt the self employed model, has carried out a fresh study that suggests negotiators are being underpaid for the job that they do deserve to earn more.
It says that number of other salary and incentive based professions sit way ahead both in terms of the base earnings and commission.
eXp UK analysed current earnings data from Salary Expert for 15 professions that are largely reliant on the additional income of sales commission to see how the nation’s estate agents compare.
The data reveals that, at an average of £42,971 per year, the median base salary of an estate agent is one of the lowest of all professions. In fact, it places them 11th in the list, with just travel agents (£35,611), car salespeople (£32,731), business services sales agents (£32,265) and advertising sales agents (£31,596) earning a lower base salary.
Of course, with the sale of such an expensive asset such as a property, the potential commission on offer to estate agents is sizable. The figures from Salary Expert shows that the average estate agent takes home a commission to the tune of £6,420 per year.
However, while this does push them up to 8th in the list when it comes to the level of annual commission made, a number of other professions still earn a far greater degree of commission, with pharmaceutical reps sitting top of the table, taking home an average of £15,608 a year in commission alone.
When considering both the base salary and commission earned throughout the year, the average estate agent takes home £49,391 annually. This places them 9th overall in the list, with software sales reps sitting top of the table with a combined annual earnings of £80,270.
Other professions that sit above estate agents in this respect include boat sales reps, insurance brokers and financial advisors.
What’s more, the average commission earned by an estate agent equates to just 13% of their total annual earnings, while a number of other sales focussed professions benefit to a far greater degree from the opportunities available to boost their income.
The head of eXp UK, Adam Day, commented: “It seems quite frankly absurd that despite orchestrating the sale of the most expensive asset someone is likely to own, estate agents earn less commission than those selling boats and computers.
“That’s not to say that there isn’t an abundance of opportunity within the property sector for those who want to perform at the top of their game, but all too often, the average agent will see a great deal of the financial spoils of their hard work get swallowed up by their employer.”
Low productivity and a penchant for “winning” business at the lowest fee drives low revenues, low profitability (or no profitability) and therefore the need to drive down the cost base which in a typical “High Street” business, where staff costs are the highest overhead, and often represents an unhealthy 50% plus of income, means lower wages and remuneration structures.
What this press release study does however fail to mention are things like company cars and other elements that may make up “total remuneration”
The self employed brokerage model is clearly attractive for many and gross revenues largely head into the pockets of the agents. However, self-employment is not for everyone and has its downsides too – lead generation, having to manage both sides of the P & L account and having a work life balance that, unless well planned and organised, can be tough. Of course the top business models provide good levels of support, some however, don’t and the “churn” of agents is as significant as other areas of the industry.
Low productivity and low fees across the sector also leads to a lack of investment in training and development, technology and, often corner cutting in areas such as compliance which could be used strategically as a business enabler but is so often seen negatively and as a business restrainer.
It would be interesting to see evidence of what EXP (which is one of the top “personal agent” business models) and other self employed broker/agents are, on average, really earning?
Of course, we regularly see and hear from the top quartile of producers in the sector but there is a significant “tail” of agents whose incomes do not perhaps reach the levels talked about. I certainly know of self employed agents who have additional jobs doing things like Amazon deliveries to top up income.
To be clear, I am not anti any business model in estate agency (providing it is legal) – I admire innovation and love what many “personal agents” are achieving. There are also many excellent “High Street” operators out there.
This “study” has shone light on the issue of remuneration relative to the value of the transactions being dealt with – the industry needs to wake up and smell the coffee – for example, if ROPA gets enacted there will be a drive to higher quality and professionalism but there will also be a cost attached.
AI could revolutionise the property market but is both a threat as well as an opportunity unless harnessed well.
We certainly live in interesting times and history is always written by the winners but it will be more interesting and successful for those who deliver service and results at sustainable fee levels.
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Bull. All agents I know are on about 22k since min wage flattened the earnings of hard workers.
If you go self employed , you won’t earn a £1 for 6 months.. your average over 3 years will be about £10 k a year..
Also, no real holiday.
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“Average agent takes home 49k”
On what planet is this?…
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This is nothing new along with also being biased, poorly researched and missing the most important data point.
There are a couple of ways of doing data analysis. First, you can come up with a theory or commercial argument you wish to make and then manipulate the data to show you are right. Or, you can interpret the data in an unbias manner and draw a conclusion.
Go back a decade (i.e. before eXp raided our shores) and the rank order was pretty much the same. Estate agents have traditionally appeared in the lower half of any commission-based sales industry.
It is utter ignorance to attribute the running costs of an estate agency to reduced earnings. Every one of the other listed industries has similar if not the same kind of overheads.
The real stupidity is to claim that the self-employed model offered by eXp means more commission going directly to the agent WITHOUT providing any data!
So I challenge Adam to publish the total commission earned in the last 12 months and divide that by the 477 eXp agents and we’ll see where they rank…
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