It’s not smart to continue working really hard to find a listing appointment, then use your skills to help the client sell and experience a great result only to lose out for yourself and your family.
Let me explain…
All too many good agents are working around the clock and when they are not working, they are thinking about work. Then they create a sale and wait 4 to 6 weeks till pay day only to have their franchise take 10%, then the business owner/principal takes 45%, then the tax man takes 30% to 45% of your hard earned… and what’s left?
Around 25% to 30% is left for the sales agent….often they are the ones who are doing all the heavy lifting and time consuming work.
This means that agents producing $500,000 to $1,000,000 per year in gross sales commissions are only keeping around $125,000 to $300,000 after tax. This is really disappointing and over a 10 year period is leaving successful sales agents in difficult financial situations while their bosses and franchise owners become rich.
Let’s take a look at the difference between an agent who works smarter and in a more sophisticated and generous business model.
Whilst one successful agent is producing $500,000 per year with a well known brand name they are keeping around $125,000 to $150,000 a year to live on and invest.
Doing the same figures…The smarter agent is keeping $280,000 to $300,000 a year to live on and invest.
Let’s say both agents require around $100,000 a year to live on….
The hard working and famous agent working with the BIG BOYS is investing $25,000 to $50,000 per year while…
The smarter agent is investing $180,000 to $200,000 per year.
At the end of 10 years the hardworking agent has invested $250,000 to $500,000 which may have grown to a net asset value of around $1,500,000. If you achieve around 5% return you will have a passive income of $75,000 a year.
Not bad but certainly not great and as you are about to see its much less than this agent was capable of achieving especially when you’ve been used to living on $100,000 per year.
The smart agent on the other hand has invested $1,800,000 to $2,000,000 over the same 10 years. Based on the same asset growth above they have a net asset worth of around $6,000,000 and with the same 5% return enjoy a passive yearly income of $300,000 per year.