{"id":2745,"date":"2010-05-18T18:08:33","date_gmt":"2010-05-19T01:08:33","guid":{"rendered":"https:\/\/redfindevelop.wpengine.com\/blog\/?p=2745"},"modified":"2020-10-05T13:12:36","modified_gmt":"2020-10-05T20:12:36","slug":"what_kind_of_person_would_work_as_a_redfin_agent","status":"publish","type":"post","link":"https:\/\/www.redfin.com\/news\/what_kind_of_person_would_work_as_a_redfin_agent\/","title":{"rendered":"\u201cWhat Kind of Person Would Work as a Redfin Agent?\u201d"},"content":{"rendered":"

I\u2019ve spent the past four years of my life explaining Redfin. If you read this blog, you already know that we\u2019re a real estate broker focused on customer service instead of sales, one that uses technology to make every step of the process totally transparent.
\nBy my own count, I\u2019ve said this nearly 10,000 times, to all sorts of people: a priest, a construction-site sign-flipper, several hairdressers, a 12-year-old, the inventor of pediatric vitamin-D supplements, an NBA point guard, a used-car salesman. And yet I\u2019ve only gotten two reactions. One is: \u201cDon\u2019t you just hate real estate agents?\u201d To which I say: \u201cWE ARE REAL ESTATE AGENTS.\u201d
\nThe other is: \u201cWhat kind of real estate agent would work for you?\u201d
\nWell, for starters there are agents who need to feel part of something bigger than themselves, who want to change the whole real estate game in consumers\u2019 favor. Most agents like focusing on service, not sales. They love doing deals rather than prospecting for clients<\/a>. They feel good about being paid to do the right thing<\/a>. They love working on teams. They want to develop new skills and advance their careers.
\nForget the Marketing Hoo-Ha… What About the Money?<\/strong>
\nTo which everyone says: \u201cYeah. Whatever. What about the money?\u201d Well, let\u2019s talk about the money. By our calculation, Redfin agents are in the 90th percentile of agent pay.
\nUsing data available to any broker, we measured the gross commissions earned by each agent who completed a deal in King County, Washington<\/a> between May 12, 2009 and May 11, 2010. Whenever commission data were unavailable for a transaction, we assumed that the commission was 3% for the buyer\u2019s agent and 3% for the seller\u2019s agent, an assumption that tends to over-estimate traditional agents\u2019 pay.
\nAnd still, the annual gross commission for agents at the 50th percentile of pay was $29,820. Agents at the 75th percentile got $75,018. You don\u2019t crack $100,000 until the 82nd percentile. If you group agents by the gross commissions they earned last year, you find that 1,817 agents earned between $25,001 – $50,000 in gross commissions, whereas only 83 traditional agents were in the $150,001 – $175,000 bracket, which is roughly equivalent to what we paid a Redfin agent:
\n\"\"<\/a>
\nThis graph of different gross-commission brackets and the number of agents in those brackets is known in certain mathematical circles as an Arpat Distribution. It reveals a stark reality. First, that there are just too many agents: 5,624 agents completed a transaction in King County last year, which doesn\u2019t even count the thousands of actively licensed agents who closed no deals whatsoever; in April, the county recorded 1,944 home sales, barely one for every three agents. In distressed markets like Phoenix, Las Vegas, Florida and many parts of California, the ratios are typically much worse.
\nSecond, the difference between the haves and the have-nots is greater than in any other industry; a few highly visible agents earn enough money to live on the lake, engendering occasional popular resentment. Most of the rest endure a gentle form of unemployment. And what most consumers don\u2019t consider are the annual expenses any decent agent has to bear:
\nBrokerage fees: $10,000<\/strong>
\nNew agents pay as much as half their gross commissions to their broker. The top dogs pay a fixed amount, in what is known as a desk fee. It is possible to pay less, but the great majority of successful agents pay $15,000 or even $20,000 per year to their broker. $10,000 is a conservative number.
\nHealth insurance: $10,500<\/strong>
\nSome agents who sell real estate on the side get health insurance through their partners or another job. But the bread-winners have to buy their own insurance, for themselves and their families. Redfin is on a group plan that costs less per member than an individual plan, and still we pay $10,500 per employee.
\nMarketing: $10,000<\/strong>
\nThe rule of thumb is that a successful agent invests 20% of gross commissions into marketing himself and his listings. For an agent earning $100,000+ per year in gross commissions, $10,000 is certainly a conservative number.
\nSocial Security & Medicare Taxes: $6,500<\/strong>
\nRedfin pays the employer\u2019s share of our agents\u2019 Social Security and Medicare taxes, whereas a traditional agent has to pay the entire amount. How much does Redfin pay? 7.65% of the first $106,800 in pay, then 1.45% of the amount in excess of $106,800. Our average contribution to a Redfin agent\u2019s pay is more than $8,000. $6,500 is a conservative assumption.
\nTransportation: $3,600<\/strong>
\nMost agents report $8,000 per year in transportation expenses to the IRS. $300 per month \u2013 five tanks of gas — is a conservative estimate of the true cost.
\nCell service: $1,200<\/strong>
\nAgents spend their lives on BlackBerry, emailing or calling ten hours a day. $100 a month in fees is conservative. Redfin pays more than $200 per agent, or $2,400 per year, though this includes a cellular modem for connecting a laptop to the Internet from anywhere.
\nEquipment: PC, mobile device, printer: $1,000<\/strong>
\nEvery few years, an agent gets a new computer or mobile device. To start out you need a printer. $1,000 per year seems fair.
\nDues, education: $783<\/strong>
\nAgents pay a fee to the local Multiple Listing Service, to the state that licenses them, to training institutes for continuing education.
\nIT, accounting, software: $1,000<\/strong>
\nThe top dogs have an assistant or transaction coordinator but most folks need help fixing their computer or figuring out their taxes at the end of the year. Agents working as independent contractors and filing tax form 1099 at the end of the year usually hire an accountant. Some pay for Top Producer or other lead-tracking systems.
\nAll told, any reasonably successful agent is shelling out $44,583 per year in commissions splits and costs. The number could easily be higher.<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Type of Expense<\/th>\nTraditional Agent, Annual Costs<\/th>\nRedfin Agent, Annual Costs<\/th>\n<\/tr>\n
Brokerage fee<\/td>\n$10,000<\/td>\nNot applicable<\/td>\n<\/tr>\n
Health insurance<\/td>\n$10,500<\/td>\nPaid for<\/td>\n<\/tr>\n
Marketing<\/td>\n$10,000<\/td>\nPaid for<\/td>\n<\/tr>\n
Social Security, Medicare Taxes<\/td>\n$6,500<\/td>\nPaid for<\/td>\n<\/tr>\n
Transportation<\/td>\n$3,600<\/td>\nReimbursed<\/td>\n<\/tr>\n
Cell service<\/td>\n$1,200<\/td>\nPaid for<\/td>\n<\/tr>\n
Equipment<\/td>\n$1,000<\/td>\nPaid for<\/td>\n<\/tr>\n
Dues, education<\/td>\n$783<\/td>\nReimbursed<\/td>\n<\/tr>\n
IT<\/td>\n$1,000<\/td>\nPaid for<\/td>\n<\/tr>\n
Total<\/strong><\/td>\n$44,583<\/strong><\/td>\n$0<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Now let\u2019s compare that to the pay of a Redfin agent. For the agents representing our clients, Redfin handles all expenses. Each agent gets a support staff to schedule home tours and coordinate closing documents; each also gets health benefits and vacation as well as the best online tools in the industry.
\nHow Redfin Pays Its Agents<\/strong>
\nWe don\u2019t pay our agents a commission, but do offer a bonus based on client satisfaction. To calculate the bonus, we survey clients about the likelihood of their recommending our service. Paying based on the survey response, and then publishing that response, has an overwhelming effect on agent behavior, most of it very good.
\nIn King County, Redfin has had five agents handling deals for us over the same time period that we considered when analyzing traditional agents gross commissions: May 2009 to May 2010. All of them lead a team. The average pay of those agents has been $113,266, or the equivalent of $157,849 if you include the value of our benefits.
\nAgents in more expensive markets tend to earn more; agents in less expensive markets tend to earn less.\u00a0Even within a market, agents may earn less over time: the team has worked very hard over the past year, so less frantic years may result in lower pay. Some may be promoted to manage larger areas as we grow, earning more. But the basic conclusion seems indisputable: Redfin agents perform very well, and Redfin pays those agents very well.
\nRedfin Pay: The 90th Percentile<\/strong>
\nComparing Redfin pay to what a traditional agent earns once you subtract costs from gross commissions, you find that Redfin agents place in the 90th percentile. If you only compare Redfin to agents earning $25,000 or more in gross commissions \u2013 to avoid comparisons to part-timers — Redfin agents are still in the 83rd percentile. In fact, in the graph displayed above, we excluded everyone earning less than $25,000.
\nSo the answer to the question about what kind of agent would work at Redfin is simple: an agent who likes putting customers first, not commissions. An agent who cares about a project larger than herself. An agent who wants a career that can grow to include new skills, technologies and management responsibility. And yes, one who makes more money than the vast majority of her peers.
\nThe Bottom Line Is Not Just the Bottom Line<\/strong>
\nOur goal is to be the best career choice in the real estate industry, so we can hire the best agents. For some, the 90th or the 83rd percentile will be their income limit; for others it will be lower. We will always pay well enough to hire the best people, but for the best people, money is never enough: what Redfin also offers is a way to expand the circle of people our folks influence and the fulfillment they take from their work.
\n(Many thanks to Dave Billings, Arthur Patterson, Adam Wiener and Scott Nagel for pitching in on this post. We tried to be conservative and fair, but if some of our assumptions are wrong, please let us know)<\/p>\n","protected":false},"excerpt":{"rendered":"

I\u2019ve spent the past four years of my life explaining Redfin. If you read this blog, you already know that we\u2019re a real estate broker focused on customer service instead of sales, one that uses technology to make every step of the process totally transparent. By my own count, I\u2019ve said this nearly 10,000 times, […]<\/p>\n","protected":false},"author":13210,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[57],"tags":[66],"coauthors":[],"class_list":["post-2745","post","type-post","status-publish","format-standard","hentry","category-company-news","tag-agents"],"acf":[],"yoast_head":"\n\u201cWhat Kind of Person Would Work as a Redfin Agent?\u201d - Redfin Real Estate News<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.redfin.com\/news\/what_kind_of_person_would_work_as_a_redfin_agent\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"\u201cWhat Kind of Person Would Work as a Redfin Agent?\u201d\" \/>\n<meta property=\"og:description\" content=\"I\u2019ve spent the past four years of my life explaining Redfin. 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