While brokers see increase in take-home pay due to more deals, they're working harder for every dollar and being asked to take smaller cuts
By Melissa Dehncke-McGill
While the real estate community is inundated with statistics about sales activity and prices when it comes to the condo and co-op market, there's one stat that's rarely bandied about in public: commission fluctuations. In this month's Q & A, The Real Deal talked to brokers and firm principals about how take-home pay and commissions have changed since the market went into freefall in September 2008.
As one source described it, the time that has elapsed since Lehman Brothers collapsed can generally be divided into three chunks: the total market freeze, which lasted until March 2009; the slight uptick, which lasted until August 2009 and came with slightly higher commissions for harder-to-sell apartments; and finally the major increase in deals that has dominated since August, with slightly lower commission rates as apartments have become somewhat easier to sell.
Total earnings for brokers in the city have dropped anywhere from 25 to 50 percent during the bust compared to the market peak, brokers say.
But in the last few months, they've been on the rise. In fact, some brokers even said they are now making roughly the same as what they were during the heady days, though they are working harder for every dollar and are dealing with obstacles like requests from buyers and sellers for commission concessions.
Several sources said they've been asked to knock down their commission by a percentage point or two in order to bridge the gap between the buyer's and seller's price. But, in other cases, particularly at new developments, higher commissions are being offered, sometimes as much as 4 percent, in the hopes that they'll bring in buyers.
For more on the new types of commission splits that some firms are using and on new development versus resale commissions, we turn to our panel of experts.?
executive vice president/sales manager, Bellmarc Realty
How does your take-home pay and the take-home pay of brokers in general compare to three months ago, six months ago and a year ago?
The volume of deals has really been increasing since the last quarter of 2009 and agents' income has increased respectively. A year ago, deals had almost completely stopped; no one was making much money.
Are you treating the money you make differently now than you were when the market was really strong?
When I first started in the business, my manager told me that the best way to manage your money in a job like ours is to keep your living expenses low. I thought that was good advice and I still live that way. There are some people in the business who spend their money as they make it, and I think that those agents are having a harder time adjusting.