How Much Money Do Beverly Hills Real Estate Agents Make?

How much money agents in Beverly Hills make each year depends on several factors, including the number of transactions they complete, the commissions they bring in, and the Beverly Hills agent’s split with their sponsoring broker. Here’s a rundown of how real estate agents get paid—and how much they make.

Percentage % Of Sale, Pending, And Agent

If you’re in the market to buy or sell a home in Beverly Hills, odds are you’ll work with a real estate agent to help you through the process. Most make money through commissions based on a percentage % of a home’s selling price.

• How much do real estate agents make? The median annual pay for  Beverly Hills real estate agents was $48,930 in 2019, according to the most recent data available from the U.S Bureau of Labor Statistics. For brokers, the figure was $59,720. Of course, real estate agents and brokers can make much more than that. The highest 10% of agents earned more than $111,800 in 2019, while the top 10% of brokers made upward of $178,720.

Commissions are generally paid only when a transaction settles. There are instances, however, when a seller is technically liable for the broker’s commission even if the transaction is not complete. If the broker has an offer from a buyer who is ready and able to make the purchase, the broker may still be entitled to a commission if the seller:

1. Changes their mind and refuses to sell
2. Has a spouse who refuses to sign the deed (if that spouse signed the listing agreement)
3. Has a title with uncorrected defects
4. Commits fraud related to the transaction
5. Cannot deliver possession to the buyer within a reasonable time
6. Insists on terms not listed in the listing agreement
7. Mutually agrees to cancel the transaction with the buyer

• How Do Real Estate Agents/Realtors Get Paid? Most Beverly Hills real estate agents make money through commissions. These are payments made directly to real estate brokers for services rendered in the sale or purchase of the property. A commission is usually a percentage % of the property’s selling price, although it can also be a Beverly Hills flat fee.

A real estate commission’s work, to the broker’s compensation, is specified in the listing agreement, which is a contract between a seller and the listing broker that details the conditions of the listing. The rate of the broker’s commission is negotiable. It is a violation of federal antitrust laws for members of the profession to attempt, however subtly, to impose uniform commission rates.

Commission percentage % generally ranges between 4% and 6% across the country, though they may be higher or lower based on the market.3 The seller pays the commission unless the buyer and seller negotiate a split. Most sellers factor the commission into the asking price, so it can be argued that the buyer pays at least some of the commission in either case due to the higher asking price.

Each Beverly Hills agent has an agreement with their sponsoring broker that specifies the agent’s cut of the commission. It could be a 50/50 split between the broker and the agent, or anything else upon which they’ve agreed. Commissions are shared real estate commissions that are often divided among several people. In a typical real estate transaction, the commission is split four ways:

• Listing agent—the agent who took the listing from the seller
• Listing broker—the broker who employs the listing agent
• Buyer’s agent—the agent who represents the buyer
• Buyer’s agent’s broker—the broker who employs the buyer’s agent

Beverly Hills real estate agents whether they are Realtors or not. They are typically paid a percentage % of the commission the listing broker earns on the transaction.

Here’s an example. Say an agent takes a listing on a $200,000 house at a commission rate of 6%. This equals a total commission of $12,000. If the house sells for the asking price, both the listing broker and the buyer’s agent’s broker get half of the commission, or $6,000 each ($200,000 sales price x 0.06 commission ÷ 2). The brokers then split the commissions with their agents.

A common commission split gives 60% to the agent and 40% to the broker, but the split could be 50/50, 60/40, 70/30, or whatever ratio is agreed upon by the agent and the broker. It is common for more experienced and top-producing agents to receive a larger percentage of the commission. In a 60/40 split, each agent in our example receives $3,600 ($6,000 X 0.6) and each broker keeps $2,400 ($6,000 X 0.4). The final commission breakdown would be:

1. Listing agent: $3,600
2. Listing broker: $2,400
3. Buyer’s agent: $3,600
4. Buyer’s agent’s broker: $2,400

• Pending Sale How To Secure: Pending sales can and do fall through. For any number of reasons, a pending sale may not be seen to completion. As we have already discussed, contingencies may prevent a sale from transpiring. For example, savvy buyers may remove themselves from a deal if the home doesn’t pass inspection — that is, at least, if there was an inspection contingency included at escrow. What’s more, every contingency in the final contract represents an opportunity for a pending sale to fall through.

In addition to contingencies, pending sales may fall through because the buyer decided to walk away. Buyers can remove themselves from a pending sale for many reasons; it’s not common, but it happens. At this point, buyers typically have some skin in the game in the form of an earnest money deposit. They can exit the pending sale, but they will have to forfeit this initial payment.

The most common reason buyers will leave a pending sale is if there is a problem with their mortgage application. If a buyer obtains a pre-approval letter and makes an offer on a house, they can still be denied when it comes time to grant the loan. This does not happen randomly and is usually the result of a job loss or an increase in debt. On the other hand, some buyers may still back out even if there are no paperwork issues. Buyer’s remorse can send a seller back to square one.

Again, a pending sale represents a home in the process of selling; it’s by no means final. A home appraisal could be lower than expected, or a buyer could get caught in a deal selling their existing property. Several things can go wrong on either end of a deal. Get familiar with the transaction process to make sure pending sales don’t go astray for you.

If you are a home buyer looking to secure a sale pending home, there are several things you can do. First, by researching the ins and outs of a pending sale, you have already completed step one in the process. Familiarizing yourself with the overall process will help make sure you are equipped to deal with any competition or obstacles that might be in your way. Here are a few tips as you aim to secure a pending sale home:

1. Organize Your Finances: A strong offer means nothing if you are unable to back it up at the time of closing. Be sure to get pre-approved for a loan and gather your down payment before going into a pending sale. This will make sure the funds are available when you need them.
2. Sell Your Existing Property: If your current residence is going to stop you from purchasing a new property, be proactive and get it on the market. Many buyers will back out if they are unable to sell their previous homes. Make sure this does not happen to you by working with an experienced real estate agent and listing your property at the right time.
3. Consider Negotiating: Sellers who are operating in an existing market may be on the receiving end of more than one offer. You need to make sure your offer is competitive to ensure you are the one they stick with. Consider being flexible about move-in dates, closing costs, and more to make your offer stand out.
4. Add A Personal Note: A personal touch can make an offer stand out in the mind of any seller. Write a quick letter to the seller outlining why you want to purchase that specific property. More often than not, they will be moved by the thought of your gesture. If everything goes to plan, you will stand out in the seller’s mind when it comes time to make a decision.
5. Be Communicative: Always respond to communications from your real estate agent and seller to ensure everything is on track. This means regularly checking your email and being responsive to phone calls or texts. Being available will demonstrate your interest and create a positive impression in the mind of the seller.

• Can A Realtor/Agents Show A House That Is Pending? – Realtors can continue to show a house that is pending. As I mentioned above, a pending sale is not final, and therefore sellers may be interested in courting backup offers. If this is the case, sellers will allow the Realtor or real estate agent to continue to show the property during closing. Due to the many reasons a pending sale can fall through, it is not uncommon for sellers to continue to show the property. This can help attract alternative offers in the event of a problem, though the seller will not act if they are under contract.

1. Responsibilities Of Buyers & Sellers – during a pending sale, the buyer carries more responsibility than the seller. A buyer can legally cancel the sale without any cause. However, a seller is locked in as soon as the offer is accepted. Pending sales usually go to closing without any issue, but problems always can occur. As a seller, the most you can do is wait for the sale to close. However, you can also keep showing your home to potential buyers should any problems arise.

As a buyer, the pending stage is your last chance to cancel the home sale. You will want to use this time to decide if the home you’ve made the offer on is the home you want. Use this time to schedule an inspection or clear the home’s title to look for outstanding issues.

Bus Expenses

Estimation: $2,000+/year one unspoken fee to becoming a real estate agent is the travel. Agents drive a lot. So, they will have to afford car insurance, gas, and car maintenance. If they don’t own a car, then they have public transit expenses. Additionally, there are plane tickets or other modes of transportation for national events, if applicable.

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Time So Important

Timing is key in many aspects of life, but especially so in real estate. Since all real estate deals are done on a timeline, real estate agents must be good at time management to ensure a smooth transaction process (or ANY transaction process!).

One prominent saying that applies to real estate is “time is of the essence.” For example, people often go with the first agent that gets in touch with them (after they submit their name on a website, for example), so it’s important to contact your leads quickly.

As a buyer’s agent, you’ll have to be on top of your game when it comes to timing. It’s especially important in a hot market like today’s, where inventory is scarce and there is a lot of competition for each house on the market. Your buyers want to be the first to see the homes that go on the market, so they can have the first choice of the house to buy.

Once your buyers have settled on a home to purchase, they of course have to make a purchase offer. In the real estate world of multiple offers and very few days listed on the market, time is definitely of the essence when submitting an offer!

A lot of new agents fall into the trap of “oh, I’m my boss, it’s okay.” Well, you are your boss, but you are still working for your clients. If they find your work unsatisfactory, or you are lollygagging around, they will certainly not recommend you to their friends. They might even stop using you and go with a different agent, which would lose you the commission and relationship. That’s why it’s so important to be an effective, reliable, and efficient agent!

Another area where timing comes into play is after the offer is accepted and the clients are in escrow. Escrow is usually a defined period, around 30 days, and both buyer and seller expect that the deal is completed in that time. Agents on both sides have to do their jobs in an efficient and timely manner so that the deal does not get delayed, or worse – fall through. Time is once again of the essence! Once the sale is done and escrow is completed, time is still a driving factor. To gain referral business, it’s important to follow up with your clients in the right time frame – usually, a few months after they’ve settled into the new home – to make sure you’re still at the front of their minds. It’s important to never fall off their radar.

Time is of the essence! Keep this in mind when striving to become the most successful real estate agent possible.

Real Estate Agents Pay Their Taxes?

Last but not least is the tax factor. Beverly Hills is notorious for having high taxes, and the broker isn’t deducting anything when they pay an agent their share of the commission. That means the agent must subtract taxes each time they receive a commission check.

As independent contractors, Beverly Hills real estate agents must pay the IRS estimated taxes every quarter. The estimated taxes include income tax and self-employment tax, which covers Medicare and Social Security taxes. You’ll need to reference the latest tax brackets to determine how much should be paid each quarter.

Beverly Hills also has a state income tax. Beverly Hills has 10 income tax brackets – the most in the country. Unfortunately, the state is also known for having the highest state income tax bracket at 13.3%. But that only applies to income over $1 million. Beverly Hills agents and brokers will pay anywhere between 0-9.3%.

At the end of the day, real estate is a profession where your salary isn’t set in stone. Set your sights high and you could be one of the best-paid agents in the country.

Closing Issues

Real estate agents play a pivotal role in the closing process. Having systems in place in your business to ensure this process goes smoothly is essential, so you don’t find yourself in hot water and facing a lawsuit because of closing delays or issues. This means ensuring that all paperwork is completed and submitted on time, as required.

When a buyer needs to access the property for inspection purposes, ensure this is arranged promptly to avoid any unnecessary delays. This is especially relevant during the holiday period because, even if you’re out of the office for the holidays, you’ll need to have systems in place to ensure prompt property access whenever necessary.

Being readily available to answer any questions buyers may have about the property and responding to any inquiries quickly can also reduce any risks on your part. Being a good communicator with your sellers, so they understand their responsibilities under the contract — for example, covenants and repairs — will also assist in a smooth transaction.

Client Acquisition Cost

Treating your business like a business is about knowing key metrics, such as marketing spend, cost per lead, return on investment – and most importantly, your client acquisition cost (CAC). Again, you don’t need an MBA for this. You simply need to do a little basic math.

Look at the amount of money you spent on advertising and marketing and how many clients you acquired for that. For example, if you spend an average of $1,000/month on advertising and marketing and get an average of two clients (not including those coming from your sphere, referrals, and repeat clients), then that math is simple, $500 per client acquired.

If you are generating your leads online, you can get your exact client acquisition cost. You look at how much you spend per lead and multiply that by how many leads it takes to get a client. For example, if your average cost per lead is $7 and you’re converting one in 50 leads, it would be $7 x 50 = $350. So, $350 is the CAC in this example.

If your client-acquisition strategy is all non-monetary and based on offline things such as open houses, door knocking, and networking (unless you’re spending money to do so), you need to calculate the hours you put in to get the client. For example, if you spent 45 hours prospecting and you acquired three clients, then it takes you 15 hours of prospecting to get a client. That will put you at a gap of around four to five clients (60-75 hours) a month as you need to do all the work post-client acquisition. Unless you want to work 80 hours a week, you’re capped with this method.

What Do The Best Do To Get There? Having a career in real estate can be rewarding and exciting. In real estate, your earning potential is limitless, and being your boss will give you a lot of financial freedom. But before you jump in, let’s talk about some steps you can take beforehand to ensure you will become a successful real estate agent.

1. Build Your Database – start by building your database. Out of all things we will be discussing, this is the most crucial. Why? Because your database is where all of your potential business will be coming from. A database is built from everyone you know, that you’ve met or haven’t met, or that you know of or know of you.
2. Research Your Real Estate Sector – When you get licensed, you have the option of doing residential sales or commercial real estate. Although each sector will allow you to work with both buyers and sellers, there are a few differences between the two when it comes to training and day-to-day practice.
3. Develop Your Brand – the best way to develop your brand is to start thinking about how you want to be perceived in real estate. Fun and personable? Straightforward and no-nonsense? Do you want to be known as an “expert” in a specific area? As you know, there are many people in the real estate field, and developing your brand will help you stand out from the competition.
4. Organize Your Finances – being financially prepared before you start practicing real estate is vital. Why? Because you don’t know how long it will take to get your first deal. Typically it can take upwards of 3-6 months before you receive your first commission check. Create a reserve of your living expenses during this time so you can focus on your new career and not your bills.
5. Work Solo or on a Team? – start thinking now about if you want to work solo or on a team. Both have their pros and cons but one is not necessarily better than the other. You simply have to evaluate the benefits and decide what’s going to work best for you.

Working Solo if you are self-motivated and confident, working solo may be the way to go. It will allow you to make your schedule, and answer to yourself, and when you earn a commission it’s not shared with team members. If the idea of handling all aspects of your business on your own gets you excited, then working solo is a good choice for you.

Working on a Team as exciting as it may be to be starting your new career in real estate, perhaps you feel that you’ll need some support. Being part of a team will give you stability and structure. You may not get as much of the commission when you close a deal but being on a team means you will get handed leads, have accountability, and have someone there to keep you on track.

• Research Your Competition – we’ve all heard the great saying, “You can learn a lot from your mistakes” but in this case, we want to flip it. As we discussed earlier, there are many real estate agents in the field. Watch the ones that are doing it right!

Take note of what successful Beverly Hills real estate agents are doing so you can implement the same strategies and tactics. Watch what they are doing on social media regarding content and posts. If you have received print marketing or emails from a real estate agent that made an impression, use that and make it your own. Researching the competition before you are licensed will help you get a leg up in your success as a real estate agent. Keeping up with it after you’re licensed, will help with your continued success.

So there you have it! So remember to be proactive, have a positive mindset, and start laying down the foundation for your future career in real estate.

Erik Brown is a Realtor that can help you with any transaction, especially when you are putting so much money, time, and attention on the line. It’s a good idea to have a Beverly Hills realtor beside you to have what’s going on so you won’t get taken advantage of.

Erik Brown (email to: erik@erikrbrown.com) has extensive experience working with all kinds of buyers in Beverly Hills REALTOR & Luxury Home Specialist

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I welcome you to connect with us anytime; as local realtors, we’d love to assist you with all your area questions and goals. If interested in learning more about buying, selling, or investing in a home in Beverly Hills or Los Angeles, we would love to be your one-stop-shop. From schools to homes, we are here for you.