7 Myths You Should Know About Your Real Estate Agent

Estimated reading time: 5 minutes

MYTH #1 – EVERY LICENSED REAL ESTATE AGENT IS A REALTOR^®
Not true! Of the three million licensees, only about half (approximately 1.6 million) are members of the National Association of REALTORS^®. What’s the difference between a Real Estate Agent and a REALTOR^®? It’s a bit like Kleenex^® and tissues, but here are some differences:

• As members of this professional organization, REALTORS® pledge to adhere to a comprehensive list of ethical standards, have no official record of unprofessional conduct and must abide by the ongoing standards of the organization.
  
• Only REALTORS® can access the Multiple Listing Services (MLS) in their areas. Over 90% of all properties for sale or rent are marketed on the MLS, so using a REALTOR^® is to your advantage.

MYTH #2 – AGENTS DON’T HAVE TO WORK VERY MUCH
The average real estate agent works about 30 hours per week, but that includes the many thousands of agents who don’t work at all or rarely work. The truth is that one must put in more effort than 40 hours a week to be a successful agent. Good agents make themselves available to their clients and customers on a nearly continual basis, including evenings, weekends, and many holidays. 

MYTH #3 – REAL ESTATE AGENTS ARE NOT EDUCATED
Quite the contrary! Did you know that about 31% of all agents hold a bachelor’s degree, 12% have an Associate’s degree, and another 31% have had some college education? By way of comparison, The United States Census Bureau reports that, among the adult population in our country, 23% of them have completed a college degree, 10% have an Associate’s degree, and another 15% have completed some college.

MYTH #4 – IT’S EASY TO BE A REAL ESTATE AGENT
Licensed agents are required to obtain some level of education prior to receiving their license to practice, and that amount varies from state to state. They must also maintain a required minimum of continuing education credits regularly to stay abreast of the latest real estate-related laws and practices. Even so, it’s not particularly difficult to get a real estate license. The difficulty, however, is making a career of it in such a large pool of other licensed agents. Between 2013 and 2022, the number of REALTORS® increased each year and grew by over 500,000 in total during that period. This makes for stiff competition among agents and a very competitive market in which to earn a living.

MYTH #5 – REAL ESTATE AGENTS ARE PAID A SALARY FROM THEIR BROKER
There are no salaries. As independent contractors, agents receive a straight commission with a check from the broker only when a property closes, and there are no guarantees of getting paid. Agents pay almost all of their own expenses, including the expenses associated with marketing a listed property.

When a property goes to closing, the real estate brokerage fee is paid from the proceeds at closing. This fee is divided between the real estate broker representing the seller and the broker representing the buyer, each receiving their share. The listing agent and the buyer’s agent each then receive a percentage of their respective broker’s portion. That means the total brokerage commission is divided among four entities, with the agent receiving just one portion to pay all of his or her expenses. The remainder after the agent’s self-employment taxes is the net income to that agent

The graphic below illustrates how the commission is split among the four different entities. Keep in mind this is only one example. Seller commissions, splits between brokers, and broker-agent splits may vary from what is shown below, but these figures represent the most common percentages.

MYTH #6 – REAL ESTATE AGENTS MAKE A LOT OF MONEY
The median gross income (before business expenses and taxes) of a real estate agent in 2023 was $69,610.  While that represents a slight increase from the previous year, the average public school teacher salary was $73,570, and electricians came in at an average of $67,810.

MYTH #7 – REAL ESTATE AGENTS GET KICKBACKS FROM OTHERS
Not only would a kickback be an ethical issue (a violation if the agent is a REALTOR®), it is also illegal. The Real Estate Settlement Procedures Act (RESPA) prohibits industry kickbacks and requires appropriate disclosures for all business affiliations between the various players, including brokers, lenders, appraisers, and title companies. RESPA was first implemented in 1974 and has had several amendments to it since then, all applying to residential family structures and sales.

Like every other industry, there are varying levels of success and professionalism.  You can always check on an agent’s success or any complaints lodged against that agent by talking to that agent’s broker or looking up their license number with your state’s licensing board.