So, I decided to poll random real estate agents across the country to see how they spend their time. The results were interesting, to say the least.
What prompted me to do this was a new study I’d just read. It showed how dire the situation in the real estate industry has become.
The Curious State of Real Estate Deals
Recently, the Consumer Federation of America released a report that states the median number of transactions closed per agent in 2023 was 2. In fact, 70% of agents reported less than 5 deals, while 49% of agents either only did 1 deal or none at all.
This study made one thing abundantly clear; there’s a tremendous oversupply of part-time real estate agents.
Unanswered Questions
Unsurprisingly, these results had everyone asking a lot of questions:
- Why are there so many agents with so few deals?
- Should the standards to become an agent be raised?
- Is the cost to acquire and maintain a real estate license too low?
- Can someone who only does two deals a year be considered a good agent?
- Does this army of part-time agents affect the perception of the industry?
- How do these part-timers impact results for their clients?
Who can blame them? These are all valid questions.
The Unasked Question: Time Spent on Deals
However, it struck me that there’s another burning question no one asked. It’s one that I think’s extremely important: How much time are all of these agents spending on real estate transactions?
If the average agent only does two deals a year, how much of that year do they actually spend working?
To answer this, I asked some top producers how much time they thought they spent working on deals.
This is how I went about it.
Methodology
First, let’s take a look at the parameters:
- In addition to polling 1 Percent Lists agents, I used Facebook real estate groups, as well as my personal social media feeds.
- I provided two scenarios, with the same simple question for each:
- A buyer enlists you to start looking at properties. From then until closing, how many hours do you spend working that deal?
- You sign a listing agreement with a seller. From then until closing, how many hours do you spend working that deal?
- There were a couple of things I needed to make very clear:
- Hours spent prospecting for a client shouldn’t be included. This is because some agents buy leads while others get leads from open houses and other means. There are also countless other variables that are impossible to quantify.
- On the other hand, time spent replying to texts or answering calls related to a deal should be included. It doesn’t matter who they were talking to or what about. If it had to do with a specific transaction, it counted.
Here’s what I found.
Hours Invested vs. Deals Closed
The agents polled reported an average of 28.67 hours spent working with buyers. The highest response being 90 hours, while the lowest was 12 hours.
When it came to representing the seller, the average of the responses was 8.01 hours, with a range of 2 to 25 hours.
That’s a pretty significant difference.
Economic Implications: How Does It Add Up?
Let’s assume that these were accurate numbers for a typical agent in 2023. So, a buyer transaction at 28.67 hours, and a seller transaction at 8.01 hours. This means in 2023 the average real estate agent only spent 36.68 hours working real estate transactions.
Now, let’s look at how this translates into actual earnings per hour for work done with buyers and sellers, separately.
Hourly Earnings
According to a study from Clever, listing agents nationwide charged an average of 2.83% to work with a seller. For a buyer’s agent, the average was 2.66%.
Per hour, that’s .353% commission for a seller’s agent, and .093% commission for a buyer’s agent. So, 380% more money per hour when working with a seller as opposed to a buyer.
To put this into perspective, here’s another number: 0.74%. That percentage, on average, is what an agent would need to charge when listing a home to make the same amount of money per hour as they would working with a buyer. Yes, you read that right, ZERO point seven four percent.
But That’s Not All
Here’s what makes this even more interesting:
- Listings scale: Agents say they could manage abundantly more listings than buyers. On average, the belief is that they could effectively handle 3 to 5 buyers at a time. For listings, those numbers become 15 to 20.
- Listings create multiple payout opportunities: Many sellers will also use the same agent to buy their next home. Even for a relocator, with a nationwide network of brokerages, there may be a referral fee opportunity.
- Listings tend to grow your business organically: Of course, family and friends of the seller are the most obvious. Another great example is the person who lists with an agent after seeing a sign in their neighbor’s yard.
- Listings typically offer an exclusive right to sell: When it comes to loyalty, buyers are often on the honor system. There are buyer representation agreements, but they are rarely signed and difficult to enforce.
Even if the hourly earnings were identical, it could still be argued that listings hold greater value. In fact, they’re so valuable that it makes sense for an agent to charge less to secure them. The long-term advantages and the growth potential outweigh the immediate financial gains.
One Thing Is Certain
Listings are the key to everything in real estate:
- If you want more listings, get more listings.
- If you want more buyers, get more listings.
- If you want a better work-life balance, get more listings.
- If you want to make more money in 2025, get more listings in 2024.
Redefining the Role: Agent to Entrepreneur
Conducting this poll only led me to more questions:
- Why are so many agents paying for buyer leads?
- Why do we have even remotely similar fees for buyers and sellers?
- Why isn’t every agent charging less money to get listings?
But most importantly:
Why has it become common practice to pay for a lead referral service for buyer leads? These leads demand more of your time and don’t scale your business like listings do.
If the buyer does remain loyal and completes a purchase, it’ll still result in less money per hour than an agent charging 0.74% commission to list a property for a lead they didn’t have to pay for.
Perhaps it’s time to stop being an agent of the industry and start being an entrepreneur.