Although it may not be the most important part of your job search, one of the biggest considerations is ‘how much will I be paid?’ It’s a question we get asked a lot here at Property Personnel and one of the reasons why we published our blog on how much an estate agent earns.
Essentially, an estate agent’s earnings are calculated using a commission structure: on a job advert, you’ll see a basic salary and/or an on-target earnings (OTE) projection. The basic salary is the minimum amount an estate agent will take home; this amount will vary depending on the actual role, location, specialism, size of the agency and qualifications. During the first few months of your employment, this basic is probably guaranteed. OTE is the amount that could be earned through commission, depending on how successful you are at the job. It’s typical for trainees to earn a basic of £10,000-£12,000 but with OTE, that could reach up to £25,000.
The proportion of basic salary to commission will differ from agency to agency; some might offer a higher basic and lower commission, while others do the reverse.
Nevertheless, commission forms a big part of the estate agent’s salary.
How does commission work?
Commission is a fee which is added to the price of a sale, expressed as a percentage. It might be one per cent, it might be ten per cent; the rate alters from agency to agency. Regardless, that percentage is where the agency makes its money. It needs to cover costs, pay salaries, keep company cars roadworthy, etc. As such, the commission goes to the agency itself. Of this, a proportion will be paid to the individual agent who made the sale.
To reiterate the example from our previously mentioned blog, if you sell a property for £200,000 with two per cent commission, the agency will earn £4,000. Of this £4,000, you might be entitled to a ten per cent personal commission, netting you a nice £400.
The amount you can earn in commission therefore relies on a) the sale price of the property, b) the percentage that the agency earns and c) your personal commission rate.
What is personal commission based on?
Personal commission isn’t simply a flat rate; it’s based on a number of factors including personal sales figures, office sales figures or maybe a combination of both. That means you are, in part, responsible for the amount of commission that everyone else earns, too.
That’s not all you can expect, though. Built into the estate agent’s reward structure are targets; if you reach these targets and make a certain amount in sales for the business, you may receive a one-off bonus plus an increase to your personal commission rate.
Why do agencies use the commission structure?
It’s a way to keep you motivated. If you’re an ambitious and confident person who is willing to work hard, then the potential is there for you to earn a significant amount of money. It’s also a way to ensure that you generate business for the agency and keep it in a healthy, solvent situation – keeping you in a job.
Ultimately, under the commission structure, you have an element of control over what you earn – if you put in the hours and work hard, you could take home a lot more money than if you are shy or disorganised. That’s why it’s important to really think about whether you are right for estate agency; you can’t be someone who feels uncomfortable liaising with strangers, you need to be vivacious and ready to go! The rewards can be huge, not just in terms of commission, but with regard to the speed at which you might progress through the ranks. High achievers can go as far as they like on the estate agency career path.
If you are interested in browsing some estate agency vacancies or simply finding more out about this exciting profession, please do get in touch; we’d love to hear from you!