92% of Real Estate Agents Are Going Broke

Real estate agents are broke. Brokers are broke. The coaches that train real estate agents are broke. Britney, what is going on in the real estate market and how are we going to solve it?

People are broke. And I think we should dive into the solutions and what we're seeing as to why they're broke. What we'll do is we'll break down why agents are broke and then at the end we'll be providing you solutions. Hang around and watch all the way till the end and comment and drop if you hear some stories about your friends being broke who are real estate agents or you're broke yourself.

Tell us what's going on out there in the market because the stats show us that we are at the great financial crisis level of decline of number of sales and I'm sure agents out there across the country are struggling with what's going on. And Britney, tell me about this statement here. The numbers tell the story, not social media. There is a huge ego play in the industry that makes it appear like everybody is making money.

And there are some people that make money in real estate, the great agents and the great brokerages, but the majority of people do not make money. They've got no profit. They're lying. They're making this big ego statement on social media and making the picture look like it's grand to be in the real estate industry.

False. It's false. Let's dive in. Social media is just a big liar.

And here's the joke. It's the broker joke. They're actually broker than you think. And that's why they're called brokers.

They are absolutely dead broke. It's actually worse than broke. They're in debt and they haven't paid taxes for four to 5 years. Let's jump into solo agents and why solo agents are so broke.

And then at the end, we'll reveal again why you how how you can get out of this kind of trap. Here's the reality of it. And this chart is just absolutely mind-numbing. 75% of agents sell less than $2 million in transactions per year.

Now, this chart, Britney, comes from 2023 to 2024. I can tell you I ran the numbers for 2025 and I gave up because the chart looks almost identical. Nothing has changed year-over-year since I started tracking this data over the last 5 years. So, Britney, why are 75% of agents selling such few number of homes?

I don't think they realize the amount of work it takes being in this this industry and a lot of times we look at it and based on these numbers they're at poverty level for their income and they'd be better off potentially getting a job and this is entrepreneurship. It takes action every day. People see the story on social media like we just talked about and they think this will be easy. I'll go in.

I'll sell a couple homes. I'll make a million dollars. Life will be grand. And that is, like we said, far from the truth.

Yeah, it's pretty it's pretty nasty actually when you look at this chart. Then you have agents who are selling two to four million. You have agents selling four to six million, agents selling 6 to8. And right on that bump, right about $8 million mark is actually when we see the majority of real estate agents start to turn a profit and start becoming and looking more like a business owner.

And there's a weird phenomenon that happens around the 10 to20 million mark. Now, why are there more people producing $10 to $20 million a year in sales than there are in the $8 to$10 million bucket of sales? The reason why is because they start building teams. They start getting leverage.

They start getting transaction coordinators and they're spending their money on leverage so they can get to the next level. And that's a big pop there. This is where you really see the magic happen. And unfortunately, it's only 2.41% 41% of real estate agents in Northeast Florida who are making that type of production.

And I'll add to that, these are the people that are staying in the grind and being consistent over time that are building their businesses, building their referral networks, and building their reputation in the industry to get to that $10 to$20 million. Exactly. So, let's jump to the next one. Let's do the math on these $2 million a unit sales folks.

So, here's the reality of it. If they did seven units at $300,000, that would bring them to about two $2 million. We just round it up to make the math easier, about $2 million in volume. The average commission for a realtor right now is about 2.5%.

So their total commission after selling $2 million of volume, that's just their revenue, that doesn't include all their expenses, is $50,000. Now, the average big box broker, most agents are at big box brokerages, right? You think of the big brand names, think of a balloon, think of somebody's last name. Their splits are about 30% to 36%.

Now, the brokerage split is 30%. In a lot of terms, it caps at like 18,000 or 21,000. We just use the lower amount here, 18,000. They have ENO and transaction fees.

They then have a royalty to the main franchiseor of that company. They have monthly fees. And then their total brokerage fees if they sell about $2 million in sales comes out to be 48%. So their broker at that level of production is often taking about 50% 52% of their income right off the top just for them affiliating with their broker.

And by the way, this is we're talking about more than like about 75% of realtors are at this level or less. This level or less. Then they have their cost of their license. Then they have other business expenses.

Maybe their website, maybe they had to drive around town, maybe they had to fix their car, they have car insurance. So the net profit to the agent just on the bare bones is 17,200. Now, I did the math. Of course, we used the help of chat GPT here.

Self-employment tax is 15.3% at that level. And then that takes out another $2,632. Federal tax at 10%, another 1720. So, your net profit after tax of being a realtor at a big box brokerage is approximately 12 to $13,000.

Now, Bren, I don't know about you, I don't know anybody who can survive on that income in Florida. I think the basic is about 4,000 per month to be able to survive in Jacksonville specifically. Yeah, it's like we talked about, it's poverty level. I don't know why you would continue to maintain this business if you're doing this at a big box brokerage model versus a more discount model or 100 commission model.

And I could argue that the other business expenses at 5,000 you should go up a little bit more because people are paying a different fees like you said for their websites, for leads, let's say, for their websites, for their signs, for all of their marketing. They're paying for ads. So, I would probably raise that, but to be conservative, we're still at poverty level at 13. Maybe they have a productivity coach, right?

They have other coaches that they have to pay or training programs that they still have to pay on top of this. Again, this is 75% of agent. This is why we're saying like all agents are broke. The other part of this is is that the majority of agents are part-time.

So, this is really where the part-time bucket stands for for this level of production. Seven units is frankly not a lot. I know Britney and I both our first year sold 66 units each and we're number one agents in our marketplace. Seven units is feels part part-time.

You would have to hide actively hide yourself to not to to sell seven. Like you should at least be able to sell one per month if you're doing it full-time. Now, if you're doing it part-time, I understand that you can still provide great service and do a good job for your customer, but seven really is not going to again make you a lot of money if you're in that type of financial model. Now, let's look at the math.

$4 million in sales. Let's double it, right? You're going to do 13 sales. We just round it up again just for convenience of the numbers.

300,000 price point gets you $4 million in volume. Your total commission 2.5% commission. Your total commission is $100,000. Same situation.

You cap on your splits. You have transaction fees. You pay your royalty in. You pay your monthly fee.

Your total brokerage fees are about $32,000 in this circumstance. And the broker is only taking 32% of your total check now. So, you get to keep 68%. And we're just keeping the numbers very light.

Even though we know this isn't true. Usually your business expenses double. When your business doubles, license cost 2,000, other business expense 5,000. Just for simplicity here, you still have your taxes and you have your federal tax.

So you would make $45,000. So you are break even on this business, Brit, and correct me if I'm wrong, at $4 million in sales at 11.5% of agents. Yeah. And this is the epitome of the model that we hear every agent coming in wanting to do.

I'm going to do at least one a month and I want to make $100,000. And they say, "I want to make $100,000." But they don't realize that after all the splits and all the fees, they're really making $45,000. And so when we shine this table at them, they're like, "Wait a minute. I either got to go bigger or go home." And what do they usually do?

They go home. They go home. Right. I think the stats out there, 87% of real estate agents give up in their first 5 years, which is why you don't see them.

You you just see so many people rotate in and out of the industry. Now, here is where things get fun and exciting and you make that actual six figures. So, when people say, "I want to make six figures," you say, "Do you want do you mean net profit six figures or revenue six figures?" In this case, the math at $8 million in sales gets you over that six figure mark if we're running this numbers correctly. And this assumes you have like virtual zero business expense.

Okay, so we're giving like the best case scenario. Again, we have I'm not going to go through all of this again, but 27 units, $8 million in um volume at 300,000, $200,000 in commission. You have all your business, all your brokerage expenses as well. This time it's 10% less and it's at 22% again because a lot of brokerages do have caps.

By the way, there's some brokerages out there that don't cap at all. And we've seen some agents pay up to 200,000 $300,000 to their broker because they never did math like what we're doing on this chart right now. And it is mindboggling because they're basically buying the broker's building that they're hosting them in. Every single year they're at that company and they just don't do the math.

The brokers never want you to know this information because you would never do it or you would leave their company and join a company that's much more affordable and you would have h much higher profit margins. And so it is the biggest theme when we show them the math. They're like, "Wait, I'm paying that much." And we're like, "Yeah, you've been paying that much for years." And a lot of times they go, "You know what? I'm just going to keep paying for it.

I don't want to deal with my problems. I don't want to think about it." And we're like, "But you're broke." They I don't understand it, Britney. I mean, maybe comment below, right? Why Why do agents not do the math and stay at these brokerages that literally provide nothing and charge them a fortune?

So, they play the ignorance game and they say, "But these shiny objects, these make me feel good. I feel happy." It's like, yeah, that's a sales tactic. They are whining you. They throw these like gigantic gallas at the end of the year that cost them $100,000.

Well, yeah. It's because you paid for that. It's not your broker paid for that. You paid for that out of your fees, your monthly fees and all the other fees.

Oh, well, I got this cool technology I only use once per year. It's like, yeah, you're you're paying a fortune for that, probably a couple grand. You just don't realize it because you're not sitting down and running your books correctly. So, the net profit after tax, selling 27 houses, this is when you're starting to look like a full-time real estate agent and things are going pretty well.

Net profit is about $110,000 from there. So, let's jump into the next one. Britney, the real estate agents, let's talk about the other issues. What do you see going on here?

So obviously you're paying self-employment taxes, so taxes are going to be more expensive for you than if you were an employee at a company. That we can dive into later. Lifestyle creep though. We see almost every single agent do this.

They make more money and they spend more money. Thus, they are net zero with even making more in profit, making more income. It goes away. And the biggest thing they say is, "I don't even know where it went.

I've done financial review with multiple agents that have over a hundred grand of profit and are still in debt and they're like, I don't even know where that money went. Yeah. And I I've had the same thing, hundreds of thousands of dollars during the financial review where they have no idea, again, as you said, where did my money go? And they end up they realize they bought an $80,000 car that's now worth 40,000.

They did it on a on you know paying at 8% rate and they basically have another mortgage payment on their car and so again lifestyle creep is a serious issue. This is the number one issue with sales people other than high taxes is they spend every dollar that they make and we want to help agents avoid that mistake. That's the number one mistake is they spend everything and they don't invest it back in their business. They invest it back in their lifestyle and that's why they have to stay on the treadmill for so long.

Then they have the market changes just exactly what we saw now. We saw a lot of agents have amazing banger years from 2020 to all the way to 2022, some a little bit of 2023 and then things started turning 2024, 2025 because the Fed raised interest rates and they did not prepare. They did not save a single dollar and they're loaded up with credit card debt. They have assets that are falling.

Their rental properties aren't performing as well anymore and they have no 401k or pension to rely on to protect them. The only thing that they have is their investments. So, these issues are the main issues that real estate agents face and it's time for time for things to change. And that's why honestly we're on here.

We want to help agents get out of this nonsense mess that continues to move forward. Brokers don't care if the agents make money. Most brokers themselves don't even make money. So, let's look into that.

Brokers, they're broke. The reality, we want to take your heads out of the sand. We help our agents take your heads out of the sand. We shake your head and we say, "This is what's happening.

There's no excuse. Yeah. So, what's the reality? What is the reality, John?

The reality is, I mean, even in Northeast Florida, there's more than 12 1,200 real estate brokerages. 1,200. There's only about 15 that probably make money off of agent commissions and splits. We're one of them, obviously.

But this, despite the crazy fees, the some of these brokerages are charging 50%. 36%. New agent programs 50%. Despite these crazy fees, they have offices, they have training staff, they have people who are inefficient, they have front desk people, they have technology stuff.

They are very inefficient with their processes. They're basically dying dinosaur type of brokerages. But they pass all of those inefficiencies on to their agents and their agents pay it because their agents don't do the math. But the reality is that most of these brokerages don't actually make any profit at all.

There's a there was a stat that came out from a big box franchise that I was associated with previously that they were bragging about 97% of their real estate brokerages uh were profitable. And I said, "Okay, that's great. Can you show me the stat of how profitable they are?" 90% of them made less than $100,000. And these are operations that are spending over a million dollars a year to operate to only make $100,000.

And they cost $300,000 to open in the first place. And they're just one bad market away from going out of business with long-term leases or with, you know, heavy debt load from from the commercial real estate that they operate out of. So, the reality is that most brokers don't make any money and they actually use their commission from selling to support their own brokerage to continue to exist. It's a huge problem in the industry.

They have high overhead. They accumulate. Britney, there's this like a people feel like they have to accumulate all of the real estate agents at their company even if they don't produce. And this ends up being there's certain brokerages that literally their their number of units per agent is one or two per year and they're all these discount brands out there in the marketplace and they don't collect enough fees to be able to operate or grow or provide value long term.

And frankly, their training doesn't work because their broker does not have the experience or the talent or the knowhow to train people to get to the next level because they've never had high production themselves. It's a constant conversation around headcount, headcount, bring bodies in the door, bring bodies in the door, and not looking at the quality of those people representing that brokerage and thus representing the clientele. Yeah, it's awful. And this is why we always say real estate agents need higher standards.

Well, brokers need to have higher standards so that way we accumulate better better real estate agents because frankly the numbers are showing us that only 5 to 10% of the real estate agents are doing the majority of the business and those are the ones that should be doing the business and the majority of the agents at the brokerage are the brokers competing with their agents trying to sustain the office as a competing broker which we are not but that's for another day. It's a mess. Yeah, it is a complete mess with the brokerage world. It's not what it seems, right?

You see these massive brokerages with these pictures of all these beautiful people lined up in a row and it's basically like, well, they all produce one sale per year and the owner is going, you know, going broke. It's it's a huge problem. Let's look at real estate teams. Brit, the goal profit margin of a real estate team, if you do it perfectly, is 35% plus.

The top I've seen is like 42%. In reality, most teams run on less than 20% profit margin. The teams that I've seen their P&Ls, they often run from 5 to 7% profit margin, which is just mind-boggling. And that's frankly why most teams implode within 5 years because that team leader needs that team member to produce more than $4 million in sales.

And again, we can math that out on another video for you. But the reality is, if your team member is not producing more than $4 million in sales per year, the math does not make sense for you to continue to have that team member on your team. They're building teams backward. Why?

Because these big Wall Street companies that come in, these big big box franchises, they want you to train their agents for them versus them having to train them. So, it saves them a ton of time and a ton of handholding for you to go out there and do all this work than that for them to do it. And so they promote you, they really encourage you. You need to have a big team for social media and it's going to look amazing and you're amazing and you should teach everybody how to do it.

Most people should not be team leaders and they should just stick to being a solo agent that's super profitable. Yeah, it's super sexy to have that big team, to have that big look that is seen as so successful. What we've seen is that most teams implode because you're not building a strong foundation before you build the team based on production and based on quality people coming in and then it just fizzles fizzles. It's exhausting for the team leader.

They get burnt out. They're becoming a manager versus a high producing real estate agent and a manager of non-quality agents as well. So, like you said, John, it is seen as this sexy thing, but it's really because brokerages are incentivizing those top leaders and pumping them up to feel super important to say you should run a team. You should bring these people on and you should train them.

Then you can, you know, hopefully make more money. But that is far from the truth. Yeah. And on the other side of that, it's even worse than that.

It's the blind leading the blind where somebody saying, "Oh, come with me. Come with me. I'll show you how to do it." They've never had the production themselves. And then it's a non-producer trying to teach another non-producer or those brokerage leaderships have also leadership members have also not done it themselves.

They don't know what it takes. They don't know the pros and the cons and thus not advising their top people on how to build a successful team. Yeah. So I mean with all that Brent, are we surprised that the agents are broke, the brokers are broke, the real estate team leaders are broke.

Are we surprised at any of this? We are not surprised. No. And frankly, I've been I've been in real estate for a decade and I have seen this every single year.

In fact, that was one of the reasons why we started our company. We saw an agent out there in 100 degree weather going up and putting open house signs in our neighborhood. And she must have been not under 80 years old. She must have been older than 80 years old.

And she was full sweat. And we're just like there, why is she? And then we looked her up online cuz we saw her name on the sign and we said, "Oh, wow. She's been in industry for like 40 years.

How is she still out there selling real estate? Didn't someone teach her how to buy an investment property, save their money, all this other stuff? We had so many questions running through our head. We realized that when we talked to more people, almost every real estate agent has the same problem.

You should not be in this industry for 40 years and still be doing open houses in your 80s. I mean, that is just an absolute like it's just destroying this person's life. I mean, I can't imagine that they're choosing to do that. They have to do that at that point.

So again, it's a it's a huge issue. Brett, go ahead. Everybody talks about how to get into the industry, how to escape being an employee at a corporate job and get into this industry, and no one talks about how to get out, how to retire, how to do what you need to do to escape the rat race. Amen.

Well put. So, let's look at luxury. One last topic. Luxury agents are awesome.

Usually, a luxury agent is a luxury agent based on where they live. They live in a luxury area and their network is all luxury. And so when people say, "Hey, John, I want to break into luxury." Great. Go live in Paneavidra and your network will instantly be everybody who owns multi-million dollar homes.

And they problem with luxury is two things. Number one, they have higher marketing expenses, takes longer to sell, there's more lawsuits in the luxury price point as well, and they have lower commission percentages, usually 1.5 to 2%. We will break down in another video why it's better to sell breadandbut 400 $500,000 houses than it is to try to sell luxury in today's market. Of course, every market is completely different and you want to adjust with what the what's going on with the times, but there when you look at it at a profit level, not about revenue and awards level.

We're talking about profit because the only thing that matters in business is profit and cash flow. And so, we're going to break this down in another video. So, here's what the solution is, Britney. Let's go.

Here's the solution to selling real estate in today's market. What is it? High volume. Yes.

Not necessarily luxury, but higher volume that is more of a bread and butter. So, like that $5 to $600,000 range, right above that at let's say your average uh sales price in your area. That's right. High volume, high profitability, tracking expenses monthly, cutting things that don't work or don't make sense in a business based on referrals.

Here's the key. If you're in real estate, guys, you have to provide five-star service. It's not optional. You need people who are shouting from the rooftop saying, "This person was so responsive.

They were so knowledgeable about houses. They know everything there is to know about house." Most realtors, I meet, they don't even know anything about houses. They don't know about roofs, HVAC, siding, plumbing, electrical, nothing. If you learn those things and you can communicate with your buyers and with your sellers on how to avoid common mistakes, you are going to become valuable.

The problem is most agents are not valuable and this why they're broke. There's no university degree on how to be a real estate agent, but the people that treat this like a degree that you would get and spend years on see the success. Yes, you have to know the product that you're selling. You need to know the difference between condos, town homes, single family properties, all the above, commercial properties.

You have to understand all this. And then lastly, this is entrepreneurship. You are playing the long game. This stuff does not happen overnight.

It took me and Britney 3 and a half years to become net worth millionaires when we started with $80,000 in debt, but our time horizon even today is 10 years for our project. It is not yeartoear or monthtomonth. You need to start thinking how am I going to grow my business and my operation long term. So this is the key to success.

High volume, high profitability, work on referrals, providing amazing service, actually caring about your customer. What a concept. Not being just transactional and playing long-term. Yeah, like whoa, mind blown.

Thanks, John. This was such a great video with such amazing insights. These are the basics. The agents that we see win out there are are conquering these basics.

So, with that, thank you guys for watching. Brit, you have any comments while we wrap up? Yeah, for the playing long term. So, we always see the successful people and think overnight success.

They've got this star quality. They must be doing something right that made them completely successful overnight. So far from the truth. The people that you're seeing killing it on the streets have been in the game typically for a long time.

They've been consistent over time. They've been doing the habits and the practices over time. This is not an overnight success game. Or and on the other side of that, it's the agents who bought a ton of leads and have very low profit margins, but they were building a big database hopefully to be relational with and get referrals out of.

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