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Residential Real Estate
Feb 15, 2018

How to Make a Million in Real Estate

Sponsored Content provided by Kirk Pugh - Broker and Realtor, KBT Realty

Q: How can I make $1,000,000 in real estate?

A: Start with $3,000,000 (and $113,000,000 in sales).

Much of the general public thinks of Realtors as part-time Vanna Whites. All you need to do is stick a sign in the yard, open a door or two and voila - payday!

We’ve all seen the ads that say, “Over $1 Billion Sold!” and even the dueling print ads that claim, “On the first and third Tuesday of the month we sell more yellow houses than all of our competitors combined!”

I often wonder if the average person looks at a flashy advertisement and thinks to himself, Wow, three percent of $12 gazillion dollars is a lot of commission to earn for opening a few doors and sticking a couple of signs in the yard.
This is not a commentary on commission, but rather an example of how a typical day in the life of a Realtor is spent and how the dollars are earned.


Let’s Do The Math

Let’s do a math problem together. We’ll use as our example a house that sells for $100 (to make the math easy on me!).

In a previous article we learned that, in most cases, if you represent a buyer in the purchase of a home, it probably took 25 consultations with potential buyers to get one to stick. That’s a lot of “nos” before we obtained a “yes”!

If you represent a seller, it may have taken, on average, 11 verbal consultations and two extensive in-home listing presentations to acquire the listing. If you are a really good Realtor, you might sell those about 70 percent of the time. 

In summary, we’ve interviewed 25 potential buyers, 11 potential sellers, written one fully-executed buyer contract and sold 7/10 of a house for a seller. 
 
Gross Total Sales for our efforts  $170.00
Average commission earned on a transaction  2.65%
 
Let’s not forget that I am an independent contractor!
Total gross commission earned:  $4.50
Uncle Sam likes to get paid - 30% -$1.35
Overhead on a good day - 30% -$1.35
Working for a national firm is a slightly more moderate 26%! -$1.17
Total off the top  $3.87
 
Net profit on these two transactions  $0.63
 
Because houses cost a lot more than $100, we can start adding zeros to our example. If the house cost $170,000, we made $630. If it cost $1.7 million, we earned $6,300. And if it cost $17 million, we end up with $63,000. This might look like a living wage at the higher prices but consider this - more than 50 percent of licensed Realtors in the
Cape Fear Association of Realtors sell fewer than four homes, and many will sell none.

We operate under the extreme scrutiny of the North Carolina Real Estate Commission and the Office of the Attorney General and follow a very strict code of ethics. Yet, our profession is not highly regarded as a professional services provider. Have you seen a real estate contract lately? 


We Work For You

If you call me at 10 p.m., I will likely answer. Call me just before my kid’s soccer game and normally I’ll miss it. Call me during my day off... huh, what’s a day off?  If I plan a vacation, all the sudden, the world wants to look at houses! 

At KBT Realty, we work with a servant’s heart and we love to serve. Subservient doesn’t really fit the model of our win-win mentality, but we do whatever it takes. 

I am sure the professionals across all the top-rated brands, as well as the myriad local independent firms, thank you for your business, your trust and your loyalty. I certainly hope we’ve earned it. We continually aspire to create confidence that you can lean on to the point of referring your friends and family to us! 

Kirk Pugh is a 25-year hospitality professional turned real estate broker. Licensed since 2009, together with his partners Becky Brown and Tyson Emery, they own and operate the KBT Realty Team, a division of Keller Williams Realty. Originally from Louisville, Kentucky, Kirk has been blessed to live in some amazing places during the course of his career and has called Wilmington home since 2001.“Seek first to understand before being understood" is one of the more recent quotes on Kirk's list of favorites. Understanding his clients, who they are, how they live and where they are in life’s journey is most important in determining how he can meet their needs.
 

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