What do real estate agents in South Africa earn?
Category PropertyTime
If you're someone who enjoys working with people, wants to have control over their time and is good at communicating, becoming a real estate agent might be a good career choice for you. Of course, deciding on a profession is a big task, and one of the most important questions is the earning potential. While there isn't a one-size-fits all answer, this article will give you an overview of what you can expect to earn as a real estate agent in South Africa, as well as the biggest factors that influence how much you can earn in this profession.
Real estate agents are typically paid on a commission basis, which means that your earnings are directly tied to the sales you make. This commission is usually a percentage of the sale price of the property. In South Africa, this is usually between 5% and 7.5%, with 6% being the most common commission.
So, let's do some math. If you sell a property for R2 million and the commission rate is 6%, you'll earn R120,000 in commission. Of course, this is just an example and the actual amount you'll earn will depend on the commission rate, the sale price of the property, and any split agreements you have with your agency or broker.
Experience Matters for Earnings
As with any job, how much you can earn is often strongly linked to your experience and the same is true for real estate agents. While new agents make an average of R20 000 per month during their first year in the business, the average monthly income of a real estate agent in South Africa is R36 000 per month. Of course, commissions-based earnings are not usually paid out monthly and one of the things that you'll have to consider is that you will be paid in lump sums whenever you make a sale, rather than drawing a consistent salary.
Location Influences Agent Earnings
Perhaps even more important than experience for real estate agents is location. Agents working in high-end and expensive areas like Cape Town's Atlantic Seaboard or Johannesburg's Sandton can earn significantly more than those working in more affordable areas. This makes sense: if your earnings are commissions-based and the properties are more expensive, then the commission you earn will be higher.
The average sales price for a property in Franschoek, Western Cape, for example, was R3.3 million in 2022. This is compared to the more affordable area of Parow, where houses sold for an average of R1.5 million. However, 2022 saw 1 388 property sales in Parow, compared to only 168 in Franschoek in the same period. While you'd earn a lot more selling one house in Franschoek, there are fewer homes for sale and the total earning potential in affluent areas might not be as high as in more affordable areas where there are more properties going up for sale.
Competition in affluent areas is often also much higher than in more affordable neighbourhoods. With higher commissions, many agents will be drawn to the more expensive areas, and you'd be competing against all of them to find clients. In addition, selling high-end homes often takes longer and requires a different set of skills and expertise compared to selling homes in more reasonable areas.
Finally, it's important to consider whether you'll be working as an independent agent or with an agency when you're calculating your earning potential. While working independently will mean that you have complete control over your commissions, time and strategy, working with an agency can reduce your costs when selling a property.
Working with an agency or broker often means that there will be a split agreement between the agency and the broker. This is a common practice in South Africa and is when the agency takes a certain percentage of your commission on a sale. The exact split varies depending on the agency and individual agent and is one of the ways that more experienced agents can increase their earnings.
For example, if you have a 50/50 split agreement and you sell a property for R2 million with a 6% commission rate, you'll earn R60,000 in commission, with the other R60,000 going to your agency or broker. If you have a higher split agreement, you'll earn more per sale, but you may also have less support from your agency or broker. Then, of course, there is PropertyTime Real Estate Specialist who pays very high commission splits, from 85% to as high as 91%.
Conclusion
In conclusion, the earning potential of a real estate agent in South Africa can vary greatly depending on experience, location, and split agreements. While there is no guaranteed salary or income as a real estate agent, the potential for high earnings is certainly there for those who are dedicated, hardworking, and willing to put in the time and effort to build up their client base.
Source: Pierre Rousseau - Founder/Principal PropertyTime Real Estate Specialists
Author: Pierre
