Real estate agent fees are not created equal. By their very nature, fee distributions vary wildly across California, as do agent incomes.

Average real estate fees and income vary across metro areas based on the:

  • average home value listed in an area;
  • number of listings; and
  • number of active agents present to compete for listings.

The transactions-per-agent ratio is easily calculated by comparing the number of homes sold in a given area in a year, along with the number of agents working in the region. This ratio has a wide range across the state, and the impact this figure has on incomes is explored below.

How many transactions in a year?

transactions-2016

The average transactions-per-agent ratio ranges from a low of 4.5 transactions each year in San Francisco to nearly 14 transactions-per-agent in Riverside.

This ratio tends to be highest in areas dependent on low-tier sales, and lowest where high-tier sales reign. Since low-tier sales produce smaller fees, it’s sensible that more low-tier transactions are needed for agents to make a decent living.

Simultaneously, the cost of living is generally lower in low-tier sales areas, like Riverside and Sacramento. Thus, agents don’t need to make as much income to make a living as in California’s expensive coastal areas.

The exception in the table above is Santa Clara, which sees both a high transactions-per-agent ratio and a high cost of living, including high home values. This combination makes Santa Clara an attractive place to be a real estate agent. But how does the average agent’s living compare to other careers in the area?

Income available to agents

income-available-to-agents-2016

It’s unlikely that any single agent in a metro area makes the exact dollar figure listed above. Likewise, real estate fees vary even within a region, and particularly based on the tier agents work in. Further, million-dollar listings are more likely to produce a smaller percentage fee than a low-tier listing.

Still, this is to give readers an idea of the real estate fees available to agents in the area, based on the ratio of active, working agents to listings.

Based on the list above, Santa Clara is by far the most profitable California metro to be a real estate agent. With around 11 listings per active agent, and most homes sold in the high tier, agents are not hard-pressed to make six figures.

careermanual

Considering the high cost of living in the Santa Clara-San Jose metro area, much of this success is diminished. But compare the number of listings available to agents here to nearby — and comparably priced — San Francisco, and you’ll see it’s still significantly more profitable to be an agent in Santa Clara than San Francisco.

In the south, San Diego beats out other nearby cities for the highest income available based on transactions-per-agent. It also has a lower cost of living than nearby Los Angeles.

California’s most profitable places for agents

For an idea of how income available to agents in these areas, compare this to the median income of each metro area:

regional-income-comparison

Here, we see the most potentially profitable places for agents to live and work in California are, in order:

  1. Santa Clara;
  2. Riverside;
  3. San Diego;
  4. Los Angeles;
  5. Orange County;
  6. Sacramento; and
  7. San Francisco.

Agents: is there a move in your future? If you live in an area where profit margins for agents are thin — Like San Francisco or Sacramento — moving may produce more income in the long run. But this also means rebuilding your client base, a tricky and time-consuming process.

Alternatively, consider doubling down on your real estate career in these relatively low-profit areas. Add property management to your skills and bring in extra income by managing rentals. Learn how to market your brand more effectively by advertising online and super-charging your print campaigns.

What has been your experience? Have you moved as a real estate agent, and was it worth it? Share your thoughts with other agents in the comments below!

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