Got A Pay Cut
It’s official: I have gotten a pay cut.
Being in real estate, I work on commission, but I work for a builder vs a brokerage like Keller Williams or Re/Max. In that situation, we are essentially fully commissioned employees who get a W2, health insurance, a 401K match, and stock discounts. To get all that, you make a lower commission than your general agent counterparts. In my area, you’d make around 1.25%- 2% per sale. Every now and then a builder will offer a small salary as well, typically with a lower commission rate.
To put that in perspective, as a general real estate agent, you would typically make 3% on a sale but pay all your own taxes and insurance. Plus, you have to pay for your own marketing, MLS access, broker fees (since it’s technically the broker who gets paid and not you), etc. You would also sell fewer homes and, therefore, make less money than your counterparts working for a builder. So, in the long run, working for a builder is a fairly beneficial arrangement and, typically, it’s worth the corporate mindset and the lack of freedom in your schedule.
Nevertheless, now they are hitting us where it hurts. Previously I had a tiered commission scale. Once you sold a certain dollar amount of homes, you advanced to the next tier. For example, you sell $7,500,000 at 1.5%, and anything you make after that would be at 1.75%. These are general numbers just to give you an idea. Now, the tier has been removed so everything is at the one amount. I did the math, and that amounts to about $500 per sale for every home that would have been in the second tier of commission. If I used this year’s numbers, it would be a little over $9000.
Why did we get a pay cut? Cause we sold a lot of homes in 2020 & 2021, which means they can lower our pay. They haven’t lowered commissions for general agents (they bring us people, you see) but the internal team is fair game. I suppose I should say “it could be worse”, but it didn’t need to happen in the first place. The company’s gonna do what it’s going to do though.
All in all, it sucks. The new commission starts next company year so this year’s pay goal is still good. Nothing I can do about it since these terms are not negotiable. I could go to another builder but, even if the commission is higher, I would not sell as many homes. That wouldn’t make it worth it in the long run. Basically, they are doing cause 1) they know they can and 2) they know that they are still our best option. 🙃 Infuriating, but it is what it is.
How are things going in your job?
Hate this for you. Nine grand isn’t insignificant, either. Does that pay difference go straight to the owners or what?
Gotta say you’re taking it with an admirable attitude. I’d be raging at the loss but you’re taking a “c’est la vie” Zen-like approach to it. Do you foresee it affecting your spending in the year ahead?
Nope. With builders we are paid by the builder. They just don’t pay us as much. Doesn’t affect the homeowners or anything. They just save money.
My attitude is mainly due to the fact that other builders are doing similar things. They lower our commission when it’s good and then increase it when it’s bad to entice us to come back or stay. That’s the game they play. Thankfully, we live below our means so it will affect the savings rate, but not too much else.
Wait, so because you had a GOOD couple of sale years, they get to cut your pay? That sounds totally backwards. Maybe I don’t know business like I thought I did but I thought you were supposed to reward your higher earners for doing well.
So frustrating, sorry to hear this 🙁
Yep. That’s the way it works in my world. Because you are making more than before because you sold more homes so removing the extra pay “shouldn’t matter” since you are selling more homes. Supposedly. It sucks, but it is what it is.
Thanks for reading.
I think you are one of the few people who understand your value from an employers perspective. If there is no better alternative then the power lies with them. Sorry for your loss, hope you have another great year though.
Thanks! I think it will be a good year despite this. The market is still freaking insane even if I am hoping for it to level off a bit.
Thanks for reading. 🙂
This really sucks, and I won’t bring up my job because we’ve talked enough about it offline. I’m so sorry. This is just an absolutely trash way of doing business in my opinion. 🙁
Yeah. The consensus among our team is it’s still the best option and we will “supposedly” sell more homes so it’ll be okay in the long run. Sucks for sure, but not the worse thing that has ever happened.
Thanks for reading.