HOW TO MAKE $1 MILLION IN YOUR FIRST YEAR SELLING REAL ESTATE: LOCATION, LOCATION, LOCATION
Can you make $1 million in your first year selling real estate? It can be done. In fact, it has been done. But it doesn’t happen by luck or accident. This is the first in a series of articles detailing how you, as a newly licensed agent, could set yourself up to be successful enough to to make $1 million in your first year. In this initial piece, we discuss the “where” of the dream—the markets and brokerages that statistically give you the best odds of success.
Most individuals who dream about a career in real estate include making lots of money to fund a lavish lifestyle rich with expensive automobiles and a luxurious home in a distinguished neighborhood.
The dream of what it takes to make a lot of money in real estate usually involves activities that people have observed real estate agents in their environment perform, including holding open houses, putting up yard signs, driving buyers around, showing houses, and so on.
According to the National Association of REALTORS® Member Profile for 2016 (the latest year available), 68% of real estate salespeople (not brokers) who have been in the real estate business for two years or less earn $10,000 or less after taxes and expenses.
Clearly, there is a gap between the dream most people possess about the glamour of the real estate profession and the practical reality of what the real estate business consists of. To avoid falling into this trap, a strategy founded on facts and a sound business plan is called for.
If You’re Going to Dream, Dream Big (and Plan Even Bigger)
Consider what it would take to make $1 million in gross commissions your first year selling real estate (before expenses and taxes). It would involve selling approximately $50 million of real property with an average salesperson commission of 2%.
Real Trends is a real estate consulting service that has been analyzing what real estate licensees and companies do for over 30 years. They have just published their 2018 The Thousand, which is a report of the “Best Real Estate Agent Rankings” in America. Real Trends identifies 250 individual agents who have achieved the above level of income, or more. Following are some insights into what it takes based on the Real Trends survey.
Top 5 States Where Individual Agents Sell $75 million to $1.9 billion Per Year
Out of the 250 top producing agents identified in the Real Trends survey, the following percentages of agents are found in the following five states:
- California: 44%
- New York State: 24%
- Florida: 7%
- Massachusetts: 6%
- Colorado: 4%
This means that 85% of all multi-million dollar selling real estate agents are located in just five states. If new salespersons want to operate in this environment, it only makes sense to locate their business in one of the above states.
Top 20 Cities to Make a Million Dollars Selling Real Estate
If one wants to have a successful career selling expensive homes, it would be even better to identify the best cities in each of the best states to operate as a real estate agent. Following is a list of the best cities where agents are finding success (ranked from 1 to 20 in order of the number of successful agents in each market):
- New York City, New York
- Beverly Hills, California
- San Francisco, California
- Menlo Park, California
- Boston, Massachusetts
- Aspen, Colorado
- Los Angeles, California
- Los Altos, California
- Saratoga, California
- Bridgehampton, New York
- Palm Beach Florida
- Encino, California
- East Hampton, New York
- Brooklyn, New York
- Burlingame, California
- Southampton, New York
- Naples, Florida
- Wellington, Florida
- Wellesley, Massachusetts
- Greenwood Village, Colorado
Next: Developing a Million Dollar Marketing Plan
Having established some ideas about where to locate a million dollar real estate sales business, and provided some direction for finding a broker to associate with, the next installment in this series will explore the type of marketing plan it takes to result in $1 million in gross commissions your first year in the real estate business. We will explore how to develop an international clientele and how to sell to celebrities. We will also discuss the one category of super-wealthy client who is involved in a multi-million dollar real estate transaction every 1.8 years (as opposed to the average homeowner, who is involved in a $200,000 transaction every 7 years). Stay tuned and learn how to develop your million dollar marketing plan.