The 80/20 rule, more properly known as the “Pareto Principle”, states that, for many events, 80% of the effects come from 20% of the causes. First developed as a means of describing land ownership in Italy in the 1800’s, the rule has since been adopted by economists, management gurus, sports medicine and a myriad of other fields.

Since my earliest days in real estate I’ve heard this rule applied to agents: 80% of the production comes from 20% of the agents. While it always “felt” correct, I never bothered to actually check the facts. Well.. now we can.

Looking at 120,000 real estate agents in rural and urban markets throughout the country, we find that its not quite as unbalanced as 80/20.

The actual ratio for real estate agents is almost exactly 75/25

That is to say that 75% of the production is done by the top 25% agents or teams. This ratio is nearly identical if we consider closed sides instead of dollars (detailed results below). If you are curious about that 80% number, it turns out that the top 30% of the agents produce 80% of the results. This production, while skewed, is not quite as unequal as most of us had been thinking.

Notes:

Percentage of agents closing 80% of volume: 29.02%

Percentage of agents closing 80% of sides: 30.27%

Percentage of agents closing 75.33% of volume: 24.66%

Percentage of agents closing 74.75% of sides: 25.25%

Source: MLS data

Production measured May 2018 – April 2019 on 120,000 real estate agents who had at least one closing during the period May 2017 – April 2019.

Agents are defined as individual MLS entities and may include teams aggregating under a single name.