Real estate agents make from $20,000 to more than $100,000 annually.
The wide range happens due to the wide variety in types of real estate agents.
There are those who are just getting started and doing the work as a side gig. There are top performers who are working deals all their waking hours.
Which one are you? The earning potential of a real estate agent is open-ended. If you don’t mind working long hours – including evenings and weekends – and like helping people, this is a great field for you.
How do Realtors Get Paid?
First, a couple key definitions. A real estate agent can act as a buyer’s agent or a seller’s agent.
A buyer’s agent represents the buyer. The seller’s agent (or listing agent) represents the seller. It’s possible that real estate agents can handle both ends of the transaction, by bringing a buyer to a house the agent has listed for a seller.
Realtors are paid by commission, usually split 50-50 between the buyer’s agent and the seller’s agent. If the property is low-priced, the agents may instead earn a flat fee. If you are just starting out you should know marketing yourself plays a very important role in your long-term success. Keep an eye on the latest real estate marketing tips to stay competitive.
How Does Real Estate Commission Work?
Real estate agents work under brokers. The broker is a real estate company.
How does the commission work? A typical real estate agent commission fee might be 6%, which is 6% of the sales price. The 6% commission split is 3% for each agent (seller and buyer).
Each real estate agent doesn’t get the entire 3%. Instead, the individual agent usually splits the 3% fee with the broker. The split is usually 50-50.
Real estate agents may charge higher or lower commission percentage fees, depending on what is set by the real estate broker. Real estate agents usually are also paid a base salary.
How to Make Money as a Real Estate Agent
Most realtors handle residential properties. Some agents specialize in land and commercial property sales.
Real estate commissions for land and residential sales range from 6 to 8 percent. Commissions on commercial sales may be higher.
An agent earns commission with each real estate transaction. How much you make depends on the land, commercial property, or home’s selling price.
More sales equal more money. Whether it is a single brokerage or one of the many real estate franchises, make sure to scrutinize payment details as they differ greatly from firm to firm.
Here are 2 ways you can make money as a real estate agent:
1. Listing Agent or Listing Broker
The listing agent meets with the seller and sets a sales price for the property. Listing agents take care of getting the needed descriptions and images, so it can be posted on real estate websites. They may offer suggestions for things that can be done to help sell.
After a listing agreement is signed, the agent posts the property to the real estate agency website and a multiple listing service.
2. Buyer’s Agent
Buyer’s agents meet with people who are shopping for a residence, land or commercial location. They listen closely to opinions expressed by the buyer. Then the agent works to find them the type of place that meets their needs. Most real estate agents also link the buyer with businesses that can do required pre-sale inspections, such as appraisals and tests for insect pests, radon, and mold.
10 Key Responsibilities Involved in Real Estate Transactions
1. Agents make appointments with sellers and buyers, and other agents. They juggle many factors, such as other previously scheduled showings, homes where tenants must be notified and even weather conditions.
2. Most agents hold open houses. Many real estate agents use open houses for networking by connecting with more potential buyers.
3. Many agents make sure the buyer is pre-qualified. The buyer goes to a bank or lending institution, provides financial information, and knows how much money can be borrowed.
4. Agents schedule showings. Often showings take place after work hours and on weekends. To work in the field, you must be willing to work those hours.
5. The buyer’s representative schedules and coordinates appraisals and inspections.
6. Both agents earn their real estate agent commissions by overseeing the negotiations. They usually work from a “punch list” of sorts, taking care of needed items such as a home appraisal one by one as part of services rendered. The average real estate transaction takes at least one month at a minimum.
7. Contracts are drawn and signed. Real estate taxes must be calculated and prorated. There are also other taxes and filing fees, as well as attorney fees. The seller pays the commission. Both the seller and the buyer must receive a preview of closing costs before the closing date.
8. The agent for the seller must update the property’s status as a pending sale.
9. The vast majority of successful agents keep track of the flexible real estate market, paying attention to sales and doing market research.
10. There are key differences between the average agents and super successful agents. As with other professions, the person who focuses on networking and building relationships in the community will earn the most money.
How much do realtors make each year?
After obtaining a real estate license, those new agents to the field most often work for a broker. They will earn a base salary plus commission. There are several factors – such as the amount of the salary – but how much each person makes depends on how many transactions they negotiate. The statistics about average salary come from the national association of real estate brokers.
The lowest performers may be those who are dabbing in real estate part time as a way to make extra income. They may earn about $20,000 a year.
Many real estate agents are high performers who earn $100,000 or more a year.
The average real estate agent salary is $44,000.
Where do realtors make the most money?
Where are the highest earnings? Of course, that’s tied into the locations of where the average home sale is highest, according to labor statistics.
Here are the 5 leading states from 2021:
- New York $103,907
- Colorado $103,371
- South Dakota $101.124
- West Virginia $101,068
- Washington $100,507