Becoming a real estate agent can be an excellent career choice if you’re looking to earn some additional income on the side, become your own boss, or make it your primary source of income. How much do real estate agents make? Depending on your field and region, you can expect to earn anywhere from $30,000 to $100,000 annually – and potentially more if you are focused on building your business! Here’s what you need to know about making money as a real estate agent and how to get started today!
If you’re interested in pursuing a career as a real estate agent, you may wonder how much do real estate agents make and if the field is worth your time. The job of a real estate agent can be divided into two primary parts—buying and selling properties—but these tasks are only one part of what they actually do on the job.
While real estate agents are some of the most in-demand professionals out there, how much they actually make can vary greatly depending on location, experience, and many other factors. But, according to Zillow, the average real estate agent makes roughly $60,000 each year. How much money you earn as a real estate agent will depend on many factors, but here’s what you need to know about the different ways to get paid as an agent and how much you could expect to make.
What is Real Estate Agent
Real estate agents (or realtors) provide a valuable service, whether they’re working with sellers or buyers. They have access to information that we don’t—like sold prices and comparable listings—and can help us make informed decisions based on their expertise. And though fees vary widely depending on what state you live in, you’ll pay for that expertise every time you work with an agent. This means there are actually three costs associated with a transaction: The price of buying or selling property, plus your agent’s commission, plus any closing costs. How much will it all cost? That depends on what kind of deal you’re getting. Let’s look at some common scenarios…
As a rule of thumb, if you’re buying a home and putting less than 20% down, you’ll probably pay an agent’s commission. If you’re paying cash or getting a loan for more than 80% of your home’s price, it won’t be an issue. As for selling your home: If it sells for less than its asking price (or appraised value), then once again you’ll have to pay a commission. But if your listing agent sells your house at or above its asking price—or even better, well above—then that commission may be yours to keep! That’s why it’s so important to pick an agent who knows their market and has experience working with other buyers and sellers in your area.
A real estate agent’s income
The average real estate agent earns about $30,000 per year. Not bad, but remember that is an average. Some agents make much more, and some make less (or not at all). The most important factor in your income as a real estate agent is how hard you work.
Also, keep in mind that there are some fields of expertise within real estate where higher pay tends to go hand-in-hand with more experience (such as flipping houses) and others where you can break into the industry with little or no experience and start earning quite well right away (such as commercial sales). Of course, it also pays to do some research on the salaries of agents in your area before embarking on a career change into real estate.
As with many white-collar careers, your salary as a real estate agent will depend on your experience, education, and location. In fact, real estate agents in some areas are far more successful than others—in certain markets, they don’t take home salaries at all. Instead, they earn a share of every transaction.
Overall, though, you can expect to make about $44,000 per year; that’s about $21 an hour for 40 hours of work each week (standard full-time employment). For some cities or regions that pay significantly better: here are the average annual wages for Realtors across America. The top 10% (the best) can make upwards of $100k!
Average annual salary
$45,670 Average hourly wage: $22.77 Median annual salary: $37,400 Median hourly wage: $17.69 Maximum annual salary: $92,260 Maximum hourly wage: $46.21. In addition to salary, most full-time real estate agents also receive a commission on their sales. This can be a huge source of income for top performers—the average annual commission for agents was about $100,200 in 2022.
As a percentage of sales volume, commissions are typically between 5 and 6 percent. In terms of pay structure, only half of all real estate agents have earned more than $50,000 in commissions in any given year. The other half made less or nothing at all. But that’s not to say that starting out as an agent is a path to financial ruin—most who begin their careers in real estate do so with little capital invested or business overhead beyond licensing fees.
Starting out as a real estate agent, you may be thinking that you’ll have to put in insane hours to make good money. However, according to Glassdoor and Indeed, most agents only earn between $17-$26 an hour and tend to work 40 hours a week.
Keep in mind that your wage can vary based on your location and commission rate, but for an entry-level agent, these hourly wages are about average. Here’s a quick look at what real estate agents across America are making hourly
Annual salary breakdown
In 2021, real estate agents and brokers made an average of $75,410 a year. Their median income was $32,140 a year. On average, real estate agents and brokers earned an hourly wage of $35.71 in 2021.
In comparison, sales representatives made an average salary of $46,120 a year—the median income for that occupation was $31,170. The highest-paid 10 percent earned more than $93,040 annually; those in the bottom 10 percent took home less than $28,070 per year on average.
The highest-paying states for realtors in 2022
In 2015, real estate agent earnings varied greatly by state. According to data from PayScale, California had the highest average annual salary ($84,000) while North Dakota had one of the lowest at $38,000. Overall, salaries were highest in major cities across California and New York; San Francisco tops all metropolitan areas with an average salary of $105,000 per year. Meanwhile, Detroit is among the cities offering the lowest salaries for realtors at $37,200 per year.
Agent income also varies depending on real estate market conditions: When home prices are increasing (or rising quickly), agents generally make more money as they sell homes for larger amounts than when home prices are flat or falling. Income can also vary based on whether a realtor works full-time or part-time, although part-timers earn less overall. Finally, compensation often depends on a person’s title within their company: Some positions may pay higher base salaries but offer fewer commissions than others.
For example, some companies offer assistants a low base salary but give them bonuses if they meet sales targets—which means those employees could potentially earn much more than someone who holds a higher position but doesn’t have incentive plans in place. As you can see below, commission structures vary widely based on industry norms and each company’s compensation philosophy.
Other benefits of being a realtor
The commission isn’t usually one of them. The average real estate commission is between 4% and 6%, which translates to a few thousand dollars at most for a typical real estate agent. What about those million-dollar agents, you ask? Good agents can negotiate high commissions, and they often bring more than one deal to close at once.
In fact, according to NAR research, some agents are making upward of $150,000 per year in commissions. But there’s a catch: Only 3% of active Realtors in North America are top producers who make more than $150K a year, reports Forbes. And their total compensation includes more than just pay from commissions.
Real estate broker vs. a realtor
There’s a big difference between a real estate broker and a realtor. While both are licensed by state law to provide property services, a real estate broker is generally not allowed to use the term realtor when working with clients. A typical broker will charge either 5 percent or 6 percent of your home’s sale price as their commission. In many states, you can opt for an even lower percentage if you work with one of several nonprofit housing groups called limited service brokers. A realtor, on the other hand, is permitted to call themselves just that: a realtor.
Also, although it may seem like a small detail if you hire a realtor to sell your home and they fail to meet their agreement with you, your only legal recourse is to sue them. If you hire a broker instead, and they don’t live up to the end of their arrangement with you, then you can sue them under contract law or engage in arbitration. Be sure to ask any prospective agents which terminology they prefer. You may not be able to get lower commissions by hiring an agent who prefers one title over another.
Salaries by industry
To determine what agents make, it’s a good idea to look at real estate agent salaries in other industries. If you compare an average real estate agent’s salary to that of sales representatives, for example, you can get a better sense of how much money agents make. According to Glassdoor, sales representatives earn an average salary of $58,247 per year or $27.62 per hour—and their salaries vary greatly depending on experience and location.
You may be surprised to learn just how many different factors play into an average salary; after all, not every sales representative earns an identical wage. For example, top sales reps at big-name companies often pull in higher wages than those who work as entry-level assistants.
In 2005, according to census data from BusinessWeek, real estate agents earned a median annual income of $43,430. However, some agents earn much more than that average. According to NAR’s report on real estate agent incomes for 2006 through 2008 (as reported by about half of all registered REALTORS®), 24 percent earned $100,000 or more in 2007 and 22 percent earned $100,000 or more in 2008.
That means half of all real estate agents make less than $100,000 per year. Approximately 38 percent make between $50k-$99k and only 11 percent of agents made less than $50k per year in 2008. However, if there is anything you think we are missing. Don’t hesitate to inform us by dropping your advice in the comment section. Either way, let me know by leaving a comment below!
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