Real estate agents do not all earn the same amount. The income of agents can be affected by their education and motivation.
While some do it for the money and others for the excitement, glamour, and challenges that come with selling property, there are many reasons to do it. Others desire to help others achieve their goals.
What is the average earning of a real estate agent?
First-year agents in real estate make very little because they are still learning the business and building client relationships. However, referrals from satisfied clients are a great way to keep their business growing over time. They will also learn new ways to attract clients.
- The median salary for real estate agents in America was $49,000 in 2020. However, the 10% lowest earners earned less than $25,000, while the 10% highest earners earned more than $112,000.
- The median real estate broker salary was $60,000. Every real estate designation has its best-use cases. It is essential to know which one is right for you.
How real estate commissions are paid
The number of transactions agents complete and the commission paid to the brokerage are all factors that determine how much they earn. Agents who are just starting typically get a lower commission split while learning the business.
A listing agreement is a contract between the seller and the agent that allows for the payment of buyer-broker fees. The brokerage signs the agent’s name.
The brokerage representing the buyer receives a portion of the commission from the listing broker. Real estate commissions can be negotiated, but agents set their rates, and fees are paid directly to them.
The seller usually determines how much the buyer’s agents will be paid. However, it can also be based on local customs. The listing commission may be a flat fee or 10% of the sale price.
Here’s an example:
Let’s take an example to show how much a listing agent could make if the commission was 7% and the brokerage that produced the buyer splits 50%.
The total commission at 7% for a $200,000 sales price would be $14,000. $7,000 would remain with the listing brokerage. The listing agent would receive a split of the $7,000; you might expect to be paid around 60% as a first-year agent.
At a 60% split, the agent would make $4,200. After deducting state and federal taxes (which could be as high as 30%), they would make about $2,940. An additional 20% could be spent on overhead and expenses by the agent, leaving a net income of $2,352.
How many homes should an agent sell?
A real estate agent should sell as many houses per year as possible to make the highest salary. In reality, however, they might only sell a few homes per year. This all depends on the market, their clients, and their area.
Around 20% of agents do 80% of their business. Agents aren’t usually looking to make 20% of the sales. However, this is often the harsh reality.
What is the average salary of top real estate agents?
The average agent earns less than top producers. Every real estate office has its criteria for top producers. However, it is safe to say that top producers must sell at least one home each month to be considered leading. According to the BLS, top producers make around $112,610 per year.
Agents who are rock stars can sell property worth $500 million per year in Los Angeles. This means that they could make millions of dollars annually.
The dollar volume of top producers, many of whom are listed agents, can be used to calculate their annual earnings. For example, a top producer who claims they sell $50 million a year will probably tell you that they make at least one million dollars in commissions.
Agents may form teams and then hire others to work for them. Sometimes, but not always, the team leader gets credit for every sale made under this arrangement, even if a team member initiated the transaction. As a result, team leaders are often strong listing agent.
To make the same amount of money, discount real estate brokers must sell more property than full-service brokerages.
