How do realtors get paid? The answer to this question is not always straightforward, but it pretty simple to figure out. Most brokers, sales agents, and realtors do not receive a salary. Although, this type of compensation is not unheard of entirely. However, if real estate professionals get this kind of wage, it is not typical for it to be for a substantial sum. Of course, people seem to be working more hours than ever before these days, so every little bit counts, and the amount, small or not, is welcome. Read further to discover some useful facts to answer the question, how do realtors get paid?
Real estate professionals make the bulk of their money via commissions. The rate is negotiable, but it is usually between 5 and 6-percent. The amount is generally split into equal shares to pay the listing broker and the buyer’s agent. If the agent is also a broker, they can keep the profits all to themselves. However, they must pay for necessary things like insurance, payroll, and advertising too. Since agents have to work with licensed brokers, they only receive a portion of the funds while the brokerage firm gets the rest. The amount the salesperson adds to their bank depends on the agreement that they have with the broker.
Let’s say that a home sells for $175,000, and the commission is set at 5%. The fee due after the sale finalizes is $8,750. This number does not get added to the closing cost, but instead, it comes directly out of the price. Agents will find it in their best interests to disclose this information ahead of time. After all, almost nine thousand dollars is a lot of money, and instead of receiving $175,000, the seller will only be getting $166,250. You can’t tell them the total cost because there is no way of knowing what the final value will be until the home sells, but still, let them know that your fee comes out of the sale price.
Nobody wants to have to deal with a disgruntled client over money issues. Providing that the agreement calls for the listing broker and the buyer’s agent to get equal parts, the $8,750 will get split, and both entities will receive $4,375. Keep in mind that realtors work irregular hours though. Sometimes, the homes stay on the market for weeks, months, and even years at a time. Hence, that four thousand dollar payday may be long overdue before the person finally receives it.
If a commercial property gets sold for $325,000, with the commission set at 6%, the fee due is $19,500. Providing that the listing agent and buyer’s agent are splitting the money 50/50, both sides will receive $9,750. This is a nice chunk of change to get at one time. However, because the checks are far and few between, the agents need to set some of the profits aside for a rainy day. Unexpected expenses can pop up at any time, and having the funds available can prevent financial hardships. Hopefully, this answers, how do realtors get paid?
As already mentioned, the salesperson’s commission depends upon the arrangement that they have with the broker. The agreement can cater more to the needs of the broker and appear unbalanced at times. Luckily, not everyone is always trying to get something over on someone else though. So, more often than not, the contracts are fair. Just be sure to get all of your ducks in a row, have the T’s crossed, and the I’s dotted so that no surprises arise after the closing of a property.
As of 2016, research by the Bureau of Labor Statistics shows that there were 444,100 employment opportunities for real estate agents and brokers across the United States. The industry is expected to grow 6% between 2016 and 2026 though. Hence, an additional 24,900 jobs are projected to become available. Of course, just like any other business, the openings will vary from place to place. Still, with growth anticipated and the economy in good shape, looking into becoming a realtor is at least worth the effort.
The wage that a realtor receives depends on various factors such as the length of time they have at a firm, experience, and additional credentials. Some of the things that help real estate professionals succeed include communication skills, the ability to market themselves via social media, and business know-how. If the person can excel in these and other areas, they can make a decent living in the industry. Analysis from the Bureau of Labor Statistics reveals that as of May 2017, the annual median salary for real estate brokers across the United States was $56,730. For the same period, agents brought home $45,990 a year.
The first year of a realtors career may be rough. They will spend a lot of time watching a mentor and learning the ropes of the real estate game. Therefore, these new professionals may not have a lot of income headed their way. Experience is the key to getting a foothold in the industry and earning more money. How do realtors get paid? Some of them find extra ways to gain wisdom and keep funds flowing. Several opportunities that you may want to consider include…
These are not get-rich-quick schemes, and they do require the person to do some work, but they can put some additional change in your pocket, which is always a plus. Additionally, the tasks will help the person obtain the needed knowledge to fast-track their career. So, if these things sound good to you, make the change today.
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