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How Much Do Real Estate Agents Make?

Last updated on April 7, 2021

How Much Do Real Estate Agents Make?

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When making a career change, the first question that most will end up looking at is just what their different options hold for them – especially in terms of salary potential. That’s a huge part of why so many people end up looking at the world of real estate. Asking “how much do real estate agents make?” often begins by seeing the true salary potential that the field holds – which is well above the national average, with the top agents earning more than double the national salary average.

But it’s also important to ask deeper questions than just ‘how much do real estate agents make?’ and only look at their maximum salary potential. Instead, average salaries and even the lowest possible income levels are well worth knowing about. This way, you can plan and prepare for your career. Additionally, it’s worth noting that as you go through your career, your income level could grow. It’s all in how you approach your career and in how you develop yourself as an agent.

So just how much do real estate agents make? There are a few key factors to take a closer look at which can help you answer this question. Here’s a rundown of the main things to consider.

VIDEO: How Much Do Real Estate Agents ACTUALLY Make?

How Do Real Estate Agents Earn Money?

It’s no secret that real estate agents earn most of their income from commissions – they get a percentage of each sale that they make. Depending on where you’re working and what brokerage you work for, standard commission rates can vary but are usually between 3% and 7%, with 6% being the average in most instances. But let’s say that you sell a home for $400,000. 6% of that is $24,000. Does that mean that you just made $24,000? Usually, that’s not the case. Understanding how much do real estate agents make means looking a little deeper into commission.

Remember that there are two agents handling any transactions – at a minimum. A buyer’s agent and seller’s agent don’t get 6% each – instead, that 6% is split. Usually, it’s an even split but sometimes it may not be a totally even split and one party may end up taking slightly more of the commission. But, for the sake of an example, let’s say that you are getting an even split. Now, each agent will receive $12,000. Still sound like a great income, right?

But what if you work for a broker – something that virtually all new agents will have to do? How much do real estate agents make then? Usually, brokers will take a fair amount of your commission. The average split is around 30%, but it could be more or less depending on where you are. In other words, the brokerage you work for will take a portion of that $12,000 as well.

Some brokerages actually pay their real estate agent small monthly salaries or even an hourly wage, but for the most part the question of ‘how much do real estate agents make?’ comes down to one thing – how much do they sell? The more property transactions you’re involved in, the more you can earn.

How Much Do Real Estate Agents Make On Average?

So just how much do real estate agents make per year? On average, real estate agents make about $36,000 to $40,000 annually. However, the high end of the agent pools can earn well over $100,000 annually – especially if they work in a robust market and have a proven reputation. You won’t likely start out earning anywhere near the six-figure income you’re likely dreaming of, but putting in some time and effort could quickly start increasing your salary potential.

How To Increase Your Income As A Real Estate Agent

One of the most important things to keep in mind is that your first year or two as an agent will often be the hardest. Real estate agents need to not only ask themselves ‘how much do real estate agents make?’, but also ‘how can I make more?’. The key is being able to look at yourself as a business entity instead of just an individual, and when you work to increase your revenue stream it can have a huge impact on your bottom line.

So how can you earn more as a real estate agent? Here are a few things that can help.

Invest in yourself. The majority of truly successful real estate agents know that they are a business. Investing in your marketing, your online presence, and in building your own reputation can have a huge impact on your ability to earn more.

Know your market. Take time daily to research market listings and your market in general. It can help you learn more about available properties as well as about what average prices are in your area.

Build your reputation. Use your marketing as well as your honesty and integrity to build up a reputation – and don’t stop putting time and effort into growing your real estate portfolio. The more of a positive reputation you have, the more leads you’ll connect with. And the more leads, the more potential for sales.

It may take time, but if you’re willing to put in the work and invest in yourself you can quickly begin to increase your income and earn a great living as a real estate agent.

The Bottom Line

So just how much do real estate agents make, exactly? On average, you can expect to earn about $36,000 for the first year or two – that’s the average income level for most new agents. But by taking the initiative to invest more into your career, you could enhance your earnings potential dramatically. Looking at yourself as a business and investing in marketing and in bettering your reputation and your niche, you could quickly increase that earning potential. The more that you sell, the more you’ll earn, so be sure to do all you can to improve your knowledge and capabilities and become the best real estate agent you can – your bank account will benefit as a result.

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