If you're thinking about entering the world of real estate, you may be wondering, "How much does the average real estate agent make?" Understanding the earning potential before embarking on a new career can help you plan your finances and make a smooth transition. We've surveyed real estate agents across the country to uncover their annual earnings and the factors that impact their income.
How much can a real estate agent make annually?
A real estate agent's income is influenced by various factors, such as their niche, years of experience, hours worked per week, and even their level of happiness. Determining the average income of a real estate agent isn't as straightforward as providing a single dollar amount. To get a clearer picture, we need to consider where agents fall on a spectrum of different metrics.
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1. Income increases with longer hours
The average income of a real estate agent depends on the number of hours they put in. Typically, longer hours lead to higher earnings. Agents who work 40 to 50 hours a week can expect to make around $113,054, according to our survey. Those who work between 51 to 59 hours a week earn approximately $143,469. Keep in mind that these figures are estimates and can be influenced by various factors.
2. Experienced agents earn top dollar
Experience plays a significant role in a real estate agent's earnings. Generally, the more experience an agent has, the higher their income. Agents in the middle of their careers can expect to earn between $149,000 and $164,000. However, other influencing factors can also affect an agent's average earnings.
3. Niche can play a huge role in determining income
The income of an average real estate agent varies depending on their niche. Residential real estate agents, for example, might earn less than commercial real estate agents. On average, real estate agents earn around $130,000 annually, but certain niches, like property management or affordable housing, have lower incomes, while luxury homes or green properties have higher earnings.
What makes up the income of a real estate agent?
As an established real estate agent, the potential for prosperity is considerable. The average annual salary for a real estate agent in the United States is $94,031, equivalent to $6,658 per month on average.
Real estate agents predominantly earn commissions based on the sale price of a property. Commissions are negotiable and typically range from 1% to 10%. For example, using a 5% commission rate, a $250,000 property would generate a $12,500 commission. However, it's important to note that the agent doesn't pocket the full commission; the broker of record receives a predetermined portion.
The most common payment arrangement between a broker and an agent is a commission split. Depending on the agreement made when the broker obtained the agent's license, a certain percentage of the commission is paid to the broker, and the remaining percentage is given to the agent. Assuming a traditional 50/50 commission split, both the broker and agent would receive a commission check of $6,250 upon the closing of escrow on that one property.
How can a real estate agent earn more than the average income?
Don't let "average" define your earnings. There are always ways to surpass the median level of income for your niche, experience level, or the amount of time you dedicate to your job. Successful agents who earn more excel at managing their marketing budget, finding quality leads, winning real estate listings, and staying updated on best practices.
