Are you curious about how much money the "average" real estate agent makes? It's a complex question with many factors to consider. Real estate is a hyper-local and niche industry, meaning that agents specializing in different areas can make vastly different incomes. Additionally, the amount of money you make as a real estate agent depends on your negotiation skills, work ethic, and success in closing deals. Looking at the average real estate commission in your area won't necessarily give you an accurate idea of your potential income.
In this article, we will delve into the topic of how much the average agent makes, explore strategies to boost your salary, and provide guidance for those who may not be making enough in the industry. So, whether you're just starting out or looking to maximize your earnings, keep reading!
How Much Does the Average Real Estate Agent Make?
In 2019, the median gross income for all Realtors was $49,700. However, it's important to note that this figure includes both full-time and part-time agents, as well as those who have just entered the industry. For Realtors with 16 years of experience or more, the median gross income rose to $86,500.
How Does Location Affect a Real Estate Agent's Salary?
The location you work in has a significant impact on your real estate sales revenue. For instance, in California, the average real estate agent makes around $102,000 per year, while in Arkansas, the average income is approximately $58,000. However, it's worth mentioning that there are exceptions. A real estate agent dealing with luxury properties in Arkansas may earn more than a beginner agent in California. Therefore, your location plays a crucial role in determining your potential income.
Caption: Bags of money in a wooden house.
How Do Real Estate Agents Earn Money?
Real estate agents earn a commission as either the listing agent or the buyer's agent. While you can theoretically set your commission rate, there is typically an upper limit of three to five percent, depending on your area. The commission is split between the listing agent, the listing agent's broker, the buyer's agent, and the buyer's agent's real estate broker.
As a seller's agent, you only receive payment when you successfully sell your client's home. Similarly, as a buyer's agent, you only get paid when the deal is closed. The timing of commissions can be unpredictable, so effective money management skills are crucial in this profession.
Both residential and commercial real estate operate on commission-based models. However, the commission structure for commercial real estate is usually a flat fee due to the higher transaction costs involved. In any case, the majority of a real estate agent's income comes from the commissions they earn.
How Can a Real Estate Agent Boost Their Salary?
It's no secret that many real estate agents experience burnout within the first few years of their careers. However, there are strategies you can employ to increase your income beyond the average. Here are some tips:
1. Close More Deals
As you establish yourself within your brokerage, more opportunities will come your way. The amount of effort you put into your work is often directly correlated with the results you achieve.
2. Provide Additional Services
Working with your listing broker, you can offer additional services such as home staging, high-quality photography, video tours, and even 3D walkthroughs. The more services you provide, the faster you can sell properties.
Caption: Two people sitting at a desk. How much does the average real estate agent make depends on negotiating.
3. Embrace Negotiation
As a seller's agent, negotiating a higher sale price can increase your commission. On the other hand, as a buyer's agent, negotiating on behalf of your client can lead to better referrals in the future.
4. Expand Your Network
In the real estate industry, connections are paramount. The more people you know, the more opportunities you'll encounter and the greater your potential income. Networking should be a constant priority when you're not actively closing deals.
5. Consider Switching Brokers
Real estate agents have the freedom to change brokers. If another brokerage offers more training opportunities, better connections, or a more favorable commission split, switching may be beneficial for your career progression.
6. Explore Part-time Work
Many new real estate agents start their careers part-time, balancing a full-time job with building their experience and network. However, it's worth noting that exclusive real estate brokerages often prefer full-time agents, so you may need to weigh the pros and cons.
7. Pursue Dual Agency Deals
Engaging in dual agency deals, where you represent both the buyer and the seller, can significantly increase your income. With more people finding properties and selling homes online, there are ample opportunities to be the sole agent in a transaction.
8. Cultivate a Referral Network
Referring clients to other Realtors can be lucrative, as you earn a significant portion of their commission. Some agents build entire careers based solely on referrals.
Remember, as a real estate agent, your income may start low due to limited connections. However, as you expand your network and gain experience, your income is likely to grow.
Caption: A man holding out his pockets.
What If You Aren't Making Enough?
A common reason for real estate agents leaving the industry is not making enough money. While a sponsoring broker can provide guidance, ultimately, agents must be determined and motivated to grow their own business. Motivation is crucial when it comes to setting your own hours, working hard, and continually expanding your network and skills.
While there are inevitable down markets, persistent effort often leads to success. However, certain circumstances and external factors, such as bad timing, can affect your income. In such cases, you may need to consider shifting your focus or niche. For example, during a market downturn, you might pivot towards townhouses, condos, or rental properties. Being adaptable and open to change is a vital characteristic of a successful real estate agent.
Starting Your Real Estate Career
Once you obtain your real estate license, you'll embark on your journey towards your first real estate transaction. Over time, you'll gain invaluable insights into the market, effective self-marketing strategies, and negotiation techniques.
Whether you aspire to become a commercial real estate agent, refer tenants to property managers, or operate independently as a licensed agent, there are numerous ways to surpass the average agent's income. It's worth noting that even an inexperienced agent can earn a respectable income. Furthermore, as you accumulate experience, your income potential increases significantly. By understanding the average commission and sales values in your area, you can estimate your potential earnings as a listing or buyer agent.
Final Thoughts on How Much Real Estate Agents Make
If you're looking for more resources to maximize your salary as a real estate agent, be sure to check out my posts on growing your real estate agent salary to reach $100k in your first year and understanding the commission rates for Realtors in 2021.
Now, I'd love to hear from you! What motivated you to join the real estate industry? Share your thoughts in the comments below!
