People associate real estate agents with money and a lavish lifestyle. But are all agents loaded?
Shows like Selling Sunset or Owning Manhattan will make you believe that's true. But, real life realtors will beg to differ.
This article explores how much do you make as a real estate agent.
What is a real estate agent's salary?
Traditionally, real estate agents, realtors, and brokers don't have a salary. They make money on the sale of a home. That's a commission.
So being a realtor is neither salary or hourly pay. It's commission pay. However, there is a new trend with brokerages. Emerging brokerages pay agents a salary or hourly rate.
This is good and bad for the agent. The good part is they have a consistent, reliable source of income. The bad part is that they severely cap their income potential. Yikes!
How do real estate agents get paid?
As I mentioned earlier, companies pay agents in commission. They receive payment when someone sells the home.
The agent and client agree on a commission percentage at the start of their relationship. Then, the agent earns a percentage of the home's sale price when the transaction closes.
How much commission do real estate agents make?
There is no standard commission percentage rate. Real Estate agents negotiate their split with their client or even split it with the seller's agent.
A few factors determine how much percentage real estate agents make. Local market, type of property, and agent's experience to name a few.
On average, real estate agents earn a commission from 1% to 4% of the home’s sale price.
Do real estate agents make commission off rental properties? Yes, they can! Many agents earn a commission for helping clients rent properties. This is equal to one month’s rent or a percentage of the annual lease value.
How do real estate commissions off rental properties work? The landlord pays the commission. This payment is significantly smaller compared to one earned from buying or selling a home.
Data collected from Bureau of Labor Statistics (2024.)
How much do real estate agents make on average
How much does a real estate agent make per sale? Let's say the agent negotiated 3% commission on the sale of a home. If they sell a $500,000 home, they would make around $15,000.
The agent will also split this amount with their brokerage. Let's assume they have a 70/30 split. If they keep 70%, they earn $10,500.
How much do real estate agents make a year? The annual income depends on the number of transactions they close.
In the U.S., full-time real estate agents make $50,000 to $90,000 per year, on average. High-performing agents can make six figures or more, especially in competitive markets.
How much do real estate agents make in California?
In California, the median home value is approximately $718,000. Assuming a 3% commission rate, this means a real estate agent will earn $21,540 per sale.
California has some of the highest home values in the U.S. Agents in this state earn more in commissions than agents in other states.
This makes California a lucrative market for real estate agent looking to maximize their commission checks.
Data collected from Bureau of Labor Statistics (2024.)
How much do commercial real estate agents make?
Commercial real estate agents earn a higher income than residential agents. They have larger transaction sizes and higher commercial real estate agent commission rates.
On average, commercial agents can make anywhere from $85,000 to $150,000 a year, depending on their experience and market.
Commercial agent commissions are similar to that of residential agents. But, because the property value is significantly higher, commercial agents make more money.
The downside is, commercial agents may buy or sell less property. The is less commercial property than residential property.
Because commercial properties tend to have higher values, even a small percentage commission can result in a substantial payout.
A commercial agent commonly works on a flat fee, too. This more common with higher valued properties.
How much do part time real estate agents make in commission?
The salary of part-time real estate agents varies. They base their income on closed transactions within the year.
On average, part-time agents earn between $20,000 to $40,000 per year in commission.
Part time agents work fewer hours and handle fewer clients. Their earnings are lower compared to full-time agents.
But, part time agents can still make a substantial income. If they work in high-value markets they can make similar income to full time agents.
How much do new real estate agents make in their first year?
How much do first-year real estate agents make? The average first-year salary for real estate agents ranges from $30,000 to $50,000.
This depends on location and the number of transactions closed. How much new real estate agents earn varies widely. Building a client base and gaining experience take time.
That's why new agents struggle in their first year. They simply don't have the time that seasoned agents have had.
The harsh truth is new agents can make no money in their first year. This can happen despite their best effort.
But as they close more deals, their earnings will increase.
In competitive markets or high-demand areas, new agents might see earnings closer to $60,000 or more.
However, new agents should consider the costs associated with starting their career. This includes licensing fees, marketing expenses, and brokerage splits, which can affect net earnings.
With hard work and a good plan, many first-year agents can quickly boost their income as they start in the market.
Final Thoughts on How Much Realtors Make
A few factors determine how much real estate agents make. In reality, most agents won't earn as much as their celebrity colleagues do.
But, it's not impossible to make $100,000 or more per year in real estate. This is even true for new real estate agents. All it takes is the proper know-how and gumption.
We provide educational courses to help you start a real estate career. If you're an active agent, we also provide training courses to help you find more clients, close bigger deals, and earn more money.
See our directory of courses that are right for you and start a wildly successful career in real estate.
