If you’re considering switching careers to real estate, you might be wondering, “How much does the average real estate agent make?” Planning ahead to know how much you can expect to earn before starting a new career will help you understand how much to save and how to adjust your budget during the career transition period. We surveyed real estate agents across the country to learn what their annual earnings are, and what factors impact how much money they make.
How Much Money Does the Average Real Estate Agent Make Annually?
A real estate agent’s income is highly dependent on many different elements such as niche, years of experience, how many hours they work a week, and even their happiness. The answer to “How much does the average real estate agent make?” isn’t as simple as giving one dollar figure. To get an accurate number, you need to take into account where they fall on the spectrum for a variety of different metrics.
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1. Income increases with longer hours
How much does the average real estate agent make? One way to figure that out is to look at what agents who put in an average amount of hours are earning. In real estate, longer hours usually mean higher earnings. Agents putting in 40 to 50 hours a week can expect to make around $113,054, according to our survey. Agents who work between 51 to 59 hours a week can expect to earn around $143,469. It’s important to note that these are only estimates and many factors can influence these numbers.
2. Experienced agents earn top dollar
In real estate, having more experience typically means a real estate agent will earn more. A real estate agent in the middle of their career might earn somewhere between $149,000 to $164,000 dollars. Again, this number is dependent on other factors which influence the average real estate agent’s earnings.
4. Niche can play a huge role in determining income
What an average real estate agent makes varies by niche. The average residential real estate agent might earn less than a commercial real estate agent. In general, average real estate incomes tend to fall in the $130,000 range, while some niches, like property management or affordable housing, have notably lower incomes and others, like luxury homes or green properties, have markedly higher earnings.
How do real estate agents earn money?
As a real estate agent with an established client base, the promise of prosperity is tremendous. The average annual salary for a real estate agent in the United States is $94,031 which equates to $6,658 per month, on average.
Most often real estate agents get paid real estate commissions based upon the sale price of a property. The commissions of a real estate transaction are negotiable and tend to range anywhere from 1% all the way up to 10%. For our purposes here we will use a 5% commission rate example. So for a $250,000 property, the 5% commission paid upon the closing of that property will be $12,500. That does not mean that the agent walks away with $12,500. The broker of record will receive a predetermined portion of the commission.
The most common arrangement of payment between a broker and an agent is the commission split. Depending on what has been agreed to when the broker agreed to hold the agent’s license, a certain percentage of the commission is paid to the broker and the remaining percentage to the agent. Assuming the traditional 50/50 commission split, each will receive a commission check of $6,250 at the closing of escrow on that one property.
How can a real estate agent rise above the average income?
Your earnings don’t have to be defined by what’s “average” for your niche, experience level, or the amount of time you put into your job. There are always ways to beat the odds and rise above the median level of earnings. We’ve found that agents who are earning more typically excel at managing their marketing dollars, finding quality leads, winning real estate listings, and staying updated on best practices.