Are you considering obtaining a real estate license? Do you want to know how much money you can earn as a real estate salesperson in a year?
You’ve undoubtedly heard of real estate brokers who make a lot of money. Is that correct? Is it true that high-income earners are few and far between?
We’ll go over some realistic earnings numbers for real estate brokers in this post. In addition, we’ll provide you with some pointers on how to obtain more customers and make more money as an agent.
What Do Real Estate Agents Get Paid?
Real estate agents’ annual earnings vary greatly. This is due to the fact that most real estate brokers operate on commission, and their earnings are based on a variety of criteria. But that’s something we’ll speak about later.
There are various sites that claim to know how much real estate agents make on average. Here are some figures gathered from various sources:
Real estate brokers make an average of $48,910 a year, according to the renowned income source site Payscale (year not cited).
According to the National Association of Realtors (NAR), a well-known real estate membership organization, agents earned an average of $41,800 in 2018.
Agents earned an average of $48,690 in 2018, according to the Bureau of Labor Statistics.
When calculating real estate agents’ yearly earnings, it’s crucial to include their years of experience. According to the National Association of Realtors, the typical agent earning $48,690 in 2018 has 16 years of experience.
To be honest, it all boils down to how much effort you put into it. In fact, many of the real estate agents at my company make well over $100,000 a year.
In 2018, I began working as a licensed real estate agent. My gross income in my first year was $20,455. This was a high amount, according to my broker manager, for a first-year part-time agent like me.
Many first-year real estate agents wait a long time to get their first commission. However, working as a real estate agent might lead to a new and rewarding profession. It might also be a way to supplement your income as a side venture.
Just keep in mind that becoming a real estate agent, whether full-time or part-time, takes training and dedication.
Real estate agents may earn their first commission as soon as they are licensed.
So, when can a real estate salesperson expect to make their first commission? An agent may earn their first commission in as little as a month, depending on the circumstances.
House transactions usually take a few months to complete, but if you find the perfect bargain, you could be completing your first sale as a real estate agent in as little as a month.
In my first year as a real estate agent, I accomplished six transactions. This early success is due to my ability to keep my eyes open for chances.
My first customer landed right in my lap. I’d been informed that the customer was selling while I was looking for a home for our family.
I inquired about seeing her home. I wasn’t licensed at the time, but I expected to be in a few weeks. When talking to someone about selling their home in my state, it’s the law to identify your status as a real estate salesperson.
I informed her that I was on my way to visit her home to see my family. However, I wanted to be very open about the fact that I was working on getting my real estate license.
I determined at the conclusion of our tour that her home was not the appropriate fit for us and thanked her for her time. She then asked if I would be interested in representing her in the sale of her home.
I responded “yes” hesitantly (but confidently), left the house, and contacted my boss, delighted and terrified all at the same time. We closed two months after I advertised the home.
Your First Commission is Mostly Determined by You. The idea is that how quickly you earn your first commission is mostly determined by you. I wanted to escape when the lady who owned the home I was looking at asked me to represent her.
I was inept and as green as I could be. But, with the aid of a kind manager, we were able to close the sale.
What’s the point? Take the plunge after you’ve obtained your real estate license. Start spreading the news about your new job without sounding like a salesperson. Make it clear that you wish to assist them.
Look for chances, take action even if you’re afraid, and you’ll ultimately earn your first commission.
What Is A Real Estate Agent’s Earnings Percentage On Each Sale?
You may be interested in learning what percentage of a commission a real estate agent earns on each sale. The answer to that question is determined by two primary considerations:
The agreed-upon proportion for each customer is
The commission that your broker pays to real estate agents
Clients pay an average for real estate services in each geographic location. Furthermore, who pays the commission varies by state or area.
Typically, real estate commissions are paid by sellers, not by purchasers. This isn’t always the case, and most buyer representation contracts include language stating that the buyer must pay the agent upon completion of the transaction.
This provision exists to allow buyers and sellers to avoid negotiating with each other via intermediaries and then striking a contract on their own. The commission is usually paid out of the seller’s earnings.
The amount of the commission varies depending on the state or region. For example, I reside near the Wisconsin border in the Minneapolis/St. Paul region.
Home sellers in Minnesota generally pay a 7% commission. However, house sellers in Wisconsin, only a few miles away, often pay a 5% fee.
Furthermore, a client’s commission is often negotiable. That implies that some agents in my seven-percent state may only charge six percent.
As you can expect, this is difficult for Minnesota-licensed agents to swallow. If they decide to do business in Wisconsin, they will lose a big chunk of their income right away.
However, since I feel that having any revenue is preferable to having none, I chose to operate in both states. Many folks in my area reside in one state and own cottages in another.
What’s the point? The percentage you’ll earn is determined by a number of things.
What’s the Deal With Commission Splits?
As a real estate agent, commission splits have an influence on your earnings. When you work as an agent, your commission is usually shared between two parties: the brokerage firm you work for and the other agent in the selling party.
Brokerage companies that represent agents are compensated with a percentage of the sale. The brokerage company (or person) in charge of overseeing real estate agents is a licensed managing firm (or person). This share pays the broker for the time and money they spent on the agent’s behalf and management.
Despite the fact that the brokerage business may get a cut of the transaction, it’s crucial to remember that brokerage companies exist for a purpose. Agents must be employed by a broker. In real estate, there are several licenses and requirements to follow. It is essential to work with a reliable broker.
The amount paid to the broker is determined by their commission structure and the agreement you have with them.
For example, I work for Edina Realty, one of the country’s top real estate firms (owned by HomeServices of America, a Berkshire Hathaway affiliate).
Real estate agents may choose from a variety of commission splits at Edina Realty. Agents might take anywhere between 50% and 90% of their compensation. The amount is calculated using the agent’s yearly revenue as well as other variables.
Some brokerages pay a greater fee yet provide fewer services to their agents. These businesses are often used by real estate agents who have a lot of expertise and don’t need much coaching from a broker manager.
You’ll also have to divide your commission with any other agents you work with on a deal. Let’s suppose you’re putting a house on the market. If another agent brings in a buyer and the buyer’s deal closes, you’ll divide your commission with that partnering agency in some way.
A Typical Scenario for Splitting the Commission
If you list and sell a property for $250,000 and charge a 7% fee, the total profit is $17,500. The commissions paid to listing and selling agents are often varied.
In my location, a seven percent agreement would pay the listing agency 3.7 percent and the selling agent 3.3 percent. As the listing agent, your company’s commission part on this sale would be $9,250 (commissions belong to the brokerage firm and are divided with the agent).
So, if you signed up for a 50/50 split, you’d earn $4,625 before taxes. You’d collect $8,325 before taxes if you signed up for a 90/10 split.
Keep in mind that you’ll need to deduct expenses from that sum. You’ll have expenses as a real estate agent, such as:
Gasoline and automobile upkeep are examples of travel expenditures.
Expenses like those of photographers, house stagers, and advertising should all be included.
If you’re the listing agent, you’ll get reimbursed for the cost of installing a sign on the property.
Expenses for licenses and training are examples of additional fees.
House cleaning, for example, is a nice touch for your customers.
Furthermore, certain customers will be more expensive than others. Clients will purchase the third property they visit. Then you’ll have other customers with whom you’ll spend a year or more looking for a house.
Similarly, if you offer a house, it may sell quickly. Alternatively, you may need to do a lot of additional advertising and other effort to sell it.
By the time you’ve deducted all of the expenses, you’ll be left with less money than you expected. However, many agents find the job to be highly rewarding in terms of hourly pay.
How can a real estate agent increase the number of clients he or she has?
You may be asking, as a novice real estate agent, what the secret is to gaining more customers.
Here are some suggestions:
1. Spread the word
If people don’t realize you’re an agent, they won’t think to use you. Make use of your social media profiles and other opportunities to tell others about your new job. However, don’t go about it in a “salesy” manner. Just be sure to share your own experiences as well as any advice you may have for your followers.
Keep an eye out for opportunities.
My success as a real estate agent has been largely due to my ability to see possibilities. When someone says they want to buy or sell a home, I jump at the chance to help them.
I introduce myself as a licensed agent and ask if they want any assistance. Or, as a courtesy, I volunteer to assist them with research if it won’t take up too much of my time.
3. Retention of Customers
You develop a clientele after years of selling properties. Make sure you stay in contact with customers who have either bought or sold a house through you. They could move once again. Especially when the kids have gone out and they need to downsize or they have had additional children and need to expand.
4. Make a Purchase
Finally, when someone asks for my assistance, I always ask for the sale. I usually do it in a semi-passive manner. I’ll offer when someone says they want to sell their property: “I’d love to come by and give you a market study if you’d like.”
I’ll ask for the sale once I offer them the market analysis. Being proactive is essential for real estate success.
A successful real estate agent strives to be very helpful above all else. It is critical to have knowledge. If you don’t know the answer to a question, though, you may always ask.
Service, on the other hand, is more of a personality quality. And the finest real estate brokers, in my experience, have a genuine desire to serve people.
Markets may fluctuate over time, but remember that real concern for your customers always wins the sale, whether the market is rising or falling.
Do you need a license to work as a real estate agent?
Are you interested in learning more about what it takes to become a real estate agent? Depending on where you reside, the answer to that question differs. Yes, in most states, including mine.
Each state has its own set of requirements for obtaining a real estate license. In most states, you must first complete a specified number of hours of schooling.
Contact your state’s department of commerce or a similar agency to find out more about how to become a real estate agent in your area.
Check with well-known brokerage firms to find out if they can help you become a real estate agent.
Working as a real estate agent may be quite profitable. You will, however, have to work hard for your money. It’s important to learn the job, make connections, and keep improving and growing your skills.
What real estate agents put into it is what they get out of it. It also comes with a great sense of accomplishment, knowing that you assisted a family in finding their new home, where they will make many memories over the years.