Real Estate Agents Have a Limitless Earning Ceiling
The standard workweek is 40 hours, but many real estate agents will work between 21 and 40 hours, resulting in earning potential of about $46,000 a year. This is dependent on the number of hours an agent will work in a week. Agents that work around 60 hours a week earn closer to $100,000 a year, on average.
Real Estate Agent Salary
The median income for real estate sales agents was just above $48,000 in May 2018, according to the U.S. Bureau of Labor Statistics. The good news is that the average real estate agent salary is 23% higher than the median for workers in all other occupations.
Real Estate Agent Top Earners Salary
Remember, the salary above is just the national average and not all real estate agents will hit this figure annually. The lowest-earning agents made less than $24,650. On the other hand, top earners in the 90th percentile earned above $112,610, which is well over twice the median salary for a real estate agent.
Top Earning States For Real Estate Agents
The market you choose to get your license in could play a big role in your overall earning potential. Below is a breakdown of the average real estate agent salary by state:
- New York - $89,744 annually
- Massachusetts - $89,098 annually
- New Hampshire - $86,936 annually
- Maryland - $82,697 annually
- Hawaii - $82,308 annually
- Connecticut - $82,069 annually
- Alaska - $82,064 annually
How Much Does a Part-Time Real Estate Agent Make?
Real estate agents that work less than 20 hours a week make about $25,000 a year. Agents that work between 21 and 40 hours, which is still part-time, earn about $46,000 a year. Now, this may be enough for some individuals based on their situation, but for most, only working part-time hours will not cut it.
Not surprisingly, the more hours a real estate agent devotes to their business, the more they earn. According to the National Association of REALTORS® and its local affiliates, agents who work 60 hours or more a week have median earnings of $100,000 a year.
Real Estate Agent Commission Rates
Real estate agents’ pay mainly comes from the commissions they make on a property sale. Nearly half of a typical agent's earnings come from their commissions. One factor you’ll need to be cognizant of is the commission split between you and your real estate brokerage on the sales price. A traditional real estate commission between a broker and an agent is made up of sharing the gross commission amount that the brokerage will collect, which usually equates to a 50/50 split of the buying agent’s commission. This amount is agreed upon by the agent and their brokerage when negotiating their work contract.
If you’d like a full breakdown of a real estate agent's salary with a commission split, read our blog Salary For A Real Estate Agent Summary.
How Do Real Estate Agents Get Paid?
The commission earned through a sale or purchase of real estate property is the main source of income for real estate agents, but this commission first goes through the agent’s brokerage. After the sale or purchase of a property, the commission will be paid directly to the brokerage, which is split between the listing agent and their broker, and the buyer’s agent and their broker.
How Much Do Brokers Make?
According to the Bureau of Labor and Statistics, the median real estate broker salary is $78,940. Just having the word “broker” on a business card can result in $58,210 a year, on top of the commission earnings. Making this distinction between a sales agent and a broker results in nearly $10,000 more than the average real estate professional.
In order to buy and sell real estate, a real estate agent must work for a broker. This relationship is important especially for new agents because a brokerage provides mentorship, tools and training, and oversight. For these services, a broker receives a cut from every commission a real estate agent earns.
How Much Are Real Estate Agent Fees?
It’s estimated that an agent will spend anywhere between $100-500 per year on their initial license and subsequent renewal fees. These costs will vary from state to state so be sure to check with your local requirements before figuring out your earning potential. After you are licensed, you may choose to become a part of a local or national association, such as the National Association of REALTORS® (NAR), and those fees can fluctuate (NAR’s annual fee is $120). Your brokerage may provide access to a Multiple Listing Service (MLS), but if you have to cover the costs, it could be anywhere between $25-100 per month for these services.
Who Pays Real Estate Agent Fees?
Depending on the agreement a real estate professional has with their brokerage, the broker could be willing to pay these fees, and other associated costs, in exchange for the commission split for home sales. This is not the case for all brokers, so be sure to check what the agreement is with your brokerage.
How Much Are Business Expenses?
As a real estate agent, you are essentially running your own small business, which means that you are independent and working for yourself. Many agents also work under a big name brokerage, but even with this, you are responsible for your own hours, your own marketing, and ultimately your own success. Marketing can be one of the top expenses for a real estate agent.
According to Investopedia, the average expenses for an agent is between $1,500-$2,000 a year. Your top expenses as a real estate agent will break down to licensing courses, business cards, signs, advertising, and association fees.
How to Become a Real Estate Agent?
Becoming a licensed real estate agent can seem overwhelming, especially when you consider everything involved with this career change, such as leaving your current job, providing for your family, and studying to pass your state and national exams. This is why we made our Pre-Licensing courses with the busy individual in mind. Our curriculum is catered to your needs, and is available for you, whenever you need it.
To get your license, you must first complete the required Pre-Licensing education for your state and, after this, take your state’s licensing exam. When you pass this exam, you will then be a fully-licensed real estate agent in your state! When looking for an approved education provider, be sure to pay attention to their pass rates, if they publish them. Poor pass rates point to a poor education experience that will not prepare you for your licensing exam. The CE Shop currently holds a national pass rate of 90%, with a 97% student satisfaction rate.
Once you’ve passed your exam, you will have to find the right brokerage to support and mentor you to become a successful agent. Matching with a brokerage that meets your needs will help you grow your real estate business. Learn how you can find the right brokerage for you here.
How to Become a REALTOR®?
Becoming a REALTOR® is often confused with being a licensed real estate agent. However, if you want to be a REALTOR® you have to become a member of the National Association of REALTORS®. To do this, you must first join a local real estate association. Membership in a local association of REALTORS® automatically extends your membership to the state and national association. Browse NAR’s list of local and state associations here.
Becoming a member is always valuable to your business and your professional growth. Associations are a great way to network and learn from others that have experience and insights into the industry.