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Income Summary

HOW MUCH MONEY ARE WE TALKING?

One of the most exciting freedoms that comes with starting your own career in real estate is being in control of how much money you make. The way an agent makes money is a little different since real estate agents don’t make a typical salary, but are paid on commission. This means that your annual income as a real estate agent is directly affected by the amount of work you do and the quality of said work. If you're willing to work hard, the sky's the limit.

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One of the factors to consider when determining your potential for earning is the location in which you will be operating as a realtor. By doing some research, you can determine how stiff the competition is, which brokers are in operation in the area, and what the average is for real estate agent income in the area. Another key point is the general state of housing prices and how often they are closed upon during a sale. Because an agent is paid a commission based on a percentage of the closing cost of a property, this is extremely important.

Let's look at an example of how much a listing agent earns if the commission paid is 7%, with a 50% split with the brokerage who produces the buyer.

Say the sales price is $200,000. The total commission at 7% would be $14,000, of which $7,000 is retained by the listing brokerage. From that $7,000, the listing agent is paid on a split, which on average is around 60% for a first-year agent.

This means the agent would gross $4,200. After deducting federal and state taxes, which could amount to 30% or more, the agent would net about $2,940. The agent also pays overhead and expenses, which could eat up another 20% of the gross, resulting in a net income of $2,100.

Successful real estate agents make more than they would on a more traditional salary. They enjoy both the relationships with the clients and the business and financial aspects.

Of course, it is completely possible to be a realtor on a part-time basis. This will mean less income, obviously, but more time to expand the operation or to pursue other interests and business ventures. The annual income for a real estate agent can vary drastically from around $20,000 to more than $1 million each year.

Today, a real estate agent’s annual income ranges from $20,000 up to $1 million+.

Annual income for real estate agents can vary widely. Factors to consider when determining your income potential include:

 

1

 

LOCATION

2

 

FULL-TIME OR PART-TIME STATUS

3

 

AFFILIATE BROKERAGE

4

 

HOUSING PRICES AND TRENDS IN YOUR AREA

 

To learn more about the average agent’s income in your area, visit one of the sites below for detailed information:

 

    

 

*When exploring these sites, make sure your research is thorough. For example, using “Realtor” instead of “Real Estate Agent” can produce significantly different results.