2 answers
Josh
Student
Elk River, Minnesota
4
Questions
Asked
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What are the average incomes of a real estate agent?
I'm a 16 year old male interested in this field of work. #real-estate
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2 answers
Will G
Real Estate: Business Development, Operations, Marketing
5
Answers
Santa Barbara, California
Updated
Will’s Answer
Hi Josh,
Great question. Without being repetitive, the short answer is if you're working with a commission-based brokerage, the sky's the limit. It's up to you, how hard and how smart you work. I live in a very high-end market, we have some Agents who make several million dollars per year, and some who do very little.
The stats from NAR (National Association of Realtors) show that the median income for a Realtor in the US makes between $40,000 and $50,000 / year, based on the median US home price of ~$375,000. Which means, the average Realtor is selling less than 10 homes per year, <1 per month. So there's volatility. Some quick math: On $375,000, @ 2.5% commission = $9,375 (Gross Commission Income or GCI), then @ a 70% split with the brokerage, that's ~$6,500 net to you. As you sell more, your split with the company increases, allowing you to keep more of the total commission.
I'm not sure what Splits are offered in your area, but if you are considering a career, you should interview several large national firms as well as independent firms and see what they're all about, what their commission schedule looks like, and what fees you owe them to hang your license.
Let's say you're better than average, there will be months where you kill it and close several transactions, and there will be months where you don't close any. So how you manage your income/expenses and cash flow is really important in this business. Also note, you should expect to invest money into your business for marketing, lead generation, licensing, continuing education, etc., so plan to be in the red for the initial part of your career, and that you have a nest egg set aside so that you are not forced out of the business to take a full-time salaried job just because you needed the money.
Hope that's helpful!! Good luck
Great question. Without being repetitive, the short answer is if you're working with a commission-based brokerage, the sky's the limit. It's up to you, how hard and how smart you work. I live in a very high-end market, we have some Agents who make several million dollars per year, and some who do very little.
The stats from NAR (National Association of Realtors) show that the median income for a Realtor in the US makes between $40,000 and $50,000 / year, based on the median US home price of ~$375,000. Which means, the average Realtor is selling less than 10 homes per year, <1 per month. So there's volatility. Some quick math: On $375,000, @ 2.5% commission = $9,375 (Gross Commission Income or GCI), then @ a 70% split with the brokerage, that's ~$6,500 net to you. As you sell more, your split with the company increases, allowing you to keep more of the total commission.
I'm not sure what Splits are offered in your area, but if you are considering a career, you should interview several large national firms as well as independent firms and see what they're all about, what their commission schedule looks like, and what fees you owe them to hang your license.
Let's say you're better than average, there will be months where you kill it and close several transactions, and there will be months where you don't close any. So how you manage your income/expenses and cash flow is really important in this business. Also note, you should expect to invest money into your business for marketing, lead generation, licensing, continuing education, etc., so plan to be in the red for the initial part of your career, and that you have a nest egg set aside so that you are not forced out of the business to take a full-time salaried job just because you needed the money.
Hope that's helpful!! Good luck
Thank you so much for the advice.
Josh
Dexter Arver
Senior Manager, Web Applications
234
Answers
San Jose, California
Updated
Dexter’s Answer
Hi Josh,
Because real estate agents earn a percentage based on the properties they sell, it depends on how many places you sell and if you're splitting that commission with anyone else.
I think the first agent that I worked with to buy property in my past life said he sold an average of 20 homes a year. Given that agents earn 3% and that properties around where I live used to go for 250-500k, lets guess that he earned 150-300k a year. Now, he worked for a real estate company, so I think they take either a percentage or a fixed amount for every sale for use of the office space, listing, etc, so I'm sure the guess I had above is a bit too high.
I've also heard from a friend that works for a hot shot agent, who sells 100-200 homes a year, where the value of homes is around 500k-2 million dollars. But I think he's in the top 100 of top real estate agents in the US. This same friend who is familiar with this industry told me that the average agent sells less than 5 homes every year.
Lastly, I would say that the ability to sell a home depends much on sales skills, reputation, and luck, so I'm sure there will be periods where you sell a lot of homes and you'd be feeling like a million dollars, and times where life could be hard. I suppose this is similar to lots of other sales commission jobs.
Anyways, I wish you luck! I hope this was helpful.
--
Dexter
Because real estate agents earn a percentage based on the properties they sell, it depends on how many places you sell and if you're splitting that commission with anyone else.
I think the first agent that I worked with to buy property in my past life said he sold an average of 20 homes a year. Given that agents earn 3% and that properties around where I live used to go for 250-500k, lets guess that he earned 150-300k a year. Now, he worked for a real estate company, so I think they take either a percentage or a fixed amount for every sale for use of the office space, listing, etc, so I'm sure the guess I had above is a bit too high.
I've also heard from a friend that works for a hot shot agent, who sells 100-200 homes a year, where the value of homes is around 500k-2 million dollars. But I think he's in the top 100 of top real estate agents in the US. This same friend who is familiar with this industry told me that the average agent sells less than 5 homes every year.
Lastly, I would say that the ability to sell a home depends much on sales skills, reputation, and luck, so I'm sure there will be periods where you sell a lot of homes and you'd be feeling like a million dollars, and times where life could be hard. I suppose this is similar to lots of other sales commission jobs.
Anyways, I wish you luck! I hope this was helpful.
--
Dexter
Thank you, this is really helpful.
Josh