There’s money to be made in real estate, and if you’re thinking of becoming one of the people who make it, you may have considered becoming a real estate agent. If not, you might be curious about how much an agent makes from a prospective buyer’s or home seller’s standpoint.
No matter why you’re interested, the team at Harris Real Estate University is here to shed light on how much real estate agents make on each sale, what the annual real estate agent salary looks like, and what it takes to become a real estate agent in today’s market.
For new agents and experienced agents both, let’s discuss how much you can expect to make from your average real estate transactions.
So, You Want To Be a Real Estate Agent?
Becoming a real estate agent is appealing to many people. Without obtaining a four-year degree or doctorate, you can make an incredibly-high average salary and work as a professional. Quite frankly, there’s not much about that scenario that isn’t enticing.
If you want to become a real estate agent, you should know that it’s a tough job that requires a lot of self-motivation and drive. The rewards are worth the effort, but there are some qualifications that you’ll want to address before you decide whether or not this career is right for you.
Office Hours: Expenses
As a real estate agent, you won’t work a regular 9-5. While you will spend time in the office filing papers, contacting other agents, writing contracts and other documents, and marketing, you’ll be in your car a lot. Basically, you’ll be paying your dues all the way up to taking down the “For Sale” sign and collecting your earnings.
Additionally, you’ll work almost every weekend, and work in the evenings as well. You’ll be subject to your clients’ schedules since you cater to their needs. If your homebuyer wants to view a property and can only leave work after 6:00 p.m. on a Saturday, that’s when you’ll view the property.
You Create Your Own Income
Even if you work for a brokerage, you’ll have a lot of control over how much money you earn. Starting in your new career, it may seem hard to find potential clients and earn a steady living. But, there’s unlimited and untapped potential in the real estate market just waiting to be discovered.
Your income will be decided by the number of transactions you close. In other words, each time you represent a buyer, seller, or landlord in a transaction, you’ll earn a commission. The average real estate commission is often based on the home price and other factors (like closing costs), but the percentage is never set in stone.
You Love People
Interacting with the public is a skill that is great to have if you’re considering becoming an agent, but it’s also something that can be learned. The coaching staff at Harris Real Estate University even offer scripts that can help you guide conversations, overcome objections, and engage in better, sales-driven conversations.
If you already enjoy working with people, you’ll build on this fundamental character trait and learn how to earn business from people you already know. You’ll also learn how to network to maximize your client database.
Real Estate Interests You
You don’t have to be a real estate mogul to take an interest in properties, investing, and matching buyers to their dream homes. Compassion and interest in the market, your clients, and their needs will take you far in your career as a real estate agent, but being interested in real estate is an excellent jumping-off point.
How Much Do Real Estate Agents Make?
Real estate agents are typically paid on a commission-only basis. That means you don’t make money or get paid unless you close the sale and purchase of a home or a lease agreement. A base salary is rare, as is a realtor requesting a flat fee.
Residential Real Estate Agents
Agents who focus their business on selling residential real estate make money in two ways:
- Representing a seller. When a seller wants to sell their property, they’ll contact a real estate agent to represent them. The listing agent will do everything from giving them advice on staging their home to sitting with them at the closing table.
- Representing a buyer. Buyers who are looking for a new home will hire you to represent them and help them find the perfect place. You’ll show them properties, help them negotiate an offer, and attend the closing to ensure there are no last-minute snafus.
If you become a real estate broker, you can proffer both sides of the transaction. Commission rates are up to negotiation, but the generally accepted amount falls between 6-7%. The average commission is split between the seller’s agent and the buyer’s agent, so you can expect to make between 3-3.5% of the sales price of the property on each transaction.
Commercial Real Estate Agents
In most of the United States, you don’t need a special real estate license to work as a commercial real estate agent, but you do need additional training to know what you’re doing. Commercial real estate agents help owners sell, buy, and lease properties that are used to earn income.
Commercial real estate agents can expect to make somewhere average incomes between $85,000 and $114,000 once they are experienced and have built a good client base.
It’s much harder to get your foot in the door as a commercial real estate agent. Additionally, sales take a lot longer, contracts are repeatedly renegotiated, and the laws that govern commercial transactions are wildly different from the laws that govern residential transactions.
Another way to make real estate agent commissions is by helping a landlord find a tenant or bringing a tenant to a landlord. In larger cities, like New York City, it’s more common to find real estate agents who earn commission on lease agreements.
Although your commission will differ from location to location, you can expect to earn a percentage of the lease amount, although every situation is unique. For instance, 10% of the total yearly amount of the lease may be collected by the real estate agent who closes the transaction.
Average Real Estate Agent Commissions: Unpredictable Profits
It’s hard to give an “average” salary of a real estate agent because there are so many variables. Where you live, market trends, the amount of time you spend marketing and investing in your business, and how you negotiate your commission all determine how much you’ll be able to make. Part-time workers may earn less than their counterparts.
Real estate agents who are successful are so because they’ve put in the hours, been determined, and learned the business. Curious how you can become a real estate agent? It’s as simple as investing some time and taking an exam.
How To Become a Real Estate Agent
Each state has laws that govern how real estate agents are licensed. Usually, you are required to earn a certain amount of pre-licensing hours by doing related coursework. Once you’ve completed the coursework, you can take your state’s real estate licensing exam.
After you’ve passed the exam, you may need to complete additional continuing education hours before you can practice as a real estate agent. Once you’ve completed your coursework, you can begin working as a real estate agent.
You’ll initially be working for a broker or a brokerage. If you decide to obtain your broker’s license, later on, that’s an option that can potentially help you grow your career. The agent’s brokerage takes part of the total commission based on the listing price and negotiations.
Don’t Wait To Educate
The world of real estate is complex, and determining how to keep your head above water is often the first order of business for extremely green agents. If you feel like you’re sinking (whether you’re new or just hitting a plateau in your once-thriving business), we can help.
The Tim and Julie Real Estate Coaching method has given thousands of agents just like you a firmer foundation in their careers and the ability to earn more money. Our coaching plans help you:
- Learn the business. From coaches who are experienced, agent-obsessed, and truly want to see you succeed.
- Generate leads. Our system of lead generation is unmatched, and we have countless agents who use it to increase their success.
- Engage in better, sales-driven conversations with prospect scripts, objection handlers, and preapproval scripts. You’ll never feel at a loss for words, no matter the scenario.
- Connect to a community of like-minded, part and full-time real estate professionals who are eager to help one another become successful.
- Retrain your mind. Your potential is largely driven by your mindset. Our daily coaching calls and podcasts offer the information you need to reframe the way you approach the real estate industry and your own business.
Hopping on board with the Harris Real Estate University team is simple, effective, and provides you with a tool kit you’ll want to maximize your success.
Grow Your Home Sales, Grow Your Income
Real estate agents make money by representing buyers, sellers, landlords, tenants, and investors in the purchase and sale of properties. The only limiting factor to how much you can earn is the amount of time and passion you want to put into your career.
For the best and most effective ways to increase your earning potential, find new clients, and uncover untapped sources of income in the ever-changing real estate market, trust the professionals with years of experience at Harris Real Estate University.