If you’re considering a career change, real estate can look pretty appealing. You get fairly flexible hours. You get to see lots of houses and help people make one of the biggest transitions in their lives. And the money is pretty good — right?
That’s the big question. Before you decide to pick up a career in real estate, you want to make sure you’ll be able to earn a decent living. So how much money can you make in real estate? Does it vary based on where you live, your license type, and your specialty (i.e., buyer’s vs. seller’s agents)? That’s what we’re here to find out.
Getting a real estate license isn’t overly hard, but it’s not the easiest process, either. So before you take your pre-license education hours or start studying for your real estate exam, you want to make sure it will all be worth it.
Yes, a career in real estate can be rewarding. But will it pay the bills? For the answer, here’s your real estate agent and broker salary guide.
Before we get into numbers here, it’s first helpful to understand how, exactly, real estate agents get paid.
Generally, speaking, if you’re a real estate agent, you’ll make a commission on any home sales you close. You can earn your commission by helping someone sell their house (working as a seller’s agent) or helping someone find their next home (working as a buyer’s agent).
In either case, when the home transaction closes, you and the other agent get a percentage of that money. The standard real estate agent commission is about 6%, which you and the other agent normally split evenly. That leaves you with about 3% of the home purchase price.
Still, though, don’t expect to be able to pocket your portion in full. As an agent, you need to work under a real estate broker. And you’ll likely need to give their brokerage a cut of your commission.
So, basically, there are some key factors that determine how much money you can make in real estate:
Generally, as you get more experience, you’ll get more listings or clients and you’ll get to work on bigger transactions. That means you can expect your real estate agent salary to creep up over time.
Now, to brass tacks. We pulled from a couple of resources here to make sure we’re giving you accurate information. Payscale says the average real estate agent salary falls right around $48,600, while Salary.com says you’re looking at a little less, with an average of $47,900.
So how much do real estate agents make? It depends on home prices where you live, your experience level, and more, but the average real estate agent salary looks like it’s right around $48,000.
Brokers can earn a commission on home sales just like an agent, but they can also earn money from the agents working under them. How much of their commission you pocket depends on the rates at your brokerage. Higher rates mean you can earn more, but lower rates make you more attractive to agents, which can help you bring top talent to your brokerage.
Ultimately, it’s a balancing act.
Still, though, you’re probably wondering about the average real estate broker salary. At the broker level, you can expect to earn significantly more than you would as an agent. Payscale says you’re looking at a little more than $57,000 a year, while Indeed puts you a fair chunk higher, with an average of more than $68,000.
Ultimately, your broker salary will vary based on how many deals you’re closing yourself and the number and skill level of the agents working for your brokerage.
Because real estate salaries are commission-based, they fluctuate with home prices in the area. For simplicity’s sake, let’s say you pocket 3% of homes you close. If the average home in your area is selling for $200,000, you’re looking at making around $6,000 per transaction. But if you live in Southern California, say, where average home prices might be closer to $800,000, you’re making something more like $24,000 per home.
To help you get a handle on home prices by area, we looked at several states across the country:
You can expect to make about $40,000 as a real estate agent in Alabama.
Similarly, Florida real estate agents earn just north of $40,000, on average.
In Michigan, you’ll earn a little more, with the average real estate agent salary nearing $43,000.
Oregon’s in a similar range, with real estate agent salaries averaging at about $42,700.
Texas falls right in the middle, with agents earning an average salary of just over $42,000.
Now, you know roughly how much real estate agents make. But you might be wondering if you can earn more working as either a buyer’s or seller’s agent.
In almost all transactions, the seller is the one that pays the commission. So how do buyer’s agents get paid? Simple: the seller’s agent splits the commission with them, usually right down the middle.
Because it’s standard practice to share commissions, there usually isn’t a financial advantage to choosing to represent sellers or buyers. It’s a matter of preference. Would you rather get to know a specific property and its owner, or would you prefer to work with a person or family to compare multiple options?
The choice is yours. Either way, you can rest easy knowing that real estate agents earn a decent living.
If you’re ready to start working toward getting your real estate license, some states let you take your pre-license education hours online to kick off the process - go here to learn more and sign up today.