Real estate salespeople salaries vary by region, state, and city. Income comes largely from commissions from sales, and different brokerage firms have different brokerage fees and commission structures. An agent’s commission is a percentage of the final sales price for closed sales. What an agent makes is also determined by experience, effort, hours worked, and the number of transactions closed.
The National Association of REALTORs found the median gross income of REALTORS was $39,200 in 2015. A REALTOR with 16 years of experience has a median gross income of $73,400.
So, “How much does a real estate agent make?” isn’t a simple question.
Here are five factors that can affect a real estate agent’s income:
The level of commitment an agent has to put in the time and effort has a big impact on salary. Agents who make real estate a full-time career earn more. True commitment involves:
- Constant learning
- Tireless prospecting
- Becoming a local expert
- Diversifying marketing
- Following the market trends
- Expanding skills
- Cultivating networks
- Following up on leads
- Smart time and resource management
- Using support staff and tools effectively
- Mastering the relevant technology
2. The Brokerage Firm
Fees and commission splits vary by firm and operate on different models. There may be a consistent split, tiered split, or 100% real estate agent commission. A firm may charge agents desk fees, transaction fees, and office supply fees. Other firms offer profit sharing, bonuses, or set salaries.
Another way the brokerage firm you’ve signed on with can affect your income is less direct. The reputation, culture, and customs of a firm can influence how much money its agents take home. The following firm-specific factors can mean more income:
- Impressive reputation in the area
- Clerical support
- Firm marketing
- In-house listings
- Client reviews and testimonials
- Training and mentorship
- Resources like web tools, photographers, and lead generation
3. State and National Economy
As we saw with the subprime lending crisis, the national economy can have an effect on real estate markets across the country. Interest rates and loan qualifying standards affect how many people can buy property. The supply of materials and labor can affect the supply of houses. Federal and state laws and regulations also influence the industry.
If unemployment is high and wages are stagnant, fewer people will feel confident enough to buy a house and take on a large amount of debt.
This is beyond state market factors. Different cities and neighborhoods in the same state can have vastly different home prices. Demographics, foreclosures, and inventory in an area can influence home prices and days on the market.
If you’re selling more expensive properties, you’ll likely make more money. An agent in Malibu, California may routinely close $20 million deals while a Missouri agent may average $200,000 houses.
Remember that stat earlier about an agent with 16 years of experience making a lot more that a new agent? The more experience you have, the more money you make. The more years in the business, the more you’ve learned and improved your skills and processes. Years in the same real estate market also yield a larger sphere of influence, which means more repeat clients, more referrals, and more leads.
Experienced agents are often brokers with their own firm who get a larger split of the commissions. And they have a lot of local exposure and impressive reputations that draw more and better clients. Buyers and sellers often prefer agents with more experience and demonstrated expertise in the local market. Experienced agents also may have a secondary specialty like property management and commercial real estate.
There are some income factors you can’t change. But one you do have control over is commitment. Real estate is one of those industries where success depends largely on the drive, hard work, and persistence of individual agents.
One smart way to expand your knowledge and skills as a full-time agent is with online real estate courses from 360training.com. Anytime you want, anywhere you have internet, you can access and complete all the training you need to get and keep your real estate license. Enroll in super convenient courses today!