Posted On: October 10, 2024

Real Estate Broker Salary: How Much Does a Broker Make?

There are generally two distinct roles that exist in the real estate industry: agents and brokers. Although these terms are sometimes used interchangeably, their responsibilities differ significantly, leading to a wider salary range between the two.

This blog will explore the salaries of real estate brokers and the factors that could influence their income.

AGENT VS. BROKER: WHAT’S THE DIFFERENCE?

Before diving into salaries, it's important to understand the difference between real estate agents and brokers. Real estate agents, sometimes referred to as salespeople or just “agents,” are licensed professionals who work under the supervision of a broker. They assist clients with buying, selling, or leasing properties, conducting market research, property showings, and negotiations.

Real estate brokers, on the other hand, operate at a higher level. They possess a more comprehensive license, granting them the authority to not only conduct real estate transactions themselves but also to manage and oversee a team of real estate agents. Brokers often own or operate their own real estate brokerage firms, taking on additional responsibilities like marketing, office management, and ensuring their agents comply with legal and ethical regulations.

WHY DO BROKERS EARN MORE?

The broader scope of responsibilities and the ability to manage their own businesses contribute significantly to the higher earning potential of real estate brokers. Brokers typically earn more for several reasons:

  • Leadership and Management Skills: Running a successful brokerage requires strong leadership and management skills. Brokers oversee agents, delegate tasks, and ensure smooth operation within their firms. This expertise commands a higher premium in the market.
  • Business Acumen: Brokers manage the financial aspects of their businesses. They are responsible for marketing, budgeting, and profitability. Their success is directly tied to the brokerage's bottom line.
  • Increased Revenue Streams: Brokers can participate in profit-sharing agreements with their agents, generating additional income. They may also earn referral fees for directing clients to other specialists like mortgage lenders or attorneys.
  • Experience and Expertise: To qualify for a broker's license, individuals typically need more experience than real estate agents. This translates to a deeper understanding of the market, negotiation tactics, and legal complexities, enhancing their value to clients and commanding higher fees.

REAL ESTATE BROKER SALARIES

Now, let's delve into the nitty-gritty: the actual salary range for real estate brokers. According to the Bureau of Labor Statistics (BLS), median annual wages for real estate brokers in May 2023 were about $97,000. However, it's important to remember that this is just a median, meaning half of all brokers earned more and half earned less.

FACTORS AFFECTING BROKER SALARIES

Several factors can significantly impact a real estate broker's salary:

  • Location: Real estate markets vary geographically. Brokers operating in high-cost areas with a high volume of transactions can potentially earn more than those in slower markets.
  • Experience: As with most professions, experience plays a crucial role. Seasoned brokers with a proven track record and a strong network of clients can command higher fees.
  • Brokerage Size and Structure: Brokers running large, successful firms with multiple agents may earn more than those with smaller operations. Additionally, commission structures within brokerages can vary, impacting individual broker income.
  • Sales Volume: A broker's income is often directly tied to the total value of properties they buy and sell. High-performing brokers with a consistent stream of high-value transactions naturally earn more.

BEYOND SALARY: THE BROKER’S ROAD TO SUCCESS

While financial rewards are certainly a motivator, a successful career as a real estate broker offers more than just a high salary. It provides the opportunity to build a fulfilling business, become a leader in your community, and help people achieve the dream of homeownership.

If you're passionate about real estate, possess strong business acumen, and thrive in a leadership role, then pursuing a career as a real estate broker might be the perfect path for you.

READY TO TAKE THE FIRST STEP?

The path to becoming a real estate broker starts with getting your real estate license. Our pre-licensing courses will teach you everything you need to know about the industry and prepare you for your licensing exam. Head on over to our website to get started today!

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Lies, Darn Lies, and Statistics

Semantics aside, there are a lot of ways to slice salary stats.

Since real estate is commission-based, different professionals can make wildly different amounts. There are extreme outliers. As a result, the mathematical average (the mean) is misleadingly high in many cases. The guy that makes $2 billion a year, for example, really wrecks the curve.

An average is still useful so we're including it, but we're going to give you two other pieces of information that paint a more realistic picture.

There's what we're calling:

  • The "typical" salary, which represents the "middle half" of salaries
    • The lower bound is the 25th percentile
    • The upper bound is the 75th percentile
  • What "most" agents or brokers make, which throws out the highest and lowest 10%
    • The lower bound is the 10th percentile
    • The upper bound is the 90th percentile

Realtor vs Real Estate Agent vs Real Estate Broker

"Realtor" may be the quickest way to identify the profession, but it's actually a registered trademark for a member of the National Association of REALTORS® (NAR). The generic term is "real estate agent," but some REALTORS® are "real estate brokers," instead.

What's the difference?

In most states, the starter level of real estate license is called real estate agent or sales agent. Agents can handle real estate transactions but need to work under the supervision of a broker. The broker-level license gives the licensee additional roles and responsibilities, like handling the money.

To make matters more confusing, though, some people use "real estate broker" as an umbrella term, because what they do is broker real estate. Plus, a few states (like Washington) call their entry-level license Broker and their next-level license Supervising Broker.

In this article, we're using the "most states" definitions of these terms.

Real Estate Agent Salary

The local real estate market, the type of real estate, and productivity all impact a real estate agent's salary

What Affects a Real Estate Agent's Salary?

A sales agent's annual income is a percentage of the total value of what they sell. There are a lot of things that influence that number, but the main factors in a real estate agent's salary are the commission percentage, the number of transactions, and the value of each transaction.

Contract Terms

For each real estate transaction, the property seller has to enter into an agreement with the real estate agent, and in theory, each of these agreements can have its own unique commission percentage. In reality, it's usually 5-6%.

However, the seller's agent doesn't get the entire commission. Their brokerage handles the transaction, takes their cut, and then pays out the agent's cut. This is called a commission split, and the exact portion varies based on an agent's broker contract.

There are three main types of commission splits. According to the 2021 NAR member profile:

  • 37% of REALTORS® make their living under a fixed commission split. In other words, the brokerage and agent get the same percentage of the commission for each transaction.
  • 23% get a graduated commission split, in which the agent's percentage increases the more money they bring to the firm.
  • 15% have a capped commission split, where they get a certain percentage until they hit their limit. After the cap, the firm takes 100%.

Buyer's agents and desk fees complicate matters further. You can learn more in our article about how commission splits work.

Your Niche

If the real estate you're selling is more expensive, you'll make more money per transaction. That's why your niche as a real estate agent directly affects your income.

The biggest split is commercial versus residential property. Commercial real estate agents make a lot more dough but need a lot more education to get started.

Within each of those categories, though, there are many ways to specialize. You can target specific types of property, specific types of clients, or some combination of both. "Niching down" makes it easier to become an expert and recruit clientele, so choosing a niche can be more lucrative than being a generalist. However, some niches have more potential for income than others.

Your Hustle

Effort and skill make a big difference in how many transactions you handle and close. The more transactions you close, the more you'll earn. You'll close more transactions with more hours, more efficiency, and more experience.

We can see in the 2021 NAR member profile that how much REALTORS® make increases with their years of experience. NAR members' self-reported median gross income is:

  • $43,330 for all members (who have an average experience level of 8 years)
  • $75,000 with 16 years of experience or more

How Much Does The Average Real Estate Agent Make in the US?

According to the U.S. Bureau of Labor Statistics, the mean annual income for real estate sales agents in the US is $62,990.

The typical yearly income falls between $33,370 and $76,720, and most agents make more than $25,100 but less than $112,410.

How Much Does A Real Estate Agent Make In Each State?

 

Typical Real Estate Agent Salary is Between

Most Real Estate Agents Make Between

Average (Mean) Agent Salary

 

 

 

 

National

$33,370

$76,720

$25,100

$112,410

$62,990

Alabama

$36,660

$63,620

$19,470

$85,100

$52,990

Alaska

$61,860

$90,680

$46,820

$105,420

$75,860

Arizona

$28,900

$73,000

$25,380

$101,040

$55,580

California

$40,660

$89,280

$30,610

$134,370

$76,750

Colorado

$40,940

$110,210

$28,520

$138,250

$81,210

Connecticut

$37,820

$84,050

$33,660

$181,280

$78,540

Delaware

$31,110

$60,680

$27,770

$83,410

$49,490

D.C.

$39,200

$90,570

$35,660

$116,350

$64,420

Florida

$29,430

$70,660

$19,990

$119,840

$61,120

Georgia

$32,420

$70,490

$24,230

$104,720

$69,150

Hawaii

$55,220

$100,210

$34,990

$115,580

$74,820

Illinois

$20,280

$51,040

$19,560

$89,230

$44,840

Indiana

$30,070

$55,120

$25,450

$92,590

$47,410

Iowa

$32,400

$68,150

$19,640

$96,090

$54,880

Kansas

$24,320

$73,710

$18,940

$109,610

$57,500

Kentucky

$31,290

$78,410

$19,130

$104,390

$53,030

Louisiana

$23,860

$51,660

$19,790

$81,620

$50,760

Maine

$37,340

$97,320

$29,470

$125,340

$65,180

Maryland

$33,670

$63,510

$27,610

$94,960

$54,250

Massachusetts

$51,780

$100,100

$35,800

$185,330

$94,170

Michigan

$33,860

$83,490

$27,760

$104,380

$62,500

Minnesota

$29,100

$60,560

$22,990

$79,220

$46,760

Missouri

$31,850

$75,430

$19,720

$89,850

$60,330

Nebraska

$29,130

$72,250

$19,860

$100,250

$52,650

Nevada

$38,330

$80,350

$29,150

$101,460

$65,180

New Hampshire

$36,170

$61,320

$20,850

$73,890

$52,450

New Jersey

$43,350

$66,880

$35,810

$143,230

$69,660

New Mexico

$41,580

$76,340

$27,040

$84,150

$58,870

New York

$52,930

$130,220

$39,740

$190,550

$102,200

North Carolina

$32,420

$63,770

$24,550

$92,090

$52,800

North Dakota

$55,100

$78,900

$37,900

$92,070

$66,270

Ohio

$30,090

$61,410

$22,370

$89,320

$49,120

Oklahoma

$31,040

$81,650

$22,580

$130,500

$66,400

Oregon

$33,170

$64,260

$27,390

$106,700

$54,790

Pennsylvania

$40,030

$66,730

$32,040

$93,790

$57,420

Rhode Island

$43,810

$62,670

$31,860

$143,740

$67,020

South Carolina

$29,260

$51,280

$19,840

$69,080

$45,550

Tennessee

$29,150

$58,600

$25,650

$81,850

$48,840

Texas

$35,680

$82,250

$28,270

$112,900

$63,780

Utah

$30,440

$79,000

$21,180

$147,710

$72,280

Vermont

$55,070

$64,280

$47,790

$74,320

$59,780

Virginia

$37,610

$79,540

$24,010

$111,040

$66,980

Washington

$42,490

$84,010

$35,750

$121,420

$69,700

West Virginia

$35,030

$95,060

$26,470

$106,860

$66,280

Wisconsin

$30,800

$53,230

$24,810

$76,070

$47,990

Wyoming

$29,760

$83,510

$18,200

$126,330

$65,190

Ready to Start Your Real Estate Career?

Now that you know what you stand to make, are you in?

In many states, you can be licensed as a real estate agent within 6 months. You can minimize your costs and speed up the process by taking quality pre-license courses online.

We offer online, state-approved pre-license packages with exam prep – start learning today!

Already an agent and looking to level up your license and your income? We offer broker pre-license education in Texas and broker exam prep in many other states.

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