Compensation is one of the most important considerations for most people when choosing between careers. As a result, it stands to reason that people who are thinking about becoming real estate agents will want to know more about what real estate agents can expect to make. However, this isn’t a simple and straightforward question, meaning there are a number of important things to keep in mind.
First, most real estate agents are paid through a commission-based system. This means that most real estate agents are paid a part of the sale price for each real estate property that is sold. Most times, this is based on a percentage. However, there are cases when real estate agents are paid a flat fee per sale as well. With that said, it is important to mention something about the relationship between real estate brokers and real estate agents here for interested individuals to get the full picture.
In short, real estate agents are not permitted to work on their own. Moreover, they are not permitted to be paid a commission by the real estate consumer in a direct manner. Instead, real estate agents have to work for a real estate broker, who will receive the commission from the real estate consumer before sharing part of it with the real estate agent. The percentage allocated to the real estate broker as well as the percentages allocated to the real estate agents involved in the transaction can see huge variation, with some examples ranging from 40 percent going to the real estate agent to 100 percent going to the real estate agent. With that said, there are some sources that have stated that a 50/50 split is considered traditional, meaning that this figure can serve as a useful guideline.
Having said this, it is interesting to note that there are some real estate brokers who pay their real estate agents a salary. Of course, the downside is that said individuals can expect a much smaller share of the commissions, meaning that there is something of a tradeoff between risk and reward. Both options have their upsides and downsides, but at the end of the day, which one is better for a real estate agent depends on their personal tolerance for risk as well as their real estate expertise and experience. After all, an established real estate agent who has built up the right connections can expect a much easier time making sales, whereas someone who is just starting out can expect no such thing.
How Much Can a Real Estate Agent Expect to Be Paid?
As for how much real estate agents can make, well, suffice to say that there is a lot of variation. Payscale.com claims that the average real estate agent can make an average of around $46,000 on an annual basis. However, this covers everyone from newbies to those who have been in their chosen careers for decades and decades, meaning that it can be useful to take a deeper look as well.
For instance, the average for real estate agents with less than five years’ worth of experience is $44,000. In contrast, the average for a real estate agent with somewhere between five and ten years’ worth of experience is $60,000, while the average for a real estate agent with somewhere between ten and twenty years’ worth of experience is $62,000. At the very top, real estate agents with more than twenty years’ worth of time have an average of $75,000, which is a huge increase compared to their counterparts at the bottom. And of course there are the outliers who are millionaires. However, the fact that the average for real estate agents as a whole is $46,000 should make it very clear just how few people manage to make it to such heights.
Summed up, the average real estate agent makes something along the lines of $46,000 on an annual basis. However, this is not necessarily a good indication of what an interested individual can expect to make because a great deal will depend on their own capabilities. Simply put, someone who is good at being a real estate agent can make much more than someone who is just starting out because that is how the commission system works out. On the one hand, this can mean a fair amount of risk for real estate agents; on the other hand, this can mean plenty of opportunities for those who are just rearing to go out and claim them.