How Much Do Real Estate Agents Earn?
The majority of real estate agents are paid through the listing agreement that is signed by both the seller and listing agent. Listing agreements are signed for both houses for sale and property for rent. This agent signs for the brokerage. Then, a part of the commission is given to the real estate agent who is representing the buyers. Because all commissions are paid to the broker, they are typically negotiable. The seller is in charge of controlling how much the buyer’s agent is paid.
A commission can vary depending on the negotiations. Usually, they fall between 1 and 10 percent of the sales price for the home. For an example to better demonstrate this, imagine you are a brokerage that just sold a house for $200,000. The total commission that is granted for this sell is 7 percent. Therefore, that would provide $14,000 total. $7,000 would be kept by your brokerage, while the listing agent is paid the other half on a split with the buying agent. The agents would have a gross income on this sale of $4,200.
Many people believe that real estate agents are able to sell many houses within a year and have huge salaries. However, the majority of agents sell only four to six homes every year. Doing the math, that would make the gross income for a year’s work around $18,000 to $24,000. That does not take out the necessary federal and state taxes, so the amount would decrease even further.
Income does tend to vary among the many types of real estate agents out there though. Of course, the top sellers make much more than the average. It is not unheard of to have a top real estate producer earn about $200,000 each year gross. Each office has their standards for these individuals, but they usually need to sell a home every month to qualify.
Real estate agents typically do not enter into this career looking to get rich overnight. Most first-year agents earn very little in income, because they are learning the business and gaining client contacts. But, as an agent gets more satisfied clients, the amount of commission and referrals steadily rises. How much these agents make depends highly on the amount of work they put in. The more homes sold and properties rented, the higher their income will be.