How do Real Estate Agents Make Money?

Many people think of real estate agents as chauffeurs. Agents drive prospective buyers all around town, show them houses for sale and hopefully after a few weeks of searching, the buyers decide on a house. Driving buyers around can be part of the real estate business, but there are many ways for agents to make money. I have not had a buyer in my car for years, and even when I worked with a lot of buyers, they were rarely in my car. Most buyers have a car and are perfectly capable of driving it to see a few houses, don’t think being a chauffeur and an agent are the same thing. When agents become super successful, they realize how valuable their time is. Many agents start their own team or strictly work with listings as their career develops. One of the great things about being an agent is you can make it a business and there are many ways to make a living.

How do real estate agents get paid?

Most real estate agents work on commission. They only get paid when they sell a house. If you happen to be one of those agents driving buyers around all day long and those buyers never buy a house, you are working for free, well actually you are paying to work because of the gas you are wasting. People think that agents make a ton of money because the commissions can be high when a sale is completed. But people do not realize how much time agents spend on marketing, on prospecting, on training and on driving buyers around. Do not get scared off from real estate if you are a prospective agent! Yes, you can spend a lot of time on tasks without getting a pay check, but if you become a great agent you can make an awesome living. Here is more information on how real estate agents make money.

How does a real estate agent make money working with buyers?

The most common way for a real estate agent to make money is as a buyer’s agent. A buyer’s agent works primarily with people looking to buy a house. The agent will look up houses for sale, show houses, write offers on houses for buyers and help the buyers throughout the transaction. Buyer’s agents will also work with sellers as well, but mostly when a buyer they are working with needs to sell their house to buy a new home.

It is possible to make good money as a buyer’s agent, but you are limited by how many buyers you can work with, because it takes a lot of time to work with buyers. For each buyer you must find the houses, show the houses and write offers on the houses before the escrow process starts. It can take hours and hours to show homes to a buyer before they find one that is suitable. This is one reason why real estate agents make so much money on each sale.

How do real estate agents make money by listing homes for sellers?

Another great way to make money as a real estate agent is by listing homes for sellers. A listing agent has a much different job than a buyer’s agent. The listing agent helps sellers price their home, get it ready to sell, list the home in MLS, negotiate offers and complete the transaction process. Here is a great article on how to get a house ready to sell. Listing agents can make a lot of money because not as many hours are required to list a house as are required to help buyers buy a home. The trick to being a successful listing agent is finding a steady stream of sellers who want to sell their home.

How do real estate agents make money by selling REOs and HUD homes?

I specialize in selling REO listings and HUD homes. I have a great article on what it takes to become an REO agent here. I also offer an REO starter kit to help agents learn how to sell REO listings and how to get REO listings from banks, asset management companies and hedge funds. REOs are homes that have been foreclosed on and the bank took possession of that home. The banks will assign these listings to REO agents to maintain, market and sell. The REO agent has many responsibilities since the owner of the home is usually in another state and will never see the home. REOs can be a great source of income due to the steady stream of listings that come to a successful REO agent.

If you are interested in getting your license, a couple of agents on my team got their license through Real Estate Express. The online school has great prices and classes in all 50 states.

How do real estate agents make money selling short sales?

Short sales are homes owned by homeowners, but the homeowner cannot sell the home for enough money to pay off what is owed on the home. The seller has to sell the home for less than the bank is owed and convince the bank to take less money. The listing agent has to help the sellers list the home similar to a traditional listing, but the agent also has to help the seller communicate with the bank. The bank will need a ton of paperwork from the seller and may take weeks or even months to make a decision on whether to accept an offer. There are many tax and legal implications with a short sale that an agent needs to be familiar with. Here is an article with more details on the legal implications. 

Making money as a real estate agent by completing broker price opinions (BPOs)

BPOs are reports completed by licensed agents that are similar to an appraisal. However, appraisals can only be completed by licensed appraisers and are much more detailed than a BPO. A BPO is a report used to value homes and consists of three sales and active comparable homes that are similar to the property you are valuing. There is also commentary and other statistics that need to be provided in the BPO. The price paid for BPOs to the real estate agent can range from $30 to over $100. BPOs require an inspection of the home with some BPOs requiring just exterior pictures and others requiring interior photos. I also explain how to get into the BPO business in my REO starter kit.

How do property managers make money?

Property managers manage rental properties for investors or other home owners. They find renters, manage maintenance and repairs, collect rent and keep track of accounting. Property managers usually get paid a monthly percentage of the rents collected with 10 percent being a common figure. They can also charge leasing fees or other fees associated with the management of properties. It takes a lot of properties under management to make a lot of money as a property manager. The best part about being a property manager is you can create consistent income that comes in every month.

Making money as a commercial real estate agent

Commercial real estate is a whole different game than residential. Many commercial agents will work at a large firm to learn the trade and may work for a salary, while residential agents typically work for commissions. Commercial properties can sell for much more than residential, but it can take a very long time for them to sell. It takes much more knowledge to sell commercial real estate due to the valuation process, which is much more involved. Instead of using the comparable sales approach which is used for most residential properties, most commercial properties are valued based in their income and expenses. Commercial real estate is not my specialty so I have a link with much more information here.

How to make more money as a real estate agent by running a team

Running a real estate team is one of the most profitable ways to make money in real estate. I think the key to long-term wealth is setting up business that can run without me and offer me a nice income. In real estate, the easiest way to set up your business is to create a team of real estate agents. I run a team with buyer’s agents as well as staff to help the buyer’s agents and myself. As the team leader I get a cut of each sale my team makes. I also pay many of their expenses and advertising, but their sales more than make up for those expenses.

It takes time to build your business up to a point where you can add agents to your team, but it is well worth it. To run a team you also need a reason for agents to join your team. I am able to offer many buyers leads through my REO listings and we also use many other techniques to generate leads. The more listings you have as an agent, the more buyer’s leads you will get off your listings. That is another reason it is nice to be a listing agent and not a buyer’s agent.

How to start a real estate team.

For more information on how to become a great real estate agent, check out my E book: How to Make it Big in Real Estate, From a Millionaire Agent available at Amazon as a 125 page E book or in PDF.  

Making money as a real estate agent by being a broker

Every agent must work under a managing broker if they are not a broker themselves. I have a much more in-depth article on what a broker does and getting started as a real estate agent here. Being the broker means you are in charge of all the agents in your office and running the office. You must make sure everyone is acting legally and take care of any disputes or problems. Some brokers run large offices with hundreds of agents and some brokers just have a couple of agents. The broker usually gets a percentage of their agent’s commissions and may get desk fees or advertising money from their agents. Most states require real estate agents to be licensed for a certain amount of time before they can be a broker.

How can investors save money by being real estate agents?

If you want to invest in real estate being a licensed Realtor is a huge advantage. A licensed agent saves money on commissions when they buy and sell homes, and I think it helps me find more deals. I estimate being a real estate agent saved me over $70,000 on my own deals this year alone! I have purchased 16 long-term rentals in the last three years and over 70 fix and flips with my father over the last ten years. There is no way we could have gotten such great deals on these homes without being a real estate agent.


There are many ways to make money as a real estate agent. I am sure I left out a few other things agents can do to create income for themselves. One of the great parts about being an agent is you can create multiple income streams for yourself. If one stream dies, then other streams can keep you going. There is always opportunity to add new income streams and increase your wealth. If you are wondering how much a real estate agent can make, please check out this article!


This post may contain affiliate links and I may be compensated if you make a purchase after clicking on my links.


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