How Much Money do Real Estate Agents Make their First Year?

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Being a real estate agent is a great way to make a living, but it is not easy to get started in the business. It takes time to build up a client base and start making money as a real estate agent. It can take years to build up a large base of clients and make a lot of money as a real estate agent. It is important to have an idea of how much a real estate agent will make in their first year so that you can plan how much money you need to save before becoming a real estate agent.

I have been a licensed Realtor since 2001 and have sold over 550 houses in the last three years. Even though statistics show that beginning real estate agents make less than $20,000 a year, those statistics can be misleading.

What does the average real estate agent make in their first year?

It is very difficult to find statistics on the average income for a real estate agent in their first year. I did find some information on average incomes, but it is from 2006! Even though these statistics are from 2006, I think we can still use them to get an idea of the average income for a new agent. The National Association of Realtors (NAR) conducted a survey in 2006 that reported Realtors with fewer than two years of experience earned a median income of $15,300. That is an extremely low number, but it is possible for agents to make much more in their first year. I have an agent on my team that made over $100,000 in his first year and another agent on my team may make $100,000 in his first year as well. Here is an article that describes what it takes to make $100,000 a year as a real estate agent.

A Realtor is slightly different from a real estate agent; Realtors belong to NAR and work by a specific code of ethics (the income for a Realtor and real estate agent should be very similar). Even though this data is eight years old, the median income for all Realtors in 2006 was $47,000 and the median income for all Realtors in 2013 was $47,700. Since the median income for Realtors is almost identical, I think it is safe to assume the average income for new agents is similar.

The data does not say the average income for Realtors in their first year was $15,300, but Realtors with less than two years of experience. The actual average income for Realtors in their first year is most likely less than $15,000 a year. You have to remember that many real estate agents start part-time and have no idea what they are doing their first year in the business. Do not be deterred by the first year average income statistics!

If you would like more information on becoming a real estate agent, finding success as a real estate agent, and how much fun it can be being an agent. Check out my book How to Make it Big in Real Estate on Amazon. It is available as a paperback or eBook and gives you an exact plan for being a successful real estate agent. 

Why the average income for Realtors can be misleading

I discuss how much money real estate agents make here. The average income for a real estate agent is $47,700 a year, which does not seem like much, but that figure includes part-time and full-time agents. Full-time agents make $54,000 a year and agents that work over 60 hours a week make over $87,000 a year.

The average income for first year agents may only be $15,000 a year, but some agents make much more. I think if an agent has a plan, sets goals, and works hard he or she can easily make $30,000 in their first year. Some agents make over $100,000 in their first year, although that is rare. Here is a great article on the goals I set for 2014.

I like to look at the positive side, and I think that a new agent who works hard can make $50,000 in their first year. Most people do not plan, do not set goals, do not take chances, and do not go after what they really want. That does not mean you should not plan to make a lot less. In this article, I discuss how much money you need to save before becoming a real estate agent.

If you are interested in getting your real estate license, Real Estate Express has classes in most states and great prices on real estate education.

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How can a real estate agent make a lot of money in their first year?

Selling real estate is not rocket science; the more contacts you have, the more houses you will sell. The secret is building up a client base that will continue to buy houses from you and refer people to you. Eighty-four percent of home buyers and sellers said they would recommend and use their real estate agent again. That means once you get a client and do a decent job for them, they will continue to use you and tell their friends about you.

The trick is finding those people who will use you as a real estate agent. In your first year, it is especially difficult, because no one knows you are an agent yet. You have to tell everyone that you are an agent, or better yet that you are becoming an agent. If you tell everyone you know that you are becoming an agent, you can build your client base before you become an agent. Here is a great article on how hard it is to become a real estate agent.

Two of the agents on my team have made over $100,000 in their first year as an agent. I created a system for other agents to use based on their success called the Six Figure Real Estate Agent Success System. This system can be used even before you get your license to help you build your business and make more money.

Can a real estate agent make money selling REO listings their first year?

I have made a great living as a REO agent. My team has sold over 550 houses in the last three years and most of those have been REO listings. It took me a long time to build up a client base that would assign me REO properties. It is very tough for first year agents to start listing REO properties, because most banks want to use an experienced agent to sell their REO listings. However, BPOs are a great way for first year agents to make extra money. A BPO (broker price opinion) is a report that helps determine the value of properties. Banks and other companies pay from $40 to $100 per report in most cases. Here is an article with much more information on becoming a REO agent.

Conclusion

Do not be shy and do not worry that you do not know what you are doing. Educating yourself is a requirement of being an agent, but education alone will not make any money. The best way to educate yourself is to learn by doing and gaining experience. The agents that make $100,000 in their first year do not worry about being perfect; they worry about meeting people and selling houses.

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