Last Updated on February 17, 2022 by Mark Ferguson
Being a real estate agent is a great way to make a living, but it is not easy to get started in the business. You hear wildly different things, but how much money do real estate agents make their first year actually? It takes time to build up a client base and you must put yourself out there. You cannot hide in your office and wait for business to come to you! It can take some time to build up a large base of clients and you may not make very much your first year. 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. It can be tough to get started, but agents who stick with it can make a lot of money. Many established agents make hundreds of thousands of dollars a year and the top agents in the country make millions a year.
What do average real estate agents make 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 would be about $21,000 in today’s dollars. That is an extremely low number, but it is possible for agents to make much more in their first year. I have had agents on my team that made over $100,000 in their first year. It is not common, but it happens.
There is also a more recent survey that was done by Real Estate Express that showed real estate agents make $19,000 in their first year. I think it is safe to say that real estate agents do not make a ton of money in their first year! However, there is s ton of potential once you get established in the business.
By the way, 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).
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 as a Real Estate Agent: The right systems and approaches to cut years off your learning curve and become successful in real estate. It is available as a paperback and eBook.
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 $40,000 to $50,000 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 $20,000 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.
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.
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.
Choosing the right broker is also very important for new agents. Many agents choose a broker with the best commission split, instead of the broker who offers the best training. I like to tell new agents that making 100 percent of nothing, is still nothing. Most agents who try to learn everything on their own do not do well. It is vitally important that new agents choose the broker with the best training and not the best commission split.
Another option for new agents is to join a team. I have run a team for many years, and we offer amazing training to our new agents. We can also offer them leads and other advantages for joining our team. If you are a new agent and looking to start quickly, a team may be the right starting point.
Investing in real estate your first year with a license
Many real estate investors want to get their licenses to help them save money and get more deals. I am a real estate investor and having my license helps me a ton! I save hundreds of thousands of dollars a year on real estate commissions because I am an agent. If you only want to use your license to help with your investing it doesn’t really matter how much agents make. What matters is how much you save and if it gets you more deals. If having your license gets you one more deal a year it might worth it! There are also many brokers that will let agents hang their license in their office without expecting them to sell a bunch of houses. There are at-home and part-time agent programs in many brokerages.
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.