how much does a real estate agent make a year?

Average incomes for real estate agents can vary based on the source you look at, and if an agent is part-time or full-time. People see that real estate agents make less than $40,000 a year on average and assume it is impossible to make more than $100,000 a year. The average income figures for real estate agents are skewed, because many agents do not work full-time and many agents do not put their hearts into the work. I have made over $100,000 a year the last six years and I know many real estate agents who make well over $100,000 a year. It is not rocket science and you do not have to work 80 hours a week to make good money as an agent. This article is going to discuss how many houses you have to sell in different markets to make $100,000 a year based on common commission splits and the costs an agent will have to incur.

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What is the average income of a real estate agent?

I discuss how much money real estate agents make in this article. The truth is the averages are pretty low because many agents work part-time and many agents don’t try very hard. To be a successful real estate agent you have to do more than get your real estate license and show up to the office once a week. The average income for a real estate agent is $39,000 a year, but the average income for a full-time agent is $54,000 a year. If you become a Realtor, which requires more classes, fees and a code of ethics incomes increase even more. If you look at just the $39,000 a year figure then it looks like real estate agents don’t make anything, but if you look at all the numbers they actually make quite a bit. In fact, Over 21 percent of Realtors make $100,000 a year or more.

How do real estate agents make money?

Real estate agents make a commission on each house they sell. Commissions are always negotiable, but HUD pays listing agents three percent and buyers agents up to three percent so I will use three percent as an example commission. Real estate agents usually represent one side of a transaction; the buyer or the seller. Each side of that transaction may make three percent, but again that is negotiable. On bank owner listings sometimes the listing agent gets a smaller percentage than the buyer’s agent. Commissions could be four percent in some cases or one percent like with some REO auctions. If you sell a $100,000 house a three percent commission would equal $3,000 to one agent, but the agent does not always get to keep that entire commission. Most real estate agents only get paid when they sell a house unless they are working on a team or a commercial real estate agent.

Here is a great article on what it takes to be an REO agent like myself.

Why don’t real estate agents get to keep their entire commission?

When you become a real estate agent you have to work under a broker in the beginning. You don’t have to work with that broker, but you have to hang our license with the broker. Different brokers provide different levels of support ranging from nothing to intense training programs and mentors. The more training, staff support and office space you get the smaller portion of the commission you get to keep. Commission splits can range from 50/50 to 100 percent with a small transaction fee paid to the broker. Remember, a lower commission split is not advantageous if you never sell any houses. I think new agents should go with a broker who offers the best training, not the highest split.

If you sell a house for $100,000, make a three percent commission and have to give 40 percent to your broker, you will keep $1,800. You will have more costs we have to figure as well, but a $100,000 sale is also pretty low in many areas of the country.

Here is a great article on choosing a broker.

What are the other costs involved with being a real estate agent?

Besides paying your broker a split of your commissions, other costs come with being a real estate agent. Many of these costs will vary greatly depending on your marketing and agreement with your broker. Some brokers will charge for an actual office on top of commission splits, you may have to pay for advertising, MLS dues, Realtor fees, and there are other less direct costs. Most people will drive much more as an agent and you better make sure you have a reliable car. You don’t have to have a fancy car to be an agent, but it must be presentable! Here is a look at what the costs may be for a brand new agent. I don’t think you have to spend a ton on advertising to make good money either. There are many ways to get leads for free.

Direct costs:

  • MLS dues: $500 a year
  • Realtor and board dues: $300 a year
  • O and E insurance: $300
  • Business cards, name tags, etc; $500 a year
  • Advertising $1,000 to $50,000 a year
  • For sale signs, marketing materials: $200 to $5,000 a year
  • Total: $2,800 to $50,000 plus

There is a wide range of costs because you can spend as much as you want on advertising. I think there are plenty of ways to advertise for free or very minimal costs as a real estate agent. Some of these costs your broker may cover and some may not be covered. There will be indirect costs as well depending on what you need. Do you have to buy a new car, new computer, new phone, new clothes or new desk? These costs can be pretty minimal or add up very quickly if you go crazy with spending.

Building a fantastic website is a great way to create loyal leads that are high converting. This site specializes in helping agents build their own websites. Since my team focused on our website we are getting many more leads and they are much higher quality than relying on third parties to send us leads.

How many houses do you have to sell to make $100,000 a year?

On to the fun part of being a real estate agent; selling houses and making money. If you are selling $100,000 houses and paying 40 percent of your commission to your broker you would have to sell over 50 houses a year to gross $100,000 a year. That is a lot of houses to sell, especially for a new agent. If you can increase your average price, you can make much more money. Here is the breakdown of different sales numbers for different price points.

Average sale price        Commission kept         Number of houses needed to make $100,000

$100,000                            $1,800                                                   55.6

$200,000                           $3,600                                                   27.7

$300,000                           $5400                                                     18.5

$500,000                           $9,000                                                    11.1

If you can sell higher priced homes it makes a huge difference in the amount of money you will make. This is why training is so important and learning from others will make you more money. Not only will you make more money with training by selling more houses you should also learn how to sell higher dollar houses. You will also learn how to list houses, which can mean two commission checks on one sale!

If you break down how many houses you have to sell, you would only have to sell 2 houses a month to make close to $100,000 a year gross with an average price of $200,000.

If you want to get your real estate license I highly recommend Real Estate Express, which offers classes in all 50 states and has some of the lowest prices for real estate classes. Two of the agents on my team took online classes through them and easily passed the exam.

Why it is important to track expenses closely as an agent

If you gross $100,000 a year in commissions but spend $50,000 on expenses you aren’t really making $100,000 a year. This is why you have to track your spending carefully as an agent and be careful how much you advertise. There are hundreds of companies trying to take real estate agents money for leads. Few of them deliver any value and most of them are not worth the cost. As a new agent, it is important to focus on building relationships, not paying for leads. If you can keep your costs below $5,000 a year, one or two sales will make come close to covering your expenses instead of ten to twenty.

How much work do you have to do to make $100,000 a year?

Being a real estate agent takes time and work. You have to get licensed, find a broker, find buyers and sellers and then show houses, list houses and sell houses. Even though it may not take a lot of hours to list a house and sell it, it takes many hours behind the scenes to find the sellers and build your business. Many people want to start real estate on a part-time basis, but it is very difficult. People want to talk to their agents and see houses at all times. If you have to work part-time you need to have a team or partner who can cover for you if you don’t have a flexible schedule.

Real estate agents don’t have to work 60 or 80 hours a week to make a lot of money, but sometimes they do have to work odd hours. Many buyers will have to work and want to see houses on the weekends, or after 5 or 6 pm. Even though you may work late some nights or on the weekends, you can also take time off during the work week for your kid’s activities like dance class or to pick them up from school.

Here is a great article with more information on becoming a part-time agent.

The more houses you sell the more leverage you have with your broker and the more money you can make

In the beginning, it is best to work with a broker who will provide training to help you succeed. Once you find success and start selling a lot of houses, you become an asset to your broker. You will be in demand by many offices, because they more houses they sell, the more agents they can recruit. That means you can negotiate a lower commission split and make more money selling the same amount of homes. Eventually, you can move on to focusing on listings and hiring other agents to join your team who work with buyers. I have eight people on my team and I only work with REO sellers and friends and family. My team handles the rest of the business.

Conclusion

Making $100,000 a year is not out of reach for real estate agents. In fact, many agents accomplish this and earn much more. The money will not fall into your lap and the more training you have the better off you will be. One of the agents on my team made $100,000  in his first year in real estate. If you want to see what it takes to make one million a year as a real estate agent, check out this article.

Launch Your Real Estate Career the RIGHT Way – 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, teaches agents everything they need to know to be successful. It is available as a paperback or eBook on Amazon.

30 thoughts on “how much does a real estate agent make a year?”

  1. I was thinking about becoming a real estate agent once I graduate high school. I was wondering if you have any insight on what to do (like what is the deal with becoming a Realtor, and where is the best place to live as a real estate agent). Also, I was wondering if you have any great tips for me.

  2. I will be a registered realtor in three more months in a rural area in Manitoba, Canada. Is it harder for rural real estate agents to sell houses and I am new at this, could you give me some good advice on how to compete with the “ regular realtors” that have been around for years

    Thx Brandie

  3. Hi Mark do you think you can make more money as a solo agent vs on a real estate team? And can you make over 150 to 200000.00 a yr on a team ? Thanks..

  4. Hello Mark, you said “houses” specifically. I live in Manhattan NYC which are primarily apartments. How does a person make 6 figures when there’s barely any houses in Manhattan? Is it really possible to make 6 figures dealing apartments?

    • Have you asked agents in your area how much they make? I imagine with the cost of living in NY, they would have to make a decent living to survive

  5. Hi Mark,
    I have been interested in a career in real estate for some time though I can’t afford to leave my job right now to start full time without a consistent paycheck. Do you think starting part time might be a good way to get my foot in the door and save money to eventually be able to leave my current job for a full time real estate career?
    Thanks!

  6. Thank you for the blog. I am a very successful Military recruiter. I definitely feel that I have the work ethic, interpersonal communication skills, as well as the leadership skills to help people find their next home. You answered many of my questions, however just as many people are scared to join the military, I am scared to leave. Has anyone heard of recruiters being successful in realty?

  7. Hi Mark. It’s a great article you wrote. I have a full time job providing engineering consulting, but I am interested in real estate and thinking of doing part time. Do you think going part time would be hard for making a career in real estate. I am really looking for another part time career that I could potentially earn a little on side. Please let me know your thoughts

  8. Hi Mark, What is your advise for a mid 20 something year old agent? ( I am not an agent yet) I am going to start studying this month , I am the daughter of two real estate agents and they have been encouraging me for some time to get involved. My concern is, being “young”. What are the disadvantages? Will people trust their biggest investment to a young agent? What are your thoughts?

  9. I just tried to buy your book for six figures into real estate and for some reason it’s not allowing me to go through. I wonder if you still have that option available or not.

  10. Hey Mark, good read! I took my loan originating classes through pro schools online, passed everything, but never left my “9-5” job. I am a licensed plumber doing about 75k a year w some overtime. My wife is a nurse who just picked up our benefits and I’m really wanting a career change, real estate is right up my alley, however with 2 small kids, and not a ton of savings, I am struggling to make the jump. My company would allow me to work weekends to help with $, So that helps, i just want a career I can control, do later in life, and generate at least the income I do now! Any thoughts would be greatly appreciated!!

  11. Hi Mark…I’m a 57 year old retiree. My husband was recently downsized out of a corporate position. I am thinking of getting my real estate license to help out our situation. I understand it will take some time to build a clientel. I live in a suburb of Indianapolis. Do you believe that any age can build a business in Real Estate? I don’t want to go back to a job that I am investing in someone’s elses future.

  12. Glad I stumbled upon your blog as this insight in timely. I’ve been working in corporate America for 12 years now. I have an MBA, a well-paid job, manage a team and as a high potential female, a lot of upward growth potential. I also have three kids, an even more type-A, workaholic husband that travels and I’m to a that point where I’m willing to give up $$ for a more flexible schedule that allows me to be more involved with my kids and their activities. But I still want a career that provides the potential to do well with more of a correlation to results. My family has always been in real estate, I work in commercial real estate (for a big bank) and I have always had a passion for the industry. I would keep our full-time nanny, so I’m not looking at part-time and would be dedicating myself to whatever job I take on, but I’m trying to balance that when the realty of evening and weekend work in the real estate industry and if I’d be trading out more precious time than I realize. The other concern is loosing corporate benefits when you work for a company the size of mine. Something real estate agents clearly don’t get and my husband’s would be about a $650 increase/month if we had to move under his policy. Your thoughts/guidance?

    • Hi Jennifer! Benefits are a huge consideration. I think you have to look at the time carefully. You don’t have to work every night and every weekend and if you are you need to hire another agent to help you. You will have to work some weekends and some nights, but not all the time. You also will have free time during the day to spend with your kids if they aren’t in school yet or during the summer. Real estate is much more satisfying than corporate if you ask me because of the direct correlation between work and results. It is not necessarily the most work you do equals the most money, but the smartest work you do makes the most money.

    • Hi Jennifer
      You seem like you have a lot of skills and success under your belt in real estate. I’m inspired by any person that can juggle many roles in life, (mother ,wife,business woman).do you mentor? I’m very new into this and I know I have along way to go,but right now all I can think of doing is being successful and happy in something I’d love to career wise.any insight would greatly considered. Best wishes .

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