Last Updated on February 25, 2022 by Mark Ferguson
Some real estate agents sell hundreds of houses a year and some don’t sell any. The amount of houses an agent sells depends on their business model, their market, their drive, their ability, and their team. I have sold more than 200 houses as an agent, but when I started and now I sell almost none. I struggled when I first started, and now I am a broker and investor who doesn’t want to sell. For agents to make a living they need to sell at least some houses. In very expensive markets you may only need to sell one house a year or in inexpensive markets, you may need to sell 20 houses a year to make a living.
How much do agents make?
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 $100,000 a year. It is not rocket science and you do not have to work 80 hours a week to make good money as an agent.
How much do agents make on each house sale?
Real estate agents may not make as much money as you think on each sale. When you are selling a house it seems crazy to pay someone a commission that could be 6$ (all commissions are negotiable but HUD pays 6% to its agents). There are a few things to consider:
- Real estate agents split that commission with another agent most of the time. The listing agent does not get all of it as the buyer’s agent gets paid as well.
- Real estate agents do not usually keep all of their share of the commission. They have to hang their license with a broker and that broker usually takes a percentage (from a small fee of $200 to 50%).
- Real estate agents pay for their own marketing, cars, insurance, education, and get very few if any benefits.
- Real estate agents only get paid if a house sells.
After considering the commissions splits, an agent may make $2,000 to $3,000 on a $100,000 house sale.
How many houses do real estate agents sell on average?
The average house is around $225,000. That means an agent would make about $5,000 per house sold if they sold average priced homes. If the average agent makes $40,000 a year that means they sell about 8 houses a year. If an agent is in a much more expensive market they may only have to sell one house to make $40,000 or 20 houses if they are in a cheaper market.
How many houses does an agent have to sell to make $100,000 a year?
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 $2,500 40
$200,000 $5,000 20
$300,000 $7,500 14
$500,000 $12,500 8
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.
What are the expenses for agents?
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 a living?
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 workweek for your kid’s activities like a dance class or to pick them up from school.
Why good agents get better splits
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 the 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.
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.