Becoming a real estate agent requires a lot of hard work and commitment, especially to build your reputation in the real estate market. Having a commission-based job can be advantageous once you start making a lot of sales. How much money do real estate agents make in a year? As a real estate agent, it depends on the location they are serving, what kind of clientele they have, what the real estate market is like if they are full-time or part-time, and conclusively how much dedication they are putting into their work.
When do real estate agents get paid?
Real estate agents only get paid when a seller transfers their property ownership deed to the buyer’s name. Real estate professionals specify this transaction as closing. This closing day consistently includes the lender, the title company, and the real estate agent. If the buyer and seller’s purchase agreement contained a contingency, such as a failed home inspection, then the buyer has the right to walk away from the real estate deal. In this case, the real estate agent will not get paid for their efforts and hard work.
Another example that can inhibit closing on a real estate property is when a lender does not approve a buyer for financing. Lenders hire a third party to execute an independent appraisal of the real estate property. Lenders won’t finance a real estate property if the purchase price outpaces the appraiser’s valuation. For this reason, sellers choose to accept full cash offers, specifically in bidding wars.
How much money do real estate agents make per year?
According to the stat of the National Association of Realtors (NAR), median gross income is on the rise – jumping from an average salary of $39,800 in 2017 to $41,800 in 2018. However, it is crucial to note that the NAR only collects data on its members. Although this number is more than 1.3 million as of February. The Bureau of Labor Statistics reports that a higher average salary for real estate brokers and sales agents is $62,990 per year, the more money will real address. Most real estate agents are not paid a base salary. But you can determine their annual earnings by adding up their entire take-home commission for one year. The typical take-home pay for a real estate agent on a $255,739 home is $4,350.
Avg. Annual earnings/Avg. per sale earnings = Total number of annual sales that real estate agent do i.e. $62,990 per year / $4,350 per sale = 14.5 home sales. Theoretically, a real estate agent needs to make approx. 14-15 home sales in a year to acquire the national average income. The annual earnings of an individual are affected by various factors such as –
- Location of the property
- Number of sales done by the real estate agent
- Agent experience
- No of hours worked by an agent
- Local real estate prices
How much money do top real estate agents make per year?
One of the defining characteristics of real estate as a profession is how much money do real estate agents make? It is seen that real estate agents can make a large amount of income. For example, if you think of a $1 million listing and you are getting 3% of that, and you do it, say 20 times a year, then you are looking at $600,000 in commissions. Real estate agents who sell even higher-priced real estate properties in expensive markets can bring in millions of money each year. Imagine a real estate agent who sells an average of 11 real estate properties, each worth $5 million. Then the commissions on those sales will amount to $1.65 million. More sales or more expensive real estate properties will, of course, add up to even more income.
Also Read – How much commission does a realtor make in CA?
Various factors that can affect a real estate agent’s pay
Real estate agents can make money when a real estate property is sold. There are many costs of being a real estate agent. Some of the factors that can affect a real estate agent’s pay above the average salary are such as –
- Taxes and brokerage fees
- Access to the RMLS database
- Membership fees for various local, state, and national associations
- Gasoline when driving to real estate properties, along with car insurance, and wear and tear on the car
- Marketing
- Various benefits such as health care if the real estate agent is self-employed
Apart from these factors some of the other factors are such as –
- Experience
Although a 6% commission rate is the average, some real estate agents can charge a higher commission on the listing agreement due to their experience. However, more years of service does not necessarily guarantee someone is an outstanding real estate agent.
- Property type
Real estate agents that expand their clientele outside homeowners can also boost their take-home pay. Real estate agents can make a lot more money selling commercial real estate properties than residential real estate properties, mainly because commercial real estate properties have a significantly greater purchase price.
- Lead generation
A real estate sales agent can make more money annually by propagating more leads and selling more houses. Developing an adequate prospecting system usually comes with time, along with building connections with other real estate agents.Commission percentages can also vary, reckoning on the real estate deal the sellers have worked out with their real estate agent. While 6% has been exemplary, the landscape is changing, and more commissions now amount to less.
Wrap Up:
The world of real estate has a lot of moving parts, with various real estate parties involved in each deal, and terms that vary depending on the circumstances. There is no set amount that how much money do real estate agents make, and there is not even a single way that they receive that income. They may get a salary as well as commission, and their commissions depend on various negotiations. The only certain thing is that real estate agents can make anywhere from negligible amounts to millions of dollars a year, depending on the real estate market.
