How Much Do Real Estate Agents Make? A Guide To Real Estate Salaries

If you’re a home buyer or seller, you have to pay closing costs associated with a purchase transaction being done. If you’ve had a real estate agent represent you in the transaction, you’ll pay for their services. But how does that work? How much do real estate agents make? What can be negotiated? We’ll cover all the ins and outs.

How Much Do REALTORS^® Make?

When we speak of REALTORS^®, these are members of the National Association of REALTORS^®. You don’t have to be a member of this professional organization to be a real estate agent. Membership status in the organization doesn’t impact how someone is paid. For the remainder of this article, we’ll be discussing factors related to real estate agents in general.

Real estate agents are often paid on commission. In this case, agents are paid based on the sale price of the home when it closes. Commission may be split between a buyer’s agent and a seller’s agent, but this isn’t always the case.

In other cases, an agent may charge a flat fee. This could apply to the whole transaction. Alternatively, they may charge different fees for a menu of services. For example, a buyer’s agent may charge for their time taking you to showings. An agent on the listing side might charge for services related to staging the home.

It’s also important to note that the amount an agent makes is always negotiable between the agent and their client. Although certain payment structures and amounts may be common based on the market, every negotiation should take place individually and clients should understand the services they’ll receive under their contract.

Because real estate agent salaries can be based on factors like location, experience and number of sales, the amount they make is highly variable.

What Is The Average Real Estate Agent Salary?

The above answer may be technically accurate, but it’s not satisfying. Let’s get you some numbers. The following data come from the Occupational Employment and Wage Statistics report by the Bureau of Labor Statistics for May 2023.

Real estate agents and brokers are classified separately. Real estate brokers often act as agents themselves, but they also supervise other agents. Nationally, real estate agents make an average salary of $64,640 and the median wage is $50,670. Brokers make an average wage of $86,700, with the median being $63,060.

However, local markets also play a big role in the salary agents can expect. In northwest Minnesota, the median wage for brokers is $26,430, while it’s $132,050 in a metro-area that includes Boston. On the agent side, wages are lowest in Western Kentucky, where the median is $29,260. Napa, California, has the highest wages at $145,600 for the median.

Factors Affecting How Much Real Estate Agents Make

We’ve looked at some of the top line numbers, but what other factors impact what real estate agents make?

Location

Every real estate market is different, and because of that, agent salaries are going to be different depending on where they operate.

For example, successful real estate agents in places like Boston and other areas of the Northeast where home prices are higher because supply is scarce are going to make more money if paid on commission than somewhere in the Midwest where home prices are lower because supply is better.

At the same time, market trends always play a role as well. There are ebbs and flows no matter where agents are operating. When looked at over the long-term, prices might usually be higher in the Northeast than the Midwest, but that doesn’t mean there can’t be significant periods where prices are higher or lower in areas based on current dynamics between buyers and sellers.

Home Type

The type of home sometimes plays a role in the charge a real estate agent will negotiate with you. For example, it might be common in your area for buyers and sellers to get a break on commission if they’re selling a luxury home. The idea here is that you’re still making a ton of money by charging “only” a 2% commission on a $2 million home.

Field Experience

Agents who have been around a while are likely to make more money than someone just breaking into the industry for a couple of reasons. The first is that they can articulate the value they bring to the transaction and what a home buyer or seller gets for their money better than a newer agent can. Part of this comes down to selling yourself.

Second, someone with field experience is going to understand the finer points of negotiation and how to close a deal. The more transactions you can close, the more money you can expect to make.

Number Of Home Sales

Simply put, real estate is a volume business. The more home sales you make, the higher you can expect your wages to be at the end of the year. This is true regardless of whether you charge on a commission basis or for a menu of services.

Network And Connections

Referrals are the lifeblood for any real estate agent’s business. Because of this, the networking connections you make are so important. Real estate agents want to be that person someone recommends to their friends and family as well as coworkers because they had a positive experience.

Even beyond referrals, broader networks among agents can also contribute significantly to business. For example, if Shawn doesn’t work in a certain market or deal with a particular type of home a lot, they may pass business along to Kelly who does this type of work.

Brokerage Fees

Many states require that a real estate agent work under a broker for a certain period of time. A real estate broker acts as a mentor and they’re also responsible for making sure applicable real estate laws and regulations are followed by the agents who work with them. After working under a broker for some time, an agent may be able to take an exam and become a broker themselves.

In exchange for having you under their tutelage, brokerages charge a fee and/or take a portion of what you make.

Business Costs

As with any business, there are overhead costs to think about. A small list of these includes office space, marketing, any memberships necessary for access to the local multiple listing services (MLS) and your transportation costs. If you’re working at a brokerage, they may cover some or all of these expenses.

How Real Estate Agent Commissions Are Split

As a practical matter, real estate commissions don’t have to be split at all. That can be a negotiation point between each party and their agents so that everyone works out their own pay arrangement.

As a seller, your listing agent may point out to you that you can attract a bigger pool of potential buyers if you offer to pay commission. The reason for this is that many first-time buyers can’t afford to pay for their own representation. The seller isn’t writing a physical check, either. It’s taken out of the purchase price.

On the other hand, buyers who can pay for their own buyer’s agent may see there offers shoot to the top of the pile because the seller can keep more money in their pocket if they don’t have to pay for that.

For the sake of a simplified example, let’s say the agreed-upon real estate commission between the parties is 5%, split equally between the buyer’s agent and the listing agent. Here’s how that might actually break down:

• Listing agent: The listing agent gets paid for their services to the seller.
• Buyer’s agent: The buyer’s agent takes an equal portion for services to the buyer.
• Real estate broker: If both agents aren’t brokers themselves, one or both of them will have to kick part of their earnings back to their supervising broker. For example, this might be 30% of their earnings.

Do Real Estate Agents Get Paid If A Sale Falls Through?

If the contract specifies that the real estate agent is to get paid on commission, they often don’t get paid if a home sale doesn’t close. However, there are a couple of notable exceptions:

• Contractual exclusivity broken: Many buyer’s agency agreements contain a provision stating that you are agreeing to work with that agent for a period of time. During that time frame, the agent could be entitled to commission even if you found the home you bought and negotiated on your own. In some cases, the agent could sue for commission.
• Payment for services rendered: You may not have a commission-based agreement, but your agent may have provided services for you such as performing a comparative market analysis or taking photos. You would pay those fees regardless of whether the property sold.

FAQs For How Real Estate Agents Are Paid

Having touched on the big outlines, let’s try to answer a few more questions.

How much do real estate agents make per sale?

It’s impossible to say this because every transaction is different. Every sale price is unique. That’s before accounting for the fact that commissions or fees are individually negotiated in every transaction.

How many houses do most REALTORS^® sell a year?

This doesn’t account for all real estate agents, but because the data is readily available, we’ll look at REALTORS^®. Members participated in a median of 12 transactions in 2022 representing the buyer or seller. It’s worth noting that this doesn’t tell the whole story because in cases where one agent is representing both sides, it counts as two for the purposes of this statistic.

Is it hard to make money as a real estate agent?

As with any career, you’ll have to hustle. You’re likely to make less money earlier in your career until you’ve built up a client base and have the experience to consistently close deals. Additionally, income can fluctuate quite a bit. You might have four home closings in one month and none in the next. This isn’t for someone who needs a regular check to budget effectively.

The Bottom Line

It’s impossible to say how much real estate agents make as a generalization because so much depends upon location, level of experience, market dynamics and, perhaps most importantly, number of home sales they participate in. Additionally, everything is negotiable, so it may not even make sense to talk about things on a per transaction basis.

Whether you’re looking for someone to help you buy or sell a home, we can help you find an agent who can align on your goals. Connect with a Rocket Homes℠ Partner Agent today!