How Much Do Real Estate Agents Make?

How Much Do Real Estate Agents Make? Can you make good money as a real estate agent?

The average real estate agent makes around $45,000 a year.  However, Real Estate Agents Can Make less than $10,000 a year or over $1,000,000 a year.

This maybe a loaded question as there are so many factors to consider when figuring out how much do real estate agents make.

So, if you are looking to get into real estate and make money, read on!

Real Estate Agents “Sell” Real Estate In Order To Make Commission

How Much Do Real Estate Agents Make?Let’s face it, real estate is a SALES career. If you do not have the desire to meet and talk to people every day, then you likely will not make any money selling real estate.

However, even if you are the most introverted person on Earth, you still stand the chance at making big money in real estate. So as long as you are willing to work at it strategically.

High Paid Real Estate Agents Have A Strong Worth Ethic

Show up!  Are you the type of person who will work tirelessly to complete a mission or goal? Your work ethic can also be coached so as long as you have the desire, open to be held accountable and have the “why” to work tirelessly to make a lot of money as a real estate agent.

Where do you live?

This is going to have an effect on your income. You could live in a small town in Michigan where the average home price is $70,000. You could crush real estate sales selling 50 homes a year making $105,000 annually.How Much Do Real Estate Agents Make?

However, you could live in Naples, Florida with an average sales price of $375,000 and as a real estate agent selling 50 homes making $562,500 annually.

Gographically, where you live will have an an effect on how much you make as a real estate agent.

I know of some real estate agents that simply packed up and moved to areas that were of higher average sales price specifically for this reason.

How much do real estate agents make per sale?

Before I get into this, there are serious consequences with real estate commission collusion. If real estate agents got together and set a commission amount that no one will go below then you are setting yourself up for fines and maybe jail time.

So, how much do real estate agents make per sale? That depends on the commissions that are negotiated. In most cases sellers will be paying the commission to the listing and buyers’ agents. Many times with the listing agent splitting the commission 50/50.

The agreement is with the seller and the listing agent. The listing agent in many cases has the sole discretion on what to cobroke out to a buyer’s agent so as long as the seller approves it in a listing agreement.

So if you negotiated a 7% commission with a seller on a $400,000 deal the gross commission payout would equal $28,000 (400,000 x .07). If another real estate agent brought in the buyer then you each would have $14,000 in your pocket assuming 50/50. This doesn’t take in consideration what the real estate agents have to pay out to their real estate brokers.

Not a bad deal making $14,000 in commissions as a real estate agent, huh?


Do Buyers Pay Commission To Real Estate Agents?

Some buyer brokers will negotiate an additional commission paid by the buyer for services rendered. We especially see this if property values are very low or say vacant lots in low price ranges. If you sold a $10,000 lot to someone and it provided you a $300 commission. If it took you 30 hours to put the deal together, you have to figure if $10 per hour is worth your time.

Also some buyer brokers will ensure they are getting for example no less than a 3.5% commission. They will have a form drafted and signed by the buyer. This means the buyer agrees to pay any difference from what the seller co-broks that is less than the 3.5%

So if a seller offers 3% commission then the buyer would come up with .5% payment at closing to the buyer broker.

If your state allows it, it maybe not a bad thing to incorporate into your business. If presented right it will clearly show the difference between you and other brokers. Trust me. You will be putting a lot of hours in working with buyers in order to secure real estate commissions.

How real estate agents get paid?

Commission are paid usually at the conclusion of a successful sale and it is expensed on a HUD (cash closing) or a Closing Disclosure (CD) for financed transactions.How Much Do Real Estate Agents Make?

The closing attorney or title company (depending on your state) will then issue the commission check to your broker. Some states will allow the commissions to be paid to the agent directly with the appropriate paperwork filled out and signed off by your broker.

Florida allows this, making it great for the agent and Broker. The real estate agent gets paid the day of closing and it is one less check the broker has to cut.

Traditionally the closing agent cuts the check to the Broker. They mail or wire the check. The broker waits until it clears then will mail or drop a check to the agent. This process can take several days or even weeks, especially if your broker is out of town and the only one signing / cutting checks. Be sure to download the FREE PDF on Broker Interview questions where you will address these questions and more.

Do real estate agents only get paid commission?

The most common form of compensation for real estate agents is by commissions. Most real estate brokers are commission only. And in fact, the reverse happens. Many times you will have to pay the real estate brokerage monthly fees depending if you are with 100% commission office.

Do real estate agents get paid a salary?

There are a few companies in Florida that I know of that will actually pay a stipend. Which is essentially a monthly loan that will need to be paid back. Be Aware! Most times you are in full recourse of that obligation regardless if you make it in this business or not. And will ultimately have to pay it back with fees and interest incurred.  I really do not like this scenario as you are essentially taking on debt.

Tip – If you are looking to get out of your other job quick, then while you are interviewing companies, ask the broker if there are any agents in the office that need a part time assistant. Or if there is any hourly clerical position you could fulfill. The quicker you immerse yourself into the real estate world and begin learning, the better.

Consider also searching for paid part time real estate positions online where they would still allow you to sell as well as collect a salary.

How Do Real Estate Agents Get Paid For Rentals?

Absolutely! I will have another detailed article on this and how my sister and I built a large tenant placement division making us $125-$175k every year. Not including the sales we got from landlords who eventually listed and sold with us.

Tip – Work with landlords! Remember… You List, You Last! It is all about getting the landlords. Tenants will easily come your way when you have inventory. So much that you may need an agent just to work exclusively with all of you prospective tenants.

If you are working with the tenant, your local MLS will cobroke traditionally on a one time placement fee. Not much money in this. Especially for an average price home. In our local market you can anticipate only getting $150 one time fee for say a $1,500 monthly lease.

How Do Real Estate Agents Charge Landlord Commissions?

#1 – Tenant Placement / No Management.

This consists of marketing the property, showing it, processing the application, credit, background checks and drafting the lease agreement.

An example charge for this would be equal to one month’s rent. So you would get a $2,000 fee if the monthly rent was $2,000.

An add on would be after one year renewing with the same tenant, handle the lease agreement and charge say half of $1,000.

#2 – Full Management.

Full real estate management would consist of everything above but would also include handling all maintenance calls, working with the necessary contractors, collecting rents, overseeing evictions, etc.

An example charge would be a fee upfront equal to one months and then 15% of the monthly. So a fee of $2,000 at the time of the executed lease and then $300 per month residually is not a bad way to make money as a real estate agent.

#3 – Vacation Rental Management.

If you are in an area like we are in Southwest Florida, you will have a big population coming out to vacation and in order to get out of the cold weather. These are short term rentals less than 6 months. And actually don’t require a real estate license as it is consider hotel / hospitality.

They handle all above but charge significantly higher. Average in Southwest Florida is 18%.

You can capitalize on this aspect of real estate selling these properties or helping owners add to their portfolios to make more commissions in real estate.

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