Almost everyone has at some time needed to use the services of a real estate agent because they have information about various properties for sale or rent.
Property owners also give them notice of their available properties that are put up for sale. This gives the listing agent as well as the buyer’s agent the opportunity to earn a sizable income from the deal. It should be noted that both are included in the name, “Real Estate Agent”
So, in this post, we are going to give you the amount of money a real estate agent can make.
Who is a Real Estate Agent?
A real estate agent is a person who assists in the purchase or sale of property. They are often known as professionals and work in the best interests of their customers to get the best deals and for their efforts they earn agreed commissions.
Apart from buying or selling real estate, they may also be tasked with locating property in a particular area, renting out property, drawing property contracts, accompanying clients to property locations, and property maintenance. All of this is one of the many ways they make money.
How much do real estate agents earn?
The average real estate agent salary in the US is $78,252, this can vary depending on several factors. However, real estate is usually commission based, 5% to 6% which is also negotiable.
The commission is shared by the listing agent and the buyer’s agent. Each agent is also required to provide a portion of their earnings to their broker.
How Are Real Estate Agents Paid?
Real estate agents are paid based on an agreed commission. Every time they successfully see a sale or purchase of a property, they earn a commission.
After the sale is completed, the commission will be deducted from the total amount received and then distributed to the escrow company which then goes directly to the listing broker and buyer’s agent.
Each agent will allocate a portion to their broker based on an agreed commission which can be 50/50, 60/40, or even 70/30. For example, if it is decided 50/50, then it implies that the amount received will be halved between the two parties.
How much do real estate brokers earn?
First, who is a Real Estate Broker?
A real estate broker is a person who is granted a license to operate their own real estate company after receiving an education, passing exams, and then obtaining a state real estate broker license.
They not only work as real estate agents but can also hire other real estate agents. The main difference between a real estate broker and a real estate agent is that a real estate broker can own their own real estate business while an agent cannot do so until he or she has a license.
A broker who helps provide additional support during sales and purchases earns a median annual salary of $98,928. In addition to receiving a portion of the money the agents under them make, they also get 100% of the commissions received from the deals they work on.
Some brokers may not have a commission sharing agreement, but instead, choose to receive a certain amount from agents under them each month.
How do real estate agents make money?
Without seeing the successful completion of the sale or purchase by the agent, there will be no money to be earned. Therefore, the success of a real estate agent will depend on their overall effort and the number of deals they are able to complete.
The area of work is one of the determinants of how much a real estate agent can make. Big cities are known to record more success for agents. It is hoped that agents working in New York City or Los Angeles will earn more than just agents in Little Rock.
Costs are on the high side in this area plus there are better and more sophisticated properties often on display from time to time in this large metropolitan area, so you can expect to make more money.
#2 Number of successful deals
Real estate agents make money on sales and purchases. Their success depends on the number of deals they can complete. They receive 5% to 6% commission on sales.
Selling or buying is not the only way they earn money. They can also get some percentage of the property leasing.
Any business can be successful if we have a wide network of professionals in the same career as well as previous clients. One way to have them is to act accordingly and that alone can ensure that they can be called upon when the opportunity arises.
It is very important for real estate agents to connect with agents from other locations. People are always changing cities and you can benefit more from that. Clients who score will also be open to vouching if the transaction goes as expected.
#3. Years of Experience
Having multiple closed deals comes with experience. If you have been in the business for any length of time, you will gain valuable knowledge of what works and have a good number of professionals and clients.
With each deal completed, you’ll learn the best way to run your business. Agents can also find people who can always recommend them when needed.
#4. Cost of running a business
Apart from word of mouth, media advertising and other known traditional advertising methods, real estate agents also need to spend some money on digital advertising to advance the business.
Digital advertising includes advertising that occurs online. This form of advertising is not only convenient but can also convert more. Social media ads are very good ads and can be used to target specific audiences.
Other costs that can be incurred are the amount spent setting up the mini real estate office space, regulatory fees, brokerage fees, etc.