Income of a real estate agent: 4 steps to understanding

Income of a real estate agent: 4 steps to understanding

The first thing that attracts people in realtor job is a possibility to get a high commission for every completed deal. However, not everyone realizes that every deal includes an abundance of work done and a realtor does not receive the total amount of the commission too. It is necessary to have an understanding that income of a real estate agent can consist of several parts and it depends on the way this person is employed. Most of the modern agents are employees of brokerage companies, so it is possible to count their possible income considering the following 4 aspects.

1. Commission split

comission split

It is not a secret that a person can become a real estate agent only when he or she receives a license and starts working in a brokerage company. Consequently, this person has a boss who owns a brokerage firm and hires agents to complete deals and get money. Usually, an agent who completes the sale receives only a certain commission percentage earned and this amount is negotiable. It means that being hired by a broker it is important to discuss how this commission will be split. It is possible to get an increase in the percentage of your commission after you achieve a necessary threshold if your boss does not agree to set it at the initial stage of your cooperation. 

Let’s consider figures: an average commission in real estate is 5%. It is clear that each of you will get 2.5% if you agreed to split it 50/50. However, more experienced realtors can ask for 60% or even 70% too. 

If you work on your own, you should not share your commission amount, but it is necessary to pay taxes and develop your brand alone too.

 

  2. Analysis of the statistics

Analysis of the statistics

A great impact on the amount of earnings is made by the statistical data of the average income. This number will shed light on how many a typical realtor can earn on average, so it is important to consider this data too. Payscale provides the following information for January, 2020: an average salary received by a realtor is $55,331 which consists of three important parts: bonus ($4,300), commission ($40,000), and profit sharing ($7,500). However, 10% of all realtors still can’t earn more than $24,000 while there are about 25% of realtors who manage to get over $165,000 too. Naturally, more experienced realtors get more money.

 

  3. Number of sales

number of sales

It goes without saying that real estate income depends directly on the number of sales made. Consequently, if a person has just joined this industry, he needs to learn more about the neighborhood you will work in. It is of great importance to figure out how many homes have been sold in the previous year, their average price, the number of agents working in this area as well, etc. Consequently, it is predictable that large metropolitan areas guarantee higher salaries to realtors since the number and cost of property sold there is higher.

 

  4. Finding your special niche

Finding your special niche

As it was mentioned earlier, experienced realtors earn more money. Therefore, you should not be satisfied with your single license of a real estate agent and continue to develop at the professional level. If you learn more about a special niche in this industry like luxury or commercial property, you can boost sales and increase income in this way too. 

It is clear that real estate income depends entirely on the professionalism and talent of an agent. It is impossible to promise a newbie a standard amount of funds on a monthly basis since income in this industry is incredibly unstable. It can once let you feel like a rock star or provide you with a unique experience what it means to be poor. 

Written by
Andrew Zlobin
CEO/Founder of spotlessagency.com

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