How Much Do Real Estate Agents Make?


Real estate agents make their income by selling or leasing commercial and residential properties. Their earnings are not based on hourly wages like those of lawyers or accountants but rather a percentage of money exchanged in each transaction. Real estate agents can only earn their commission when a deal closes, either when a sale goes through or when a lease is signed.

The amount of money a real estate agent makes is dependent on the types of property they sell and their experience level. As a new real estate agent, it takes time to build up their reputation and gain experience, so their first year may not be very profitable. However, many successful real estate professionals are able to double their earnings once they get past the initial learning curve. Read more

For example, a new real estate agent may sell a property in their first year that has a sales price of $200,000 and receive a 6% commission which amounts to $12,000 in total. However, there are several different ways that real estate agents can structure their commissions to increase their overall earning potential.

Most agents are paid on a commission basis, but some work for brokerage firms that pay them a salary in addition to their commission. For instance, Redfin is a company that employs full-time real estate agents and pays them a salary as well as a bonus based on their sales. The company also offers a range of benefits that other brokerages might not offer to their employees.

It is important to note that the actual amount of money a real estate agent makes will be impacted by a variety of factors such as their working hours, their experience level, and how much they can push their clients to pay for properties. Many real estate agents can increase their earnings by focusing on high-end and luxury homes in a given market. It is also important to consider how the cost of living in a particular area can impact real estate agent salaries.

A real estate agent’s earnings are typically eroded by taxes and business expenses. Federal, state, and self-employment taxes as well as business expenses such as real estate association dues, advertising, and Multiple Listing Service (MLS) fees can take a significant chunk out of an agent’s income.

In addition to these costs, a real estate agent must also factor in their own personal expenses such as insurance, phone, internet, and car. As such, it is recommended that real estate agents budget their expenses carefully and keep their expenses in line with their income to avoid financial stress.

A common misconception is that real estate agents only earn a commission when they sell or lease property. While a portion of the commission does go to the real estate agents, the majority of it is used to cover expenses and marketing. It is important for potential real estate agents to understand the overall picture of how much a real estate agent can make before making a career move.


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