Before anyone decides to pursue a career as a real estate agent in 2022, one question lingers in their mind: how much do real estate agents make?

Table of Contents

  1. What’s the Average Real Estate Agent Income?
  2. Is a Real Estate Agent Career Lucrative?
  3. What Factors Affect a Real Estate Agent’s Income?
  4. How Do Real Estate Agents Make Their Money?
  5. Three Ways to Earn More Money as a Real Estate Agent
  6. Key Takeaways

If you’re looking to get licensed and start working as a real estate agent in 2022, whether on a full-time or part-time basis, you need to know what your earning potential looks like. After all, no one wants to spend their money and resources getting certified only to run a loss-making venture.

In today’s article, we seek to answer the question: how much do real estate agents make? We’ll also look at factors that contribute to an agent’s earnings, as well as how you can make more money.

What’s the Average Real Estate Agent Income?

How much do real estate agents make? In 2019, the median gross income for real estate agents in the US was $49,700. In 2021, the number rose to $59,980.

However, keep in mind that the above numbers might not necessarily influence your income in any way. There are many factors that we’ll look at later that affect your income. The factors include part-time and full-time real estate agents’ income, as well as commercial and residential real estate agents. 

The statistic also doesn’t consider that agents in some states earn considerably higher than their counterparts in other states. 

How much do real estate agents make in California? Real estate agents in California earn an average income of $68,860, compared to agents in Arkansas, who make an income of $41,660 on average.

How much do real estate agents make in Texas? Texas is one of the most lucrative states for real estate agents. Agents in the state earn an average income of $72,480. It is a considerable figure compared to agents in Kansas, who make an average income of $46,640.

How much do real estate agents make in Florida? Real estate agents in Florida report an average income of $57,520, compared to $46,880 for real estate agents in Michigan.

Is a Real Estate Agent Career Lucrative?

The short answer to the above question is “it depends.” Besides other factors that we’ll be looking at in a short while, your salary as an agent is determined by the amount of hustle you put into the job. 

While we don’t want to sound like the cliche advice from motivational speakers, real estate agents who win don’t separate their work from their ordinary lives. They simply breathe, eat, and sleep selling real estate. They strive to become resourceful in their real estate community.

For example, they will take up leadership roles in their local churches, will volunteer to serve at large charities, and will host industry networking events for other real estate professionals to benefit from.

As you can tell, the transition from a newbie to a seasoned agent earning six figures doesn’t happen overnight. You need to put in the work and think beyond obtaining a real estate license. 

Also, there’s an ugly side that’s rarely spoken about. Most agents find it difficult while starting out. Newbie agents are often broke when starting their careers and also possess scarcity mindsets.

However, soon enough, they overcome the darker days and start getting obsessed with real estate. They soon realize that the game isn’t all about earning a commission check only but also helping their clients achieve their investment goals and dreams.

What Factors Affect a Real Estate Agent’s Income?

As we’d promised above, while looking at how much money do real estate agents make, let’s look at some of the factors that affect how much a real estate agent earns.

Real Estate Niche

Firstly, real estate income from different specializations is different. It can be influenced by the volume of sales, price tags, and other niche factors. 

On average, residential real estate agents don’t make as much as commercial real estate agents. Similarly, an agent dealing with luxury properties could be earning an entirely different income from another agent dealing with commercial properties in the same zip code.

Other lucrative markets you can consider include green properties, international investments, and buyers relocating to another location in search of greener pastures. 

Niche values also vary depending on location. The key is to carry out due diligence on your location to find out which available opportunities are more and the best place to buy rental property.

Related: The Ultimate Real Estate Due Diligence Checklist

Hard Work and Skill

Secondly, your agent commission check is what you make of it. Answer the following questions to guide you here:

  • Are your negotiation skills top-notch? 
  • Do you work ordinary hours, or will you sacrifice some time at the office to meet a client? 
  • How successful are you at getting your clients under contract?

Working longer hours in real estate means you stand to earn a high income. Statistics show that agents who work 40 to 50 hours weekly make around $113,054. On the other hand, agents who work 51 to 59 hours can expect an income of $143,469. Please note that the said figures are estimates that may also be influenced by various other factors.

While we can say that the average real estate agent income in a certain location is X, it’s not assured that you’ll hit that amount if you can’t negotiate well and get more clients under contracts. If you put in the work, you might actually make more than the average real estate agent income in your location.

Level of Experience

Since your income as a real estate agent is influenced by your ability to perform well, it makes sense to say that your level of experience determines how much money you make. Just like the hours you put in, more experience in real estate means you earn more. 

As an entry-level agent, you can expect to make around $44,000. This average can increase by more than $30,000 by the time you reach the peak of your career. 

Seasoned real estate agents might make as much as between $149,000 and $164,000. Again, these are estimates that may be influenced by other factors. Remember, it isn’t like any other government job where you’re assured of a salary increase every year.

The bottom line is that the more time you spend working as a real estate agent, the more you build a strong client base, learn better strategies and find better ways to maximize your income.

How Do Real Estate Agents Make Their Money?

While we might assume that most people know how much do real estate agents make once they become one, we don’t want to leave any gaps.

Unlike many traditional careers, real estate agents aren’t under a monthly salary. They earn their money from the commission they get from their brokers. While commission-based is the typical arrangement, it’s not always the case. Some brokerage firms offer some agents a monthly salary to work under them, plus a commission for the deals they bring in.

However, a real estate agent’s career is typically commission-based. It means that the money you take home is a direct reflection of your work and effort. The better you perform, the more income you earn.

How Much Do Real Estate Agents Make per Sale?

Typically, the commission for residential property is usually 6%. The amount is split four ways: the listing agent, listing broker, buying agent, and buying broker. If a home sells for $500,000, the commission is $30,000 for both brokerage firms and agents involved in the transaction.

Again, the commission percentage can also vary depending on the agents involved, the property’s selling price, and the client. For example, if the agent is involved in a multi-million deal, the commission could be as low as 1%, which ultimately translates to quite a significant amount. 

Low commission rates are mainly reserved for commercial properties and real estate deals going for eight and nine figures.

As a listing agent, you don’t make money until your client sells their home. As a buying agent, you don’t make money until your client buys a home. You also won’t make any money if the deal falls through at the last minute.

Since you don’t get paid until the deal is successful and you also don’t know when the next deal will succeed, you need to possess money management skills. 

Three Ways to Earn More Money as a Real Estate Agent

We’ve already answered the question, “how much do real estate agents make a year?” Now, let’s look at what you can do to earn more money in your real estate agent career.

Become a Property Manager

Many property owners who own a few rental properties shoulder the property management tasks themselves. After all, managing two or three tenants, collecting rent, and scheduling their maintenance tasks is relatively easy.

However, property management for 10 or 20 units isn’t easy. This is where you can come in as a real estate agent. It’s not uncommon to see real estate agents doubling up as property managers, especially in markets where short-term rentals are popular.

You simply work with your client to purchase the investment property, then take up the property management tasks once the deal is successful. The property owner will pay you a percentage of the rent collected (mostly 10%).

To boost your income more, you can take on more properties. It will have you earning a consistent income each month.

Keep in mind that property management takes time and effort and can at times be stressful. On the flip side, it’s a great supplement to your commission-based income. You won’t have to worry about sleeping hungry during slow months.

Related: Starting a Property Management Company in 2022: The Complete Guide 

Invest in Real Estate

As a real estate agent, you know that purchasing a property isn’t just about buying a home. It’s also an investment. Since you’ve gained a lot of knowledge and experience in the industry, you can now leverage this knowledge and use it to benefit you.

One of the easiest ways for real estate agents to start investing is joining or forming investment clubs. You can find like-minded individuals and put your money together to do big things. The strategy also helps you mitigate the risks involved.

If you choose to follow the said strategy, don’t just work with anybody. Consider the amount of legal work and the property maintenance and management involved. Ideally, a strong investment club should have a real estate attorney, agent, banker, and contractor. In such a way, you have an expert for every step you might consider.

After a few successful investments, you might gain the confidence to go at it alone. It will not only boost your income but also make you a better agent. You’ll now understand your clients’ needs better and put you in a better place to solve them.

Whichever step of the real estate investing journey you are on, you’re going to need Mashvisor’s rental property calculator. It is a tool developed to help investors calculate a property’s potential profitability. The property provides you with the return on investment metrics, such as cash on cash return and cap rate.

How Much Do Real Estate Agents Make - Mashvisor's Rental Property Calculator

Mashvisor’s Rental Property Calculator allows investors to calculate a property’s potential profitability, based on several ROI metrics.

Identify an Underserved Niche

As we’ve seen, real estate markets vary. What might work in Florida might not work in California. It is why you need to understand your local market well and gain a competitive edge against your competition.

If you’re not sure where to start, you can consider the following pointers:

  • College and university students: If you’re in a college town, you can see it as an opportunity to serve students who need housing. While the commission fee for rental agents is lower compared to residential agents, the transactions are much simpler and faster.
  • Short-term rentals: Short-term rentals are increasingly becoming popular in the real estate investing scene. If you’re in a vacation rental hotspot, you can help investors find properties they can turn into Airbnbs. It is also a great way of getting long-term clients. Simply learn what makes a great short-term rental, understand the risks involved, and how to mitigate them.
  • Maximize housing shortage: Sometimes markets experience a high housing demand but low supply. Such scenarios can accelerate the community’s growth since the local government creates tax incentives to encourage builders to develop more housing. Since these builders will be needing land, you can front yourself as an expert in it.

Related: How to Find Short Term Rentals for Sale

Key Takeaways

Most people thinking of pursuing a career in real estate ask, “How much do real estate agents make?” There’s no definite answer to the question. It depends on many factors, such as location, level of experience, and the amount of work you put in. However, we’ve listed some tips you can use to increase your income as an agent.

On top of the above tips, you need to realize that successful agents go above and beyond to market themselves. They fuse both traditional and online strategies to see the best results. One way to do it is by claiming your free profile on the Mashvisor real estate agent directory.

Click here to access your free profile.

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