Successful real estate agents can make good money. Real estate agent salary earnings come from commissions on property sales. And total income can vary widely depending on experience and other factors. It’s important to consider salary opportunities when choosing a career (or switching to a new one) because your income can impact whether you are able to reach your financial goals, like buying a home or retiring.
Real Estate Agent Salary Breakdown
Median earnings for real estate agents hit $48,690 in May 2018, according to the U.S. Bureau of Labor Statistics. That’s higher than the median of $38,640 for workers in all occupations. It also exceeds the median of just $35,720 for all sales workers.
But not all real estate sales workers meet that figure. The lowest-earning agents earned less than $24,650. That’s just over half the median. At the other end, the best earners in the 90th percentile and above collected $112,610, well over twice the median.
A lucky few in real estate sales in the amusement, gambling and recreation industries brought in $190,650. However, BLS counted just 70 people, or 0.01% of total real estate sales employment, in that niche.
Components of Real Estate Agent Salary
As noted, the biggest part of real estate agent pay comes from commissions on property sales. Commissions amount to nearly half of a typical agent’s earnings, according to compensation researcher Payscale.
Profit-sharing supplies another 15%, or a sixth of the typical agent’s earnings. Bonuses come in for another 10% or so. But commissions, the largest portion of an agent’s take-home pay, are only collected when the property transaction closes.
Commissions are based on a percentage of the sale price, commonly 6%. With average home sales prices nationwide nearing $400,000, as calculated by the Federal Reserve, that seems like a lot. But agents commonly split that commission with other agents and brokers.
Just how much they give away is often open to negotiation. Commissions may be higher or lower depending on the type of property being sold. Commercial properties and raw land sales, for instance, often carry much higher commissions.
Other Factors in Real Estate Earnings
A job title can have a significant effect on real estate agent salary as well. Real estate professionals who are trained as brokers and have experience in the field can out-earn agents dramatically. Having “broker” on a business card is worth $58,210 a year, which BLS says is nearly $10,000 more than median agent earnings.
A real estate professional’s location also determines real estate agent salary potential. Job search app ZipRecruiter recently ranked states by real estate sales agents’ estimated earnings. It found a difference of nearly $25,000 a year between top and bottom. Agents in New York average $85,862. They’re closely followed by Massachusetts agents, who average $85,406.
The lowest-earning agents in the country are in North Carolina, where the average take is only $60,988. That’s nearly $5,000 a year lower even than the second-lowest earners in Florida, who average $65,049. Agents in large states like California ($78,600) and Texas ($70,600) fall firmly in the middle.
Experience makes a big difference as well. Payscale says its surveys show late-career real estate agents bring in 36% more than the average. Newcomers, meanwhile, earn 14% below the average.
This job also values skilled negotiators. According to Payscale, agents who can negotiate a solid deal can increase earnings 7% higher than average. Communication skills are similarly prized, producing a 6% increase in income. Customer service, however, earns agents just a 1% pay increase.
The Price of Real Estate Paychecks
Real estate agents can expect to work lots of weekends, nights and holidays. And the more hours, the better. The BLS says many brokers and agents put in more than 40 hours a week. Much of that time is spent networking and connecting with potential clients. That said, real estate professional schedules tend to be flexible.
Unfortunately, real estate earnings can fluctuate with markets. The National Association of Realtors reports agents with its Realtor designation earned 5% more in 2018 than in 2017.
That gives Realtors an advantage, considering the 3.2% increase to overall salaries that the Society for Human Resource Management witnessed in 2018. But real estate markets have down cycles when home sales drop.
Despite some uncertainty, real estate remains an appealing profession with solid earnings prospects and good job growth. The BLS says the 444,000 real estate sales agent jobs in 2016 will expand by 24,900 by 2026. That’s a 6 percent growth rate and right in line with the overall job outlook.
However, in post-recession 2011, the Census Bureau counted 306,000 new single-family homes sold. That was down from 1,283,000 in the boom year of 2005. By 2018, new single-family sales had only recovered to 617,000. Before considering a career as a real-estate agent, you may want to take those market fluctuations and long hours into account.
- Before you consider a career move to the world of real estate sales, consider consulting a financial advisor on how this impacts your greater financial plan. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
- If you’ve made up your mind and are just looking for a place to start, SmartAsset has compiled a list of the top real estate agencies in the country. You may not end up at any of them, but they may be a good place to start your search.
Photo credit: ©iStock.com/Natee Meepian, ©iStock.com/skynesher, ©iStock.com/lucky336