Content of the material
- How Much Do Real Estate Agents Real Estate Brokers Earn?
- Who Makes More Money, a Real Estate Agent or Broker?
- Where Do Real Estate Agents Make the Most Money?
- Where Do Real Estate Agents Make the Least Money?
- Where Do Real Estate Brokers Make the Most Money?
- Where Do Real Estate Brokers Make the Least Money?
- How much do real estate agents make per year?
- Example of a Real Estate Commission
- What do real estate agents and Realtors do?
- Are You Supposed to Pay Your Real Estate Agent?
- 10 States Where Real Estate Agents Earn The Least Money
- How Real Estate Commissions Are Paid
- An Example
- Alternatives to using a real estate agent or Realtor
- How Are Real Estate Agents Paid in Texas?
How Much Do Real Estate Agents Real Estate Brokers Earn?
For this analysis, we used a Bureau of Labor search tool to find the mean annual salary of real estate agents and brokers in each state. Here are the results.
|State||Agent||Broker||+/- national average for agents||+/- national average for brokers|
* This data was taken from a search tool that accessed 2019 census data. These numbers are the mean salary of real estate agents and brokers in each state. Connecticut, Iowa, Mississippi, Nebraska, Montana, New Jersey, North Dakota, Pennsylvania, Rhode Island, Tennessee, and West Virginia did not have available census data for the mean salary of real estate brokers in their state. For these states, we used self-reported salaries from ZipRecruiter.com.
Who Makes More Money, a Real Estate Agent or Broker?
According to our analysis, the median national salary for a real estate agent is $48,930.00. For a real estate broker, however, the median national salary is over $10,000 more at $59,720.00. On average, brokers make more annually than agents.
Where Do Real Estate Agents Make the Most Money?
Where Do Real Estate Agents Make the Least Money? Rank State Average Salary 50 Illinois $30,270.00 49 Louisiana $33,930.00 48 Ohio $37,890.00 47 Wyoming $38,224.00 46 Kentucky $38,270.00 45 Arizona $38,290.00 44 Arkansas $38,410.00 43 Oregon $38,560.00 42 Kansas $38,800.00
Where Do Real Estate Brokers Make the Most Money?
Where Do Real Estate Brokers Make the Least Money? Rank State Average Salary 50 Illinois $29,860.00 49 Oklahoma $31,440.00 48 Missouri $33,450.00 47 Florida $37,860.00 46 South Dakota $39,270.00 45 Alabama $45,700.00 44 Louisiana $48,110.00 43 Utah $48,200.00 42 Arkansas $50,320.00
How much do real estate agents make per year?
The U.S. Bureau of Labor Statistics puts the median annual wage for a real estate agent at $48,340 — meaning 50% of agents make more and 50% of agents make less.
|State||Per sale||Per hour||Per year|
|District of Columbia||$4,074||$30.97||$64,420|
While most agents work on a commission basis, you can calculate their earnings by adding up their entire take-home commissions over the year.
The typical take-home pay for an agent on a $350,000 home (which is close to nationwide median home value) is $5,250.
Median annual earnings / Average per sale earnings = Total number of annual sales
$48,340 per year / $5,250 per sale = 9.2 sales
Theoretically, a real estate agent needs to complete approximately 9–10 transactions a year to earn the national median income.
To break into the top 10% of agents earning $102,170 or more, you’d need to sell approximately 20 homes per year.What determines a realtor’s earnings?
A realtor’s annual earnings are affected by factors like: Location Number of sales Years of experience Hours worked Local real estate prices Out-of-pocket expensesWhat out-of-pocket expenses do realtors pay?
On top of commission splits, most real estate agents — unless they are salaried — will also need to cover: Transportation to get to and from listings Health insurance Taxes Professional membership fees Marketing costs (signage, photography, business cards, etc.) Continuing education
Example of a Real Estate Commission
Here's an example of how a real estate agent is paid a percentage of the commission that the listing broker earns on the transaction.
Say an agent takes a listing on a $200,000 house at a commission rate of 6%. This equals a total commission of $12,000. If the house sells for the asking price, the listing broker and the buyer's agent's broker each get 50% of the commission, or $6,000 each ($200,000 sales price x 0.06 commission ÷ 2). The brokers then split their commissions with their agents.
A common commission split gives 60% to the agent and 40% to the broker, but the split could be 50/50, 60/40, 70/30, or whatever ratio is agreed by the agent and the broker. It is common for more experienced and top-producing agents to receive a larger percentage of the commission.
In a 60/40 split, each agent in our example receives $3,600 ($6,000 X 0.6) and each broker keeps $2,400 ($6,000 X 0.4). The final commission breakdown would be:
- Listing agent: $3,600
- Listing broker: $2,400
- Buyer's agent: $3,600
- Buyer's agent's broker: $2,400
There are cases, though, in which commissions are split among fewer parties. For instance, if a broker lists a property and finds a buyer, that broker would keep the full 6% commission (or whatever the rate in the listing agreement is). Or, if a listing agent sells the property by acting as agent for both the seller and the buyer, that agent would split the full commission with their sponsoring broker. If the commission is $12,000, as in the previous example, the broker keeps $4,800 and the agent receives $7,200 (assuming the same 60/40 split).
Of course, as in other professions, an agent’s earnings are eroded by taxes and business expenses. Federal, state, and self-employment taxes as well as the cost of doing business—insurance, dues, multiple listing service (MLS) fees, and advertising—end up taking sizable chunks of the agent’s commissions.
We used publicly available data from the United States Bureau of Labor Statistics to source information about the annual earnings of real estate agents across the country in 2021.
The salary information in our customized data tables intentionally excludes real estate brokers. Brokers often act as both agents and brokerage managers, so their earnings are generally higher and their compensation structure includes a salary or a percentage of the brokerage’s overall sales.
Average commission numbers and total take home pay were sourced from Clever Real Estate’s 2021 survey of real estate agents in all 50 states.
What do real estate agents and Realtors do?
Whether acting on behalf of sellers or buyers, the duty of a real estate professional is to maximize the benefits his or her client gets from the home transaction.
Agents do this by having:
- An intimate knowledge of the local housing market, including expertise in appraisal
- Negotiating skills to secure the best or optimum price for the client
- Local contacts in the marketplace who can help with the rapid acquisition or sale of a home
- A close knowledge of the legal and mortgage processes involved
- Troubleshooting skills that keep a transaction on track when issues arise
- Interpersonal skills that allow clients to feel comfortable and in control throughout the process
If you pick a good one, your agent can be highly valuable.
Ideally, your agent will have several years of experience in your local real estate market. But new agents can offer a lot of skills and insights, too.
Are You Supposed to Pay Your Real Estate Agent?
Consumers don't pay real estate agents directly. Brokers receive the commission, which is taken from the total proceeds of the sale. This amount is then split between the broker and the agent.
10 States Where Real Estate Agents Earn The Least Money
Here’s a breakdown of the top-10 states in which real estate agents earn the least:
|Rank||State||2017 Mean Annual Wage|
This list is dominated by states of the South and Midwest, with one state representing the Northeast.
How Real Estate Commissions Are Paid
How much agents earn depends on the number of transactions they complete, the commission that's paid to the brokerage, and their split with sponsoring brokers. Agents who are just starting typically receive a low commission split while they learn the business.
Apart from buyer-broker agreements that allow for direct payment to a buyer’s broker, most real estate agents are paid through a listing agreement signed by the seller and the listing agent. The agent signs on behalf of the brokerage.
The listing broker then shares part of that commission with the brokerage that represents the buyer. All real estate commissions are negotiable, but agents set their own rates with fees paid directly to the broker, not the agent. Agents work for brokers.
The seller typically designates how much the buyer's agents are paid, but it's also based on local custom.
A listing commission can vary from a flat fee to 10% or more of the sales price.
Let's look at an example of how much a listing agent would earn if the commission paid were 7% with a 50% split with the brokerage that produces the buyer.
If the sales price were $200,000, the total commission at 7% would be $14,000, of which $7,000 would be retained by the listing brokerage. From that $7,000, the listing agent would be paid on a split; for a first-year agent, you could expect to pay around 60%.
The agent would gross $4,200 at a 60% split. They would net about $2,940 of that after deducting federal and state taxes, which could amount to 30% or more. The agent also pays overhead and expenses, which could eat up another 20% of the gross, resulting in a net income of just $2,352.
Alternatives to using a real estate agent or Realtor
Many sellers think real estate agents’ commissions as too high and try to avoid them.There are three main ways of selling a home without such high costs:
- For sale by owner — At its most basic, this might involve putting up a yard sign, printing and distributing some flyers, and telling everyone you know your home’s for sale. It’s cheap and sometimes works, especially in hot real estate markets. But the risk of undervaluing or overvaluing your home is high
- Flat-fee MLS listing by owner — The MLS is the Multiple Listing Service. It’s the online resource that real estate agents use to let other agents and buyers know that a home is available. Owners can add their listings (which may appear on Realtor.com and Zillow, too) by paying a flat fee — or a smaller flat fee with a success charge on sale
- Trimmed-down services — Some agents offer lower commissions for a more basic service. You might get a menu — from MLS alone through increasingly complete levels of service — from which you choose what you want and how much you’re willing to pay
Are these better ways to sell? That will depend on many factors, including:
- How strong your local property market is
- How good you are at appraising your own home’s value
- How much effort you’re prepared to put into finding a buyer
- How confident you are in your ability to shepherd your sale through to closing
If you’re sure you can handle all those as well as an agent, feel free to sell without enlisting one.
But for many people, working with a real estate agent, broker, or Realtor gives them peace of mind they’re getting the best price on their home from the most qualified buyer.
How Are Real Estate Agents Paid in Texas?
Real estate agents don’t have a typical salary or hourly rate, but instead, work off commission. The commission you’ll earn as a real estate agent in Texas can vary. Agents just entering the field might receive a lower commission split (for example, a first-year agent often receives about 50 percent of the commission paid to the broker). They may also have to split the commission with the buyer’s real estate agent.
Most real estate agents are paid through a listing agreement, which is signed by the seller and the listing agent. The listing broker then shares part of that commission with the brokerage that represents the buyer.