How Much Do Real Estate Agents Make on Average Each Year?

The salary of a real estate agent depends on several things, including real estate exam education, hours worked, and more. 

Are you looking to switch careers? Maybe you're interested in getting started in real estate, or maybe you've even completed your real estate exam education and are wondering what's next. Prospective real estate agents and even regular people often wonder how much real estate agents get paid, but it's not always so easy to understand. "How do real estate agents get paid?" is a common question and one that has a definite answer, while questions such as "how much do real estate agents get paid?" are often a bit more complex to answer with just a number. The real answer is that it depends. 

How Much Can a Person Earn as a Real Estate Agent?

Most real estate agents get paid based on commission. That means that they earn either all or most of their income when they sell or help buy a property. On average, when a person sells their property with help from a real estate agent, the seller will pay a 5-6% commission on the sales price of the property. This commission is divided between the buyer and seller agents. 

For example, a property that is selling for $250,000 will typically have a common agreement for each side - the buyer and seller agents - to earn a 3% commission. Once it sells, the agents will each expect to earn a $7,500 commission. 

However, most agents don't expect to pocket that entire $7,500. Most commissions are split in more ways than just between the buyer and seller agents. The broker (the company that the agent works for), also gets a cut of the commission. For new agents, this might be 50%, while for more experienced agents, the percentage may be less, but it all depends on the brokerage. 

Real estate agents also have to pay for all their expenses. This can include real estate exam education, continuing education, professional association fees, driving clients around, advertising expenses, signs, and more. 

Based on the example above, the agent may only get about $2,500 after expenses for the single property that they've sold. 

Income Is Based on the Number of Transactions

The average real estate salary is based on the number of transactions they have each year and the dollar amount of each transaction. According to the National Association of Realtors, average members have about 12 completed transactions each year. Let's say the average commission earned is $5,000 per transaction after expenses - that means they would make roughly $60,000 each year.

This number can be lower if you're a new real estate agent with fewer transactions or maybe even working part-time. Based on the Bureau of Labor Statistics, average real estate agents earn $45,990/year. However, the range of income can be quite large. 10% of agents earn less than $23,000, while the top 10% earn more than $110,000. 

How Quickly Can You Get Your First Commission?

One of the things most real estate agents look forward to is generating their first commission, and generating it quickly. The first step is to complete your real estate exam education and cover the upfront fees, which can cost you a few thousand dollars. These can include license costs, education, signs, and ads. 

To ensure that you can start earning money quickly in the real estate industry, it's important to let your friends and family know that you're an agent. Let your followers on social media know, and let people know through personal contact. The key is to get the word out. Once you secure a couple of transactions, you'll start getting more business through referrals. 

Keep in Mind That You Need a License

It's important to remember that to become a real estate agent, you'll need to have a real estate license. To do this, it's crucial to go through the necessary real estate exam education classes, pass the state and national portions of the exam, and keep up with your continuing education to maintain your license. PrepAgent provides exam prep in all 50 states to prepare you for your exam.

Final Thoughts

While understanding how much a real estate agent is important, it's really up to the agent to determine their salary based on their drive and how aggressive they are in the industry. As an agent, you'll want to be within the top 10% of earners; however, this comes with eagerness to learn and an aggressive drive.