If you're considering entering the real estate industry as an agent, you're likely wondering how much you'll earn in this new career.
How much money real estate agents earn depends on various factors, such as the number of deals or transactions they close, the commissions they bring in from each transaction, and the split with the sponsoring broker.
To give you an idea of what to expect with this new career, we created a rundown of how much real estate agents make in a year and how they get paid.
How Much Do Real Estate Agents Make Annually?
As previously mentioned, there are a number of contributing factors that determine how much money real estate agents make in a year. The average salary for a real estate agent in the United States is $95,554 per year, according to Indeed.
It is important to note that the average salary changes depending on the real estate agent's years of experience in the industry. For agents with up to two years of experience, the average salary is around $86,147. The salary goes up to $113,031 for real estate agents with more than 10 years of experience.
In addition to experience, the area where the real estate agent works is also a contributing factor to the yearly salary. The five cities where real estate agents are likely to earn above the national average include Wakefield, Massachusetts; New York, New York; Charlotte, North Carolina; Honolulu, Hawaii; and Dallas, Texas.
How Do Real Estate Agents Make Money?
Most real estate agents make money through the commissions from each transaction. The commissions are based on a percentage of a property's selling price or flat fees agreed upon at the start of the transaction.
Commissions from real estate transactions are not directly paid to the agent. These are first given to the real estate brokers where the agent is employed. The broker splits the commission with any agents involved in the transaction.
Currently, the usual commission for each transaction is between 5% and 6%, depending on the conditions of the housing market. However, this may soon change following a landmark ruling against several large brokerages in the country.
Apart from commissions, some real estate firms such as Redfin pay their agents a salary and a bonus based on customer satisfaction ratings.
READ MORE: Real Estate Agents May Soon Say Goodbye to 6% Commissions
