In today’s world, the housing industry offers one of the widest ranges of career options. By investing sincere efforts in this profession, you can not only gain financial freedom, but also a quick career progression.
If you are aspiring to become a real estate agent, there is one question that comes up often. How much do real estate agents make? As per the latest data, the average annual salary of real estate agents in the US is $43,522.
However, the actual figures can vary between $42,517 and $55,360 depending on other factors. In this article, we will talk about the earnings of real estate agents and the factors that impact them.
How to Start a Career in Real Estate?
It is relatively simple to start a career in real estate, no matter what your background is. If you prefer to be an independent contractor and love interacting with people, this is indeed a rewarding career.
At the same time, not all who are in this profession do it for the money. Some love the challenge and excitement, and others enjoy helping people in finding their dream home.
That said, the path from starting your career to becoming a successful real agent involves a lot of hard work. Since you need to play multiple roles while interacting with buyers and sellers, it is not an easy profession.
To become a licensed real estate agent, you need to go through a pre-licensing course and clear the real estate license exam. The next step is sending an application to the real estate regulatory organization of your state for license activation. The entire process can be completed within a period of six months.
Once you have cleared the exam, you can start on your own, or work for a brokerage. Starting with a brokerage will help you to develop your skills and learn about the profession.
Here is a look at some of the common tasks of any real estate agent.
Completing various documents, agreements, and lease records, and submitting the same.
Planning and organizing open houses, meetings, and showings.
Develop marketing plans.
Maintaining and organizing records and correspondence through paper and electronic filing systems.
Generate monthly, and annual budgets.
Creating and distributing promotional materials and maintaining websites and social media presence.
Corresponding with clients, developing client databases, and networking.
How Much Do Real Estate Agents Make?
The real estate agent salaries are based on commissions that are earned during the sale of a property. Generally, the commission is around 5% to 6% of the listing price of the property. This amount is split between the agents involved in the process.
For example, the commissions from the sale of a property in Manhattan or San Francisco can easily reach seven figures.
However, not every real estate deal is so lucrative. Some of the states where real estate agents earn the most are New York, Texas, Hawaii, Alaska, and Rhode Island. Ohio, Arkansas, Montana, Indiana, and West Virginia are some states where the earnings are the least.
The exact volume of earnings in a year will depend on the number of completed sales. The location and the size of the property also play an important role in determining the total earnings. In most cases, an agent can only sell a handful of homes in a year. The numbers will also depend on their region and the market conditions.
The top agents who make the highest volume of money through selling are termed as the top producers. They can earn around $112,610 in a year. Some of the best real estate agents can earn $500,000 or even more per year. The common saying is “10 percent of the agents do 90 percent of the deals”.
For a beginner, the earnings can be irregular. An agent may have to go for months without making a sale. The earnings rise with time and more experience. Once an agent has established a client base, the chances of generating a high income are much more
How Do Real Estate Agents Get Paid?
As we have already discussed, real estate agent salaries are paid through commissions. Not all property deals will pay a 6% commission. For some residential properties, the commission can be as low as 1%. For others, it can be as high as 10%. The rates also vary depending on the location.
In principle, the commissions are negotiable. However, some agents are not willing to negotiate and the commission figure mentioned in the listing agreement is considered final. This is an agreement regarding the marketing and sale of the property between the seller and the listing agent.
Keep in mind, real estate brokers have multiple agents working for them. That way, they collect a commission split from each of the agents.
How Do the Real Estate Commissions Work?
The commissions earned from a property sale are usually split in four ways among the following professionals.
The listing agent
The broker the agent works for
The buyer’s agent
The broker the buyer’s agent works for
Agents working with a broker do not get paid directly. The commission payment is made to the broker. The agent gets paid as per their agreement with the broker. The split between the agent and the broker depends on the agent’s experience and capacity to generate leads.
How to Earn More Money as a Real Estate Agent: 10 Tips
Here are 10 effective tips to help you earn more as a real estate agent.
1. Communicate Effectively
Most home sellers pick their agent through a referral by friends or family. Besides, the majority of the sellers prefer to work with their previous agent. That means you need to stay in touch with previous clients in the best possible manner. One option is to invest in a customer relationship management tool (CRM) to schedule emails and phone calls.
2. Seek New clients
The fact is, you need to put an effort to seek new clients by using all possible sources. If you have started fresh, this is the most important step you can take. For this, you need to do networking, create an online profile, develop a top-quality website, and distribute your business cards freely. The target should be to develop a reliable database of potential leads.
3. Mark your Expertise
Think about the unique skill or area of expertise that will help you to stand out from other agents in a competitive marketplace. You may be more skilled at marketing luxury properties than common residential properties. Perhaps you have a talent for helping homebuyers.
4. Add Certifications
By adding certifications to your title, you can stand out as a more experienced and professional real estate agent. Joining online classes for extra certifications can be effective in impressing the clients and help in increasing leads.
5. Make use of Technology
Since home buyers are spending more time researching on the internet, you need a robust presence in this space to make the right impact. For that, you can place advertisements on popular real estate websites. The next step is to develop your own mobile-friendly website with a live chat feature.
6. Use Social Media
An active presence on social media platforms is a must to expand your outreach. Set up your business page on Facebook and start a digital marketing campaign. Showcase the homes or properties you have for sale by posting videos on YouTube. Share pictures of the properties, and promote events and open houses through Instagram.
7. Use Prospecting
Cold calling clients may not sound attractive, but it is one of the most effective ways to reach out. In fact, research has indicated that a few hours of cold calling in a day does yield results. It’s an effective method of making your chances of getting listing appointments higher.
8. Work Under a Mentor
Finding a mentor with the right knowledge, experience, and market understanding is one of the best ways to grow as a real estate agent. Many senior agents will be happy to share their views and insights about niche markets. Knowledge gained from association with experienced veterans can go a long way in helping you to earn more.
9. Work as a Consultant
Property developers need an expert for evaluating their new projects. By reaching out to them you can work as a constant from the planning level. Quite often, banks and insurance companies need a market assessment for a property. Connect with them to work as a third-party price analyzer.
10. Invest in Real Estate
You can use your own knowledge to make some investments in the real estate market and earn a significant income in the long run. With some personal experience in your portfolio, you will also be able to handle clients with more confidence.
Now you have a clear idea about how much real estate agents make.
To become a successful agent, diversify your revenue generation techniques. A multi-pronged effort will help you to collect revenue from different segments of the housing industry.
If you are interested in a career in real estate, Christian Saunders Real Estate has a winning culture with some of the most successful agents in our market. Click here to learn more about joining our team.