Wondering How Much Money You Can Actually Make as a Realtor? All Your Real Estate Income Questions, Answered

Meredith Hart
Meredith Hart

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The Bureau of Labor Statistics (BLS) projects the employment of real estate agents to grow 6% over the next eight years. If you're considering a career as a realtor you likely have a few questions -- especially surrounding how much money you'll be making.

realtor-salary

I've taken a look into some of the common questions asked about realtor income, and I have the answers for you. Let's dive in and take a look.

How much do real estate agents make in a year?

The median annual income for realtors was just below $46,000 in 2017, according to the Bureau of Labor Statistics. Real estate agent wages vary depending on location, industry, experience, and the amount of real estate sold by the realtor.

For example, real estate agents in the construction industry earned a median annual wage of $54,660, while realtors in the rental and leasing industry made $42,670 on average in 2017. I'll break down how much the top earners make and where they work below.

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This graph shows the annual mean (average) wage real estate agents earned across the United States in 2017.

Source: Bureau of Labor Statistics

Below are the states where realtors had the highest annual average wage:

  1. New York: $102,310
  2. Texas: $72,480
  3. Hawaii: $72,470
  4. Alaska: $71,030
  5. Rhode Island: $70,450

The other main factors that impact how much a realtor makes include the commission they're paid and the number of sales they complete.

Real estate agents make a commission on each house they sell. Once the house is sold, the realtor will receive a percentage of the home's selling price.

How much do real estate agents make per house?

Commission rates are variable, and there isn't a standard percentage -- but, the average commission falls around 6% of the selling price. And this fee is split between the buyer's agent and the seller's agent.

Real Estate Commission

It's common for each side split 50/50, so if the commission is 6% the buyer's agent and the seller's agent would each earn 3% commission. Just like the commission rate, the commission split is variable and there isn't a standard all agents are held to. I've included an example to demonstrate what this would look like.

Let's say a house has a selling price of $350,000 and the buyer's and seller's agents split the commission 50/50 -- each agent would walk away with $10,500. The commission is paid to both real estate agents at the end of the home buying process, once the house has closed.

If each agent is working with a real estate broker, the commission could be divided up further -- the broker provides oversight, consultation, and direction to ensure the home buying and selling process goes smoothly and is properly managed.

The brokers for the buyer and seller's agents will split the commission, and then they'll split their portion with their agents -- these splits are agreed upon by the agent and broker and could be 50/50, 60/40, 70/30, etc. Here's what the commission split might look like if it's split between the agents and brokers.

The selling price of the home is $350,000 and the commission rate is 6%. The commission is $21,000 and the brokers split it 50/50 -- leaving them each with $10,500. Then the brokers will split the commission with the agents 70/30. After the sale of the home, each agent would make $735 and each broker would keep the remaining $315. Below is an overview of what this breakdown looks like.

  • Seller's broker: $315
  • Seller's agent: $735
  • Buyer's broker: $315
  • Buyer's agent: $735

Much of a realtor's income is dependent on how many houses they sell, not just the selling price and commission rate. Experienced agents who have developed strategies for filling their pipeline and perfected their selling skills are likely to sell more homes than a new realtor who's just getting started.

Once you've developed your home selling tactics and, you'll be well-equipped to make more sales and request higher commissions. If you're looking for a real estate job, check out these top resources to find a job as a realtor.

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Topics: Real Estate

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