How much did real estate agents make this year?
How real estate agents make income and whether this amount is good money that can be dependable is always asked. Well, most buyers and sellers who decide to buy and sell their property may for once involve the real estate agents to close on deals. The real estate agent will help close the deal, and they earn their money through commission based on the percentage of the home selling price. In this article, we have crunched the numbers and figured out whether real estate agents earn a good amount of money.
There are two methods for a real estate agent to profit from the sale of a house.
A real estate agent has a bilateral contract with a customer under which the agent has a fiduciary obligation to meet the client’s needs in exchange for a commission from the client. The realtor can potentially profit from the sale of their own house. Well, it may not look so when you are at the closing table and watch your agent collect a hefty check for what appears to be very little labor. However, trust me on this. Behind the scenes, much effort is made. It is a very competitive industry. At the very least, the 80/20 rule applies in each given market. Eighty percent of the agents fail or live on a subsistence level. Many, like aspiring performers, have part-time or full-time jobs to supplement their income while attempting to make it in real estate. So, on average, 20% of agents are successful.
There are also more reasons why real estate brokers do not make a good living. In the United States, there are far too many licensed real estate agents. Many people obtain a license solely to conduct their transactions or work part-time in the industry.
A substantial majority of licensees conduct only one or two transactions per year on average. This significantly reduces the average wage. Most of the successful full-time agents I know earn many times the average compensation you indicated, and they handle at least 10–12 deals each year or more. To achieve and sustain that level of sales, an agent must rank in the top 10–15 percent of the profession. Top agents work hard and long hours, and it is estimated that they cannot earn more than $40,000 per year.
The amount of money that agents make each year is determined by various factors, including the number of deals they complete, the commissions they earn, and the split the agent has with their sponsoring broker. Above are how real estate brokers are compensated — and how much they earn.
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Not as much as you may think
The National Association of Realtors puts out a Member report annually. In the 2018 report, NAR lets us know:
Boston Real Estate Agents Made $50,800
According to NAR this is the median gross income of all Realtors from real estate activities in 2017. Realtors median business expenses for the year totaled $4,580. After all taxes and all expenses, the median net income of Realtors in 2017 was a mere $25,900. The Realtors who worked less than 20 hours a week had a median gross income of $8,930 a year and those who worked 60 or more hours per week had a median gross income of $102,630. For experienced Realtors with over 16 years in the business, the median gross income was $78,880 and the median net income $48,750. Of course, from coast to coast home prices (and cost of living) varies tremendously. So real estate agents in Chicago, for example, that complete the same amount of sales as real estate agents in Portland would have a significantly higher median income, but also, of course, a higher cost of living for themselves as well.
What does the average real estate agent look like?
The typical Realtor is 54 years old, sells 11 homes in a year, and worked 40 hours a week. Interesting the NAR reports, “the typical Realtor was a 54-year-old white female who attended college and was a homeowner.” Again, all of this information is from the National Association of Realtors 2018 member report.
Want to become a Real Estate Agent?
Realtor membership is at a record high. Read our 2018 update article on exactly how many Realtors there are right now. Competition is fierce, and the average income levels are poor. I can’t say I’d recommend it. However, if you are excited and determined to become a real estate agent, I highly recommend joining a real estate team as a paid intern when you’re starting out. It is a great way to learn the ropes. I do not recommend starting out as a 100% commission sales agent, that is a tough road and only a few make it. Bottom line, the majority of real estate agents do okay, plenty do not do well at all, and only a few do exceptionally well.
Work with a top 1% Realtor
Only 5% of Realtors sold more than 51 homes in a year in 2017. Only 5% represented sellers in more than 11 listings a year.