How Much Do Real Estate Agents Make and How to be Successful At It

If you’re considering starting a new career as a real estate agent, you’re probably wondering, “How much do real estate agents make?

However, before you begin ordering business cards, you first need to consider a couple of factors.

For instance, being a real estate agent is a commission-based job, which means there is potential to make serious money. On the other hand, your success is a function of your efforts. In other words, you can’t show up and expect to get paid for doing nothing.

This article will explain how much real agents make and what other factors to consider. I’ll also cover the steps needed to become a real estate agent. Furthermore, I’ll share some insights from experienced REALTORS on why some agents fail and what advice they would give to have a successful real estate career.

How Do Real Estate Agents Get Paid?

Real estate agents don’t receive a base salary. Instead, real estate agents earn money when they sell a real estate property, such as a house, and receive a commission for it. The commission is a percentage of the property’s purchase price, which the seller pays for. Thus, the buyer isn’t responsible for paying either the buyer’s agent or the seller’s agent.

On average, a real estate agent commission is five to six percent of the purchase price. However, some agents are willing to negotiate with clients and offer a discount. For example, an agent may represent both the buyer and seller or the agent has received repeated business from the client.

However, it’s essential to understand that the real estate commissions do not entirely go to the seller’s listing agent. Instead, the seller’s and buyer’s brokerages split the commission 50/50—afterward, the agent and broker divide it between themselves.

Those who share the commission:

  • Seller’s broker
  • Seller’s agent
  • Buyer’s broker
  • Buyer’s agent

The split between the agent and the broker varies, such as 50/50, 60/40, or 30/70. The agent’s years of service or production can positively affect how much of the split they receive. Therefore, it’s normal for a real estate agent just starting to receive a smaller cut.

For example, a listing agent helped their client sell their house for $300,000. For a 5% commission, the commission upon a sale is $15,000 ($300,000 x 5%). The seller’s and buyer’s brokerages split the commission between them. Therefore, each brokerage receives $7,500 ($15,000 / 2).

Afterward, the seller’s broker and seller’s agent agree amongst themselves to share their commission 50/50. Thus, each receive $3,750 ($7,500 / 2).

When Do Real Estate Agents Get Paid?

Real estate agents only get paid when a seller transfers their property ownership to the buyer. Real estate professionals refer to this transaction as closing. This closing day usually includes the lender, the title company, and the real estate agent.

Therefore, if the buyer and seller’s purchase agreement contained a contingency, such as a failed home inspection, the buyer has the right to walk away from the deal. In this case, the real estate agent will not get paid for their efforts.

Another example that can prevent closing on a property is when a lender does not approve a buyer for financing. Lenders hire a third-party to perform an independent appraisal of the property.

Lenders won’t finance a property if the purchase price exceeds the appraiser’s valuation. For this reason, sellers prefer accepting full cash offers, especially in bidding wars.

How Much Do Real Estate Agents Make?

The average real estate wage for real estate agents ranges from $42,000 to $49,000 annually, according to the following reports:

  • The U.S. of Labor Statistics shows that the median annual wage for real estate agents is $48,930 (May 2019).
  • reported a lower median yearly salary of $42,821 (December 2020).
Real Estate Agent Sales Agent by Percentile From

However, these figures don’t specify how many years of experience for the real estate agents. According to, a real estate agent with more than ten years had a median annual wage of $47,166, which is $4,345 above the median.

Also, the NAR reported that a REALTOR with more than 16 years of experience had a median gross income of $71,000. This increase in gross income for a seasoned real agent can result from various things.

For example, a broker may be more willing to share a larger percentage of commission to reward a real estate agent’s experience. Furthermore, a seasoned agent has also built more relationships and connections over time, allowing them to produce more efficient results.

Below is a table showing the median annual income for different years of experience from

Years of ExperienceMedian Annual Income
Less than two years$42,304
3 to 4 years$42,452
5 to 6 years$42,599
7 to 9 years$43,168
10 to 14 years$47,166
More than 15 years$49,426
Median Annual Income Per Years of Experience From

Out-of-Pocket Expenses

Although a real estate agent technically works for a brokerage, they operate like contractors or small business owners. Several expenses can chip away at their commission check. A broker may be willing to help their agent with costs, but ultimately it’s the agent’s responsibility.

A couple of out-of-pocket expenses are the following: brokerage fees, REALTOR membership fees, access to the Multiple Listing Service (MLS), and Error and Omissions Insurance. Additionally, real estate agents have to pay for their marketing, website, and any travel expenses.

Factors That Can Improve A Real Estate Agent’s Income

Real estate agents make money when a property sells. However, certain factors can help increase an agent’s income above the average salary.


Although a 6% commission rate is the average, some real estate agents charge a higher commission on the listing agreement due to their experience. However, more years of service doesn’t necessarily guarantee someone is the best real estate agent.

Property Type

Agents that expand their clientele outside homeowners can also increase their take-home pay. Real estate agents can make a lot more money selling commercial real estate than residential real estate, mainly because commercial properties have a significantly greater purchase price.

Lead Generation

A real estate sales agent can make more annually by generating more leads and selling more houses. Developing an efficient prospecting system usually comes with time, along with building connections with other agents.

A young real estate agent can achieve success and make good money. They have to hustle and put in the work like any good business owner.

How to Become a Real Estate Agent in 3 Steps

Step 1: Take Pre-Licensing Courses

Each state has different requirements to be a licensed real estate agent. For example, in California, a person must take three real estate classes for 165 hours. On the other hand, New York only requires 75 hours of salesperson qualifying education courses in real estate.

Therefore, it’s essential to research a state’s real estate licensing information. Being licensed in one state doesn’t permit an agent to practice in another.

Courses can be completed on-line or in person. But, make sure the classes are recognized and accepted by the state.

Step 2: Take Real Estate Salesperson Exam

Your course instructor should be your first resource in helping you apply for the real estate salesperson exam. Be sure to follow the application process to avoid delaying the exam.

It’s to your advantage to take the exam sooner rather than later while the information is still fresh in your mind. Most states require a background check, which can take weeks to finish. So, keep on studying!

Step 3: Join a Brokerage

Agents are not allowed to sell houses independently. Instead, agents must join a real estate brokerage, where a broker will oversee all the agent’s transactions.

Interview several brokerages to find the one that works best for you regarding assistance, guidelines, and commission. Real estate is all about relationships. So, it’s essential to have a good one with your broker.

Some agents prefer a brokerage associated with a known real estate brand. They believe that it can help market themselves.

However, the name of a brokerage doesn’t automatically provide success. Other successful and seasoned agents decide to become a real estate broker and start a new brokerage.

How To Be Successful in Real Estate

There is a misconception that being a real estate is an easy career. Although acquiring a real estate license is a straightforward process, new agents quit within five years.

I interviewed two seasoned real estate agents to get their opinion on what it takes to be successful. They have a combined 30+ years of experience in the real estate industry, helping people sell and buy a home.

Heeran Workman, an Associate Broker for eXp Realty, says about real estate agents, “They assume that once they get their license, everyone they know will automatically hire them for the job. Most fail because they don’t prospect for clients.”

Shawn Prouse, a REALTOR with Berkshire Hathaway, adds, “An agent doesn’t run their profession as a legitimate business and cuts corners or isn’t dedicate to the process, not fully committed.

Furthermore, like any sales job, being a successful real estate agent is all about time management and creating a process to generate more leads. Prouse states, “If you fill [your time] with business generating activities, you will become successful.”

Workman adds, “A successful agent will most likely be a well-rounded person who has a great prospecting system to look for new clients…and continues to keep this funnel moving.

What Else Can a Real Estate Agent Do With a License?

If you’re having difficulty as a real estate agent finding clients wanting to sell a house, there are other things you can do to leverage your license.

Become a REALTOR

A REALTOR is a licensed real estate agent who is a member of the National Association of REALTORS® (NAR). However, a licensed real estate agent is not necessary a REALTOR. The NAR holds REALTORS to a higher standard by adhering to the Code of Ethics & Standards of Practice.

Many real estate agents decide to become REALTORS. This title can build confidence with potential clients and help agents gain more business.

Start a Property Management Company

A majority of states require that a property manager be licensed. A property manager’s responsibilities include marketing properties for rent, calculate rent affordability for a tenant, and handle repairs.

Running a property management company is an excellent way to supplement their income. A manager’s fee ranges from 6% to 10% of the monthly rental income. A property manager that takes care of multiple rental properties can make a sizable income.

For example, a rental property with a monthly rental of $1,500 and a 10% property management fee would yield $150 a month ($1,500 x 10%). Imagine managing 20 properties with the same monthly rental income; That is $3,000 a month ($150 x 20).

Perform Broker Price Opinion (BPO) Work

A Broker Price Opinion (BPO) is a report created by a licensed real estate agent that estimates a property’s value, similar to an appraisal.

The difference between an appraisal and a BPO is that the appraisal must conform to the Uniform Standards of Professional Appraisal Practice(USPAP). Also, a BPO can be relatively less expensive compared to a formal appraisal.


Acquiring a real estate agent license or registering as a REALTOR is a straightforward process. However, what you do after you pass the examinations is ultimately up to you.

A real estate agent’s salary can vary, which shows that the level of effort can directly affect success. You’ll need a good understanding of real estate legal knowledge and personal skills to coordinate a closing. If you have excellent sales ability and market skills, you may fit well for a real estate career.

However, don’t spend your time chasing commission checks. Instead, always put your clients first. A satisfied client can lead to referrals, which can generate more real estate sales.

Real estate is all about relationships. Sellers want to choose a real estate agent that they can trust.


This article originally appeared on Your Money Geek and has been republished with permission.

Is 2012 the Time to Buy to Let Mortgages?

For many, homeownership has become impossible. People are leaving their homes in record numbers and this means that rental properties are in demand. As investors consider whether or not to take on a buy to let mortgage, they are shopping around for the right property as well as the right interest rate.

So how do today’s rates stack up to the rates of the past? Is this the year to take on that investment project and purchase rental property?

Lower Rates

When compared to the buy to let mortgages of the past, today’s rates have decreased somewhat, making it a great time to take the risk. While these rates are typically more than a traditional mortgage, the rates often follow the same pattern. Any change in interest rates means paying less for the property in the long run. There are benefits to taking advantage of these low rates.

In the future, as the financial situation gets better, there is a chance that the rates will once again increase. However, the interest rate is not the only thing to consider when determining whether or not 2012 is the year to venture into the buy to let industry.

Financing Difficulties

While the rates may be low, it does not mean that everyone can pick up rental property. The amount of money needed as a down payment has increased significantly. An individual looking to become a rental property owner needs to come up with much more capital down if they want to take on the venture.

In the past, lenders required around 15% of the property’s value to be put down. Now, the down payments often start around 25% and increase from there. If someone has the money to invest, they can pick up a great deal.

More Opportunities

With homeowners vacating their properties because of finances, there is a demand for rental property. People need a place to live and they are looking to rental companies and individuals to offer housing at an affordable price. For some, this means that a buy to let purchase is less of a risk.

They feel fairly confident in the fact that they will be able to find someone to rent the property. If they can find a tenant that pays on time, it can be a positive investment with long-term benefits.

If you are looking into a buy to let mortgage, be sure to shop around for the best deal or even consider Melbourne Mortgage for your needs. While you need to keep an eye on the interest rate, you also need to pay attention to the amount you need to put down as well as any fees or penalties that you will need to take care of.

5 Reasons Why Renting is Better than Buying

reasons why renting is better than buyingWith marriage around the corner I seriously considered buying my first place.   After talking this idea over with Hannah, we both decided that it would be best if we rented and purchased a place later down the road.

So, this got me thinking, what are the advantages of renting over buying?   I’m sure you can do a simple Google search and find your answer but I’m going to share with you a couple reasons that really stick out to me, especially in this stage of my life.


1-  No maintenance or hidden costs

This is a real beauty of renting.   Anything that goes wrong is on the landlord’s shoulders.   Talk about a big relief!   It costs some big coin to fix things like broken refrigerators, heating and air conditioning units, and plumbing problems.   When you rent, all you have to do is make a call and hopefully it gets fixed stat.   I’ll be honest, getting married is expensive.   I wouldn’t want to add any additional expenses to my life!   I’d rather settle down with Hannah and get our finances in order before we made a move on a condo or home purchase.


2-  Flexibility for employment

We all know that the economy is still in shambles and could get worse at any moment.   If I had owned a home in Washington, I wouldn’t have been able to start my career down in San Diego!   When you rent, you can move around the country for employment opportunities.   This is assuming that your lease is up.   But heck, a 12 month lease is better than a 30 year mortgage!   I can’t tell you how many of my friends have had to move around the country to find a job.   Don’t let home ownership slow down your career growth.


3-  Fancier living and added perks

When you rent, you can typically live somewhere a little nicer than if you purchased.   We all have had dreams of living on the ocean or way high up in a high rise building.   If you rent, you can pursue these dreams and not break your bank.   I’m picky about marble countertops and updated bathrooms, so renting makes much more sense to be because it’s much more affordable when you don’t have a mortgage!

Another benefit is perks.   Many complexes that rent out their unit have community pools, BBQ areas, and even a gym.   What house has a pool or a home gym?   You’d have a shell out some cash to get these types of perks.   Plus, with a gym within your complex, you can say goodbye to gym memberships!   Perks often times equal cost savings.   It’s something to think about when you’re deciding between renting and buying your next place.


4-  Consistent budget

Don’t you just hate unexpected expenses?   I know I do!   When you rent, you will never have to worry about unexpected expenses like a broken shelve in the kitchen.   The landlord is required to fix any issues.   Not only are that but there hidden costs like HOA fees and taxes.   Let the landlord take care of it and you can go on living a worry free tenant life.   This also helps with knowing the exact amount of money you will owe your landlord at the end of the month.   It creates an environment where you can manage your money efficiently and know exactly how money is being spent.


5- Insurance is cheaper!

This is a little known fact but renter’s insurance is cheaper than home owner’s insurance!   I didn’t know this either until I did a little research.   Home owner’s insurance is sometimes 15 times the price of renter’s insurance.   This can result in hundreds of dollars every year.   I’ll take these savings any day!


Rent forever

In summary, as you can see, there are many reasons why renting is better than buying.   Now, if we were talking about investing in real estate for cash flow purposes, then this post would be completely difference.   But for the renting vs. owning argument, I’m still a believer in that renting is the way to go for most people!

Use Zillow Before Buying or Selling a Home

Recently, I was catching up with a friend of mine and the topic of business came up.  It had been several years since we last spoke, so I was excited to hear about what he was doing.  It turns out, he is working for a relatively new company called Zillow.  Our conversation took off and what he had to say about Zillow really sparked my interest.  So much in fact, that I felt the need to write up a review/informational post about the company.

First, a little background and history:

-Online real estate database that was founded in 2005 by  Rich Barton  and Lloyd Frink

-Uses a proprietary algorithm called the “Zestimate” to appraise property values based on undisclosed factors.

-Sellers can use Zillow as a marketing tool by appraising their properties, posting property information such as improvements and access to major roads; and comparing nearby property value appraisals.

-Buyers can freely access and track such information online.

-The website currently tracks 72 million valuations throughout the United States.Zillow is ranked in the top 300 U.S. sites in terms of traffic by Alexa.

Why should I care?

First off, Zillow is a totally FREE tool that provides easy access of home properties.  Zillow also offers many other home appraisal services.  Zillow is guided for both buyers and sellers of homes. If you’re a buyer, you can map out neighborhoods and do some research in aparticular area. You can inspect a home’s appraisal value and know if the asking price is too high or not.  Not only that, but you can check out recently sold homes to give you a better understanding of what homes are going for in that area!

Now, if you’re a seller, Zillow is an awesome tool for you!  There is something called the Zindex that calculates your home’s estimated value.  It not only gives you a number but shows you a comparison with your neighbor’s appraised values.

zillow review

Site layout and design

Zillow knows what they’re doing in terms of site layout and design.  Everything about their site platform is crisp and lightning fast.  They make it easy to find things through the use of an organized navigation bar at the top of the screen.  Everything from mortgage rates to their personal blog is linked at the top.  Finding things on Zillow is a breeze.  I was especially impressed with their home finder map, which was very interactive.  Zillow has made an effort to make the site visually friendly and it shows.

Zillow Mobile

As if their site wasn’t enough, Zillow has developed a completely free app for common electronic devices out there.  With the Zillow app, you can simply scan the surrounding area where you are standing and the app will tell you the prices of homes nearby.  It will also show you historical records, latest listing, and property pictures.  I can see this app being great if you were in the market to purchase a home and wanted to simply drive through neighborhoods and check out prices.  It’s instant and you don’t have to rely on a real estate agent or go through the hassle of navigating the many real estate websites.

zillow android

Zillow Advice and Blog

What I like about Zillow the most is their desire to be a client and customer focused company. Having a more personal blogging platform does the trick.  Zillow has an “advice” section to their site where you can ask industry experts questions about the real estate market.  Along similar lines, Zillow has a fantastic real estate focused blog.  It covers cool stories, market trends, home value information, mortgages, and the latest celebrity home purchase.

I recommend Zillow

After thoroughly navigating their website and reading what others have to say about Zillow, I definitely recommend their website for your next home endeavor.  Add this website to your tool box.  When you save thousands because of the free research Zillow does for you, you will be glad you started using it.

Although I’m a ways off from buying a home, I will keep Zillow in mind and will use them when that time comes for me.  In the meantime, I just found out that the house I’m renting is worth over $500,000!