By Bill Gassett
Are you considering becoming a real estate agent? If so, you're not alone. Many people are flocking to the real estate industry, especially after how it has performed over the last few years.
If a career in real estate seems appealing, you likely want to know how much REALTORS® get paid. Without a doubt, real estate can be a lucrative career. It's also a career with a high turnover rate, and many would-be agents end up flopping and quitting.
Changing careers isn’t easy, so before you make the switch, knowing how much a real estate agent can make is essential. It will allow you to better budget for the transition. Now, you shouldn’t expect to make a killing the first couple of years in the business, because that is not realistic. It may take a while to become established.
Closings take a while, so even if you sold a home in the first month, your first check won't come for months later. You should be financially prepared for this.
If you get past the first year successfully, you'll likely see improvement in the years to come.
Take a look at average real estate agent incomes and the things that affect earnings. You can end up being one of the top producers if you put your mind to it. Before that happens, though, there will be things to know and learn when starting in the business.
How Much Do Real Estate Agents Make?
Many different things contribute to what an agent will make, including their experience, hours worked, niche and quality of life expectations.
Just looking at the average earnings might not paint the full picture, however. To work out what you could earn from a career in real estate, you need to consider how these different factors will apply to you.
Real estate agents are compensated by commission, which can vary dramatically based on quite a few factors. Let’s look at the elements that contribute to annual earnings.
Experience Matters in Real Estate
As with most careers, the experience will generally increase a real estate agent's earning potential.
For example, a new agent who has been in the job for under a year can expect to earn around $55,000 on average. But with a few years of experience, this could jump to $82,000.
Average earnings peak with 11 to 25 years of experience. A real estate agent with this experience could earn more than $164,000 per year.
Some of the upper echelon agents in the industry can make hundreds of thousands per year.
However, earning an exceptional income usually doesn't happen overnight. It takes time to learn the ropes and get the word out that you've entered the industry. You also need to have some of the qualities that make real estate agents great.
Understanding The Hours Worked
Real estate agents that are willing to put in more hours will earn more. At one end of the scale, an agent working 20 hours or less per week could earn around $44,000 annually.
Whereas an agent working 60 hours or more each week could earn more than $172,000 yearly.
Realtors working between 21 and 39 hours could expect average earnings of $72,000. 40 to 50 hours see average earnings of $113,000, and 51 to 59 hours could mean $143,000 per year.
Trying to be a part time real estate agent is very difficult. There are too many things riding on a real estate transaction for a real estate agent not to be able to be reached at key times.
Will You Have a Niche?
Realtors that specialize can earn more. Without a specialty, average earnings might only be around $64,000, whereas agents focusing on a specific niche could earn much more.
Part of the reason for this difference could be down to the fact that new agents are less likely to be specialized in a particular area of real estate, lowering the average. Choosing a niche is considerably better for earnings with even the lowest niche, property management and rentals, agents can expect to earn an average of $129,000 per year.
All of these factors will affect the annual earnings. But, for example, even though working long hours should earn you more, will that make you happy? Lifestyle considerations will also factor into your earning potential as a real estate agent.
If you are working countless hours and don't have any time for a social life, you could get burnt out quickly. Listing agents tend to have a higher income than buyer's agents.
How Can an Agent Earn More Than the Average?
If you aren’t content with average, there are things you can do to rise above that level.
If you can better use your marketing budget, seek out better leads and outperform the competition in the property listings, you should see your earnings beat the averages.
You also need to continually educate yourself on trends and changes in real estate to stay ahead of the game.
Real Estate agents who make a significant income are usually tremendous at marketing themselves. They understand that you need to spend money to make money.
Being a secret agent won't cut it in real estate sales. At least not if you want to be considered among the best.
Working with a Realtor offers many benefits to buyers and sellers alike. The more you can do to show you're worth the commission the better. When agents do this, they will find more clients will head their way.
Real Estate agents who are coming out on top are generally more tech savvy and use technology to their advantage to win more business.
So what kind of agent will you be? One of the best or just an average agent, making an average income? Do you want to become a real estate agent? See what you need to know to join the real estate industry!
Bill Gassett is a nationally recognized real estate leader who has been helping people buy and sell MetroWest Massachusetts real estate for the past 33 years. He has been one of the top RE/MAX REALTORS® in New England for the past decade. Gassett works for RE/MAX Executive Realty in Hopkinton, Massachusetts. In 2018, he was the No. 1 RE/MAX real estate agent in Massachusetts.