How Much Do Real Estate Agents Make

Real estate is a great way to make money and this article will show you how real estate agents earn an income and how much can be made. Even in a tough economic times, real estate is still a top money maker. Yes, it may be tougher to make the sale in this economy but it can definitely get done.


How Do Real Estate Agents Get Paid?


Now just so you know, real estate is a commissioned based profession. People that have answered ads in the newspaper have walked into my broker's office and asked how much do they get paid and when. There are no weekly, bi weekly or monthly paychecks. You get paid on a sale by sale basis, which means whether you sell 0 homes or 20 homes a year, you only get paid when you sell a house.


The fact is, a commission based profession like real estate depends on how much time and effort you are willing to put in to make as much money as you want. If you want to make $20,000 a year or $100,000+ a year, it's all up to you.


How Much Commission Does A Real Estate Agent Charge In New York


Since I am an agent in New York, our standard or most common top percentage is 6% of the purchase price, but it can vary depending where you live in the U.S. Now this is the most common commission rate, but its not in stone. An agent can decide to go a little higher like up to 7% or as high as 10% depending what the transaction entails. An agent can also go lower than 6% depending on the situation with the seller.


How Much Does The Real Estate Broker Get


Now all real estate companies are not created equal. Most real estate companies get paid 50% of each transaction. Sounds like alot? It depends on what services your company is offering to earn 50% of your pay. Some offices offer great marketing services and materials, desk, computer and more.


Let's do an example:


You listed and found the buyer and sold the1 family home for $300,000. You charged the seller 6% of the purchase price.


- $300,000 X 6% = $18,000


- Your broker gets $9,000


- You get paid $9,000


That's right you will actually get a check in your hands for $9,000. Wouldn't you like to have $9,000 in your hands at once for selling a home. But don't be fooled there's alot more work involved in doing a real estate transaction than you think, it's not as easy as you think, especially in this market. Any profession that makes a great income takes skill, hard work and dedication to the business.


How Do You Get Paid When You Co-Broke A Deal With Another Office?


When you co-broke a deal that means two different companies work together to do a deal or sell a home. One company will have the house for sale and the other will have the buyer. See two examples of a co-broke below.


Example- One agent in a real estate company has the buyer and the other agent in another real estate company has the seller


Let's say, you had a buyer named Ms. Smith and found a two bedroom condo for $400,000 through ABC realty that agent Mr. Brown listed. Mr. Brown is getting paid a 5% commission and is willing to co-broke 2% with the agent for the buyer, which is Ms. Smith.


- $400,000 cost of the condo X 5% = $20,000 total commission


- $400,000 cost of the condo X 3% = $12,000 total paid to Mr. Brown's broker's office, Mr. Brown will get paid $6,000 for selling the house and pay


-$20,000 X 2% = $8,000 total paid to Ms. Smiths' broker's office who represented the buyer


*Out of the $8,000 Ms. Smith is being paid for selling the home. Her broker at her office gets 50% of her pay.


$8,000 X 50% = $4,000 for Ms. Smith's broker and $4,000 for Ms. Smith to take home.


I'm sure you get the point!


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How Do You Get Paid When You Split A Sale In Your Own Office


Sometimes an agent may get a home to sell and another agent sells. Let's take a look out how they payment would work.


Example: An agent has a one family home that sold by another agent in the office for $450,000. The commission to be paid is 4% of the purchase price.


Total commission to the broker's office = $18,000


The real estate office receives 50% of $18,000 = $9,000


The total left for the two agents to split = $9,000


The selling agent will receive = $4,500


The agent representing the buyer will get = $4,500


Above are just the most common examples and there are others depending on how many agents representing a seller and how many are representing the buyer. So the splits and agreements among agents can vary.


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Who Pays The Commission To The Real Estate Broker?


This question has always been an issue in real estate as to who really pays the commission, the buyer or the seller. Over the years my personal opinion is the seller pays the commission. Why? The seller automatically has all the expenses deducted from their total profit right at the closing table. The buyer pays for the house but they are taking out a loan from the bank and spreading it over 30 years, so there is no real direct impact.


Well I hope that this article answered some of your curiosities about how real estate agents get paid. Remember that real estate company fees can vary in the percentages they pay and additional expenses they may charge per transaction.


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