Real Estate Agent Income
Show Me the Money!
As noted in Real Estate Careers, many people are drawn to real estate careers because there is an unlimited earning potential.
Note the word potential. There are excellent agents out there who make millions in the real estate industry, but they are the exceptions, rather than the norm. The general trend is for beginning real estate agents to make a low income for the first two years and having it grow as his/her experience and list of loyal clients develop. Here are statistics on how the average U.S. real estate agents fared in 2007:
- Realtors with 2 years or less of experience earned a median income of $10,500
- Realtors with 3 to 5 years of experience earned a median income of $34,600
- Realtors with 6-15 years of experience earned a median income of $57,100
- Realtors with 16 or more years of experience earned a median income of $69,500
"But house prices and commissions are high," you argue. "Why aren't the incomes greater?" Let's consider a house that is sold at $250,000 and has a commission of 5%.
The commission comes out to $12,500, which may sound like a lot until you consider that the fee is first split between the listing and selling brokerage (the term for a real estate company). Then the brokerage splits the commission again with the agent, leaving the agent with 50% to 70% of that amount. After other expenses like gas, meals and advertising, the agent is left with between $3,000 to $4,000 per transaction. Eventually the can become high paying careers, but patience and hard work is a requirement.
If possible, start your real estate career with at least six months savings to get through the initial slow period.
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