If you've had anything to do with real estate, you have probably run across a real estate agent. Maybe it's your cousin's friend, or perhaps it's your cousin himself! Real estate agents are aplenty. Real estate agents start out from all walks of life and varying backgrounds and education. It seems as though some are rolling in the cash, while others seem to be struggling. So how much do real estate agents make? Do they make salaries like the typical corporate job?
Real Estate Agent Salaries
One of the more significant perks to being part of a big company is making a salary. A salary is a set amount that is paid over the course of a year. Salaries generally come with sick days, vacation days, and are not as tied to performance. If you miss an assignment, your boss my scold you but you won't get fired unless you do that many times over. This provides a sense of job security and allows you to be competitive when it comes to finding a job for which you're well qualified.
On the other hand, commission means you only get paid on performance. If you mess up on your responsibilities, you might lose the contract and miss out on helping a home exchange hands.
Although real estate agents are part of larger companies, these agents are considered private contractors. Therefore, real estate agents are not compensated by these larger brokerages — at least not in the way an employee of a company would be. In fact, real estate agents pay yearly dues to their brokerage as well as a percentage of their income! You may be wondering, then, how many of the agents you see make so much money? What is the appeal of being a real estate agent? Those are both excellent questions.
How do agents get paid?
Like most sales roles, real estate agents are no different and usually get paid in commission, meaning they receive a percentage of the home's sale value. Both the buyer's and seller's agent agrees to the commission amount upon signing the contract.
If you are selling your house, for example, you would decide upon a percentage with a listing agent, and then offer a percentage to the buyer's agent as an incentive for them to show the listing. The total commission for both agents is typically as much as 6% of the sale amount of your house. The seller usually ends up paying the commission out of the money made from the sale of the home. The buyer doesn't pay anything to the real estate agents outright.
The listing brokerage and the buyer agent's brokerage divide the 6% commission between the two of them. It is not an even split, however. The listing brokerage usually receives 3%- 4% of the sale price, while the buyer's agent's brokerage receives between 2%-3%.
Although the commission seems to go straight to the agent themselves, it's not that easy. All real estate agents are representing a brokerage and sign the contracts as a representative for the brokerage. Each agent's commission travels through the brokerage first, where fees are taken out, and then the remainder is given to the agent.
How much does an average Real Estate Agent earn?
A first-year agent typically doesn't make much money at all, as their network is usually pretty small and many are looking for an experienced agent to list their home. However, eventually, the agent picks up speed from referrals and networking, or generally as friends and family start to buy or sell.
The average real estate agent makes about $45,990/year. Considering the national average is $44,564 per year, they seem to be doing reasonably well. Except when you consider that there are roughly 2 million active real estate licenses in the United States as of May 2018. Roughly 1 million (50%) of all real estate professionals make at or below the national average. Most real estate agents work in real estate part-time, saving the remainder of their time for other jobs. According to NAR, most agents report working 40 hour weeks. This means most of them work two jobs, and their "part-time" job runs them 40 hours per week alone.
The income level all depends on the agent, however. Those who show up and put more than the value of their commission into creating an excellent experience for their clients end up making more because they are committed high-quality service and it shows. It is also worth noting that the amount these agents make depends on the type of properties they work with. Listing agents usually make 3% to 4% of the listing, while buyers agents make about 2% to 3%. That means, if the sale price of a home was $240,000, the listing agent would make between $7,200 and $9,600 and the buyer's agent would make between $4,800 and $7,200.
The Top 5% of Real Estate Agents
As in every job, there are top producing people. These are the people whose work ethic is not only apparent in their career, but it's also part of who they are as a person. The top 5% show up every day to give their all to those clients they work with, whether they're making $200 or $30,000 from the sale of the home. The difference is palpable and present in every interaction the agent has with their client. These top agents are the ones that make you feel like it's not only a pleasure to serve you, but they would go out of their way often to do so.
Because of their expertise and level of service, the Top 5% agents can make anywhere from $54,000 to $1,000,000 and beyond annually. Because they are top producers for their brokerages, they usually get a more substantial portion of their commission back in their pockets.
The Clever Alternative: Top Real Estate Agents at Discount Rates
When you hear about top producing agents, many jump at the chance to work with them. They are, after all, the ones with the most raving reviews. Although it's appealing to work with an agent that knows their stuff, if the price has you balking and backing away, we've got a solution that may interest you.
Clever Real Estate works with the top real estate agents in your area to help you sell or buy your house. We believe in providing only the best service to our customers, and these top agents serve you for a flat rate of $3000 or 1% on homes worth more than $350,000. So, if you're like the average American, you'll only end up paying $3000 to our top listing agent. We do recommend, however, that you offer a commission to the buyer's agent to help sell your home faster.
Why would the top agents be willing to work for so less? Because of the volume of clients, we connect with them. Think of Clever as a dating service: we match the top agents with customers looking for quality service at a fraction of the price. There are so many people like you out there looking for ways to save money on the sale of their house but don't want to sacrifice service. While technically considered a discount agency, Clever doesn't discount the value their agents offer.
Saving thousands on the sale of your home doesn't mean you need to sacrifice service. Get a top local real rstate agent at discount rates through Clever. Call us at 1-833-2-CLEVER or complete our online form to get connected a top-rated local agent that will list your home with a discounted commission rate.