How Much Do Real Estate Agents Make? And Why?

Dennis Shirshikov

By 

Dennis Shirshikov

October 21st, 2021
Updated October 21st, 2021

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Find out why below the table!

Real Estate Agent Earnings by State

StateAverage Earnings RankAverage Annual EarningsTop 10% of Earners
U.S. Overall

N/A

$72,818

$120,806

Alabama

46

$52,055

$81,765

Alaska

11

$74,310

$99,775

Arizona

31

$62,315

$106,995

Arkansas

41

$56,285

$98,130

California

3

$89,130

$127,800

Colorado

9

$75,070

$114,680

Connecticut

6

$79,780

$173,310

Delaware

24

$65,245

$90,305

District of Columbia

8

$78,465

$137,170

Florida

33

$61,170

$124,290

Georgia

38

$58,435

$93,505

Hawaii

10

$74,810

$143,205

Idaho

43

$54,700

$84,115

Illinois

51

$44,475

$91,340

Indiana

18

$68,695

$123,820

Iowa

44

$54,610

$94,220

Kansas

28

$62,990

$107,390

Kentucky

27

$63,525

$99,450

Louisiana

48

$51,515

$78,305

Maine

21

$66,945

$133,390

Maryland

12

$72,670

$98,120

Massachusetts

2

$96,660

$128,780

Michigan

25

$64,420

$100,370

Minnesota

50

$50,095

$87,875

Mississippi

39

$57,030

$142,520

Missouri

36

$59,980

$100,245

Montana

15

$70,930

$183,910

Nebraska

45

$54,595

$90,080

Nevada

7

$79,065

$144,320

New Hampshire

26

$64,045

$100,360

New Jersey

22

$66,880

$133,250

New Mexico

4

$84,380

$142,000

New York

1

$105,865

$202,005

North Carolina

20

$67,465

$141,020

North Dakota

29

$62,570

$95,380

Ohio

34

$60,610

$117,340

Oklahoma

47

$51,600

$100,950

Oregon

23

$66,570

$121,260

Pennsylvania

30

$62,430

$100,460

Rhode Island

17

$70,420

$148,000

South Carolina

35

$60,080

$93,470

South Dakota

37

$58,890

$83,475

Tennessee

49

$50,670

$81,000

Texas

5

$83,990

$124,570

Utah

32

$61,315

$113,060

Vermont

42

$55,510

$69,625

Virginia

16

$70,580

$123,580

Washington

19

$68,405

$113,930

West Virginia

40

$56,880

$102,100

Wisconsin

13

$71,845

$136,955

Wyoming

14

$71,460

$121,940

We used 2019 data on agent and broker earnings by state from the Bureau of Labor Statistics (BLS) to populate the table above. The states are ranked by average income, which is reported by the BLS based on their methodology. Income for the top 10% of earners represents the minimum that the agents in that group make.

The earnings data are self-reported and may misrepresent the income of agents in a given year. Self-reported data may be inaccurate for a variety of reasons, including that agents with lower incomes may be less likely to report them.

The earnings displayed don’t factor in costs that a real estate agent incurs to sell a home. A recent MIT study estimated that agent costs are as high as 80% of observed revenue.

How are agents paid?

Agents earn a commission for helping a client buy or sell a home. The commission that agents earn is a percentage (usually 6%) of the home price. For most transactions, there is a buyer’s agent and a seller’s agent that split the commission in half. Each of those agents also has to split their commission with their broker.

What influences how much real estate agents earn?

  • Gender: Women earn almost half as much as men.
  • Experience: More experienced agents tend to earn more.
  • Hours worked: Agents that work longer hours make more money.
  • Location: Agents in metropolitan areas have higher average incomes.
  • Franchise affiliation: Working with a franchise for longer results in higher earnings.

Editor’s note: When evaluating any kind of data, it is important to:

  • Confirm the source of the data: We’ve added citations where possible to our data, so you can go straight to the source where any potential distortions are minimized.
  • Evaluate the nature of relationships: Confirmation bias is very real, and things often look like we expect them to. We’ve left editors’ notes to explain some potential flaws in reasoning and encourage you to think about the data presented critically.
  • Understand that correlation is not causation: Many facts in our research are based on the relationship between two variables. While they are connected in some way, it may be a leap to assume that one variable directly causes the other to rise or fall.

Gender

Real estate is not immune to the gender pay gap; in fact, women earn 47.46% less than men in the real estate industry. [1][2]

We concluded there is no evidence that age and experience can explain the gap in pay. The ratio of male (33%) to female (67%) shows little variation across all ages and experience levels.[3][4]

Promotions to manager and broker may explain the higher pay gap. The data shows that men get promoted to higher paying positions more often than women. Men represent 33% of all realtors, but they account for 50% of broker-owners and 42% of managers.[5] While all realtors had a median annual income of $41,800 in 2018, the broker-owner and manager roles earned $86,100 and $93,200 respectively.[6]

Editor’s note: This is one of many potential reasons for a pay gap. Anyone that has grappled with untangling this problem can attest to the fact that every answer raises even more questions. The real estate industry is particularly opaque because every agent is an independent contractor, making it very difficult to find good data concerning wages and gender.

Experience, Referrals, and Repeat Business

Agents with more experience have higher incomes, in part because they rely more heavily on referrals and repeat business. The largest income increase from $9,300 to $42,500 occurs in the first five years of an agent’s career.[7] In the first two years, 55% of agents have no referral business, and 74% report no repeat business, respectively. By year five, those figures increase to 84% and 73%.[8][9]

Multiple academic studies cite the positive correlation between the experience of agents and the income they earn.[1][10] Interestingly, real estate agents with 15 or more years of experience demonstrate a negative relationship between experience and earnings.[2]

Editor’s note: Part of the connection between experience, referrals, and repeat business is self-reinforcing. As agents get more referrals and repeat customers, their income rises, and they stick around longer to gain more experience.

Specializing and putting in the hours

Agents that work in real estate full-time tend to earn higher incomes than agents that only did the work part-time.[2] In fact, the leap from 20 to 39 hours of work per week to 40 to 59 hours of work per week allowed agents to more than double their incomes from $30,800 to $64,400.[11]

The most important factors contributing to success for high-earning agents included: (1) the number of hours worked, (2) working full-time, and (3) working on the weekend.[1] This was confirmed by researchers that found effort (hours worked) and specialization (concentration of income sources) were positively correlated with real estate agent income.[12]

Editor’s note: It seems self-evident that focusing exclusively on real estate and putting in more hours leads to a higher income. It’s important to consider the possibility that agents may also be more likely to put in the time and focus only on real estate if it’s making them money. In this framing, some early success for agents may result in pushing them in the right direction toward improving their income.

Location

Academic studies have found positive links between working in a metropolitan area and higher realtor incomes. [10] According to Douglas Elliman, a third of its agents work in Manhattan and brought in 11.8 billion, or 40%, of its revenue for 2019, providing additional evidence for this conclusion. [13]

We conducted our own research comparing the home values of various states and realtor incomes. Our findings indicated that individual agent incomes and property values were closely related. We found that available inventory for agents, or the total value of residential properties in a state, had a positive correlation with agent incomes. Interestingly, we also found that top-performing agents did only slightly better in states with high property inventory. [14][15][16]

Editor’s note: Agents that sell and list more expensive homes will always tend to make more money. However, the income data reported in these studies do not account for the costs that agents incur. This includes staging, marketing, and transportation for clients, which tends to be expensive in metropolitan areas. The data also misses the higher cost of living that these agents must be able to afford so that they can work.

Commission Structure & Franchise Affiliation

Franchise affiliation, firm size, and firm reputation were all found to have a positive impact on overall real estate agent earnings.[1][10] Amongst high earners, the length of the affiliation with the current franchise also had a large impact, [1] presumably due to better commission splits.

Research has shown that agents gravitate towards better commission splits. In 2019, Realogy (a brokerage holding company) indicated that competition from agencies that offered better commission splits was a key risk to its business. [17] Realogy employs 189,000 agents in the United States and owns Century21, Coldwell Banker, Sotheby’s, and Better Homes.

Advantageous compensation structures let agents keep more of the money they earn. From lowest take home pay to highest, agent commission splits include:

  • Fixed commission split: No matter how much the agent makes, the money is split along a certain ratio with the broker.
  • Graduate commission split: The more an agent makes the lower the split is with the broker.
  • Capped commission split: Once an agent makes more than a certain amount, there is no longer a split.
  • 100% commission: The agent retains the entire commission.

The share of real estate agents taking home 100% commission rose from 9% to 17% as experience increased from 2 years to 16 years.[18] Earnings verify that this is a positive choice for agents. Rising gross earnings were almost always associated with shifts toward graduated, capped, and 100% commission splits.[19]

Editor’s note: Brokerages used their access to information and tools to leverage bigger commission splits with agents before the internet made those tools more accessible. New firms like Keller Williams are offering real estate agents capped commission splits, enticing the best agents to join and producing growth for the company.

ARTICLE SOURCES
[1]

G. Sirmans and Philip Swicegood. Journal of Real Estate Research (1997). "Determinants of Real Estate Licensee Income." Page(s) 137-153.

[2]

Jud, G.D., Winkler, D.T. The Journal of Real Estate Finance and Economics (1998). "The Earnings of Real Estate Salespersons and Others in the Financial Services Industry." Page(s) 279-291.

[3]

National Association of REALTORS, Exhibit 5-1: Gender of REALTORS, by Age. "2019 Member Profile." 

[4]

National Association of REALTORS, Exhibit 5-2: Gender of REALTORS, by Experience. "2019 Member Profile." 

[5]

National Association of REALTORS, Exhibit 5-3: Compensation Structures for REALTORS, by Gross Personal Income. "2019 Member Profile." 

[6]

National Association of REALTORS, Exhibit 3-15: Annual Income of REALTORS, by Main Function. "2019 Member Profile." 

[7]

National Association of REALTORS, Exhibit 3-16: Annual Income of REALTORS, by Experience. "2019 Member Profile." 

[8]

National Association of REALTORS, Exhibit 2-22: Repeat Business from Past Consumers and Clients, by Experience. "2019 Member Profile." 

[9]

National Association of REALTORS, Exhibit 2-24: Business Through Referrals from Past Clients, by Experience. "2019 Member Profile." 

[10]

Benjamin, J. D., G. D. Jud, K. A. Roth, and D. T. Winkler. Journal of Real Estate Finance and Economics, vol. 25, no. 1, 2002. "Technology and Realtor Income." Page(s) 51-65.

[11]

National Association of REALTORS, Exhibit 3-17: Annual Income of REALTORS, by Hours Worked. "2019 Member Profile." 

[12]

Anderson, R. I., Guirguis, H., & Turnbull, G. K. International Journal of Business and Economics, Volume 17. (2018). "Focus or Generalize: Real Estate Agent Effort Allocation and Compensation." Page(s) 25-42.

[13]

Vector Group LTD. (2019). "2019 10-K Form." 

[14]

Zillow. "Housing Data." Accessed September 17, 2020.

[15]

United States Census Bureau. "National, State, and County Housing Unit Totals: 2010-2019." Accessed September 17, 2020.

[16]

Bureau of Labor Statistics. "Real Estate Brokers and Sales Agents: Occupational Outlook Handbook." Accessed September 17, 2020.

[17]

Realogy Inc. (2019). "2019 10-K Form." 

[18]

National Association of REALTORS, Exhibit 3-2: Compensation Structures for REALTORS, by Experience. "2019 Member Profile." 

[19]

National Association of REALTORS, Exhibit 3-3: Compensation Structures for REALTORS, by Gross Personal Income. "2019 Member Profile." 

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