You may be wondering how much money realtors make. We were curious about this too!
We know that starting a side hustle or making a career change can be a big decision, so we want to give you all the information you need before taking the plunge. That’s why we did some digging and found out what the average income for a realtor is.
Becoming a realtor is a great way to achieve financial independence and work for yourself. But how much do realtors make?
How Much Do Realtors Make
The national median income listed by the Bureau of Labor Statistics is lower than we used. The figures we used came from the job search boards that many people use to look for jobs online.
This could be because the survey is skewed in one way, whereas job sites have users report their information- meaning they can have a larger pool of data to pick from across the states.
Let’s look at how an average real estate agent gets paid:
Realtors and real estate agents are typically paid on commission. This means real estate agents make money when they help someone buy or sell a property.
The amount of real estate agent commissions most agents make will vary depending on the price of the property and the agent’s agreement with their brokerage firm.
The final pay per year depends on how many transactions an agent completes, the commission rate, and how the commission is split.
Here’s our example:
An agent has a listing with a sales price of $400,000 with a commission rate of 6%. The total commission for the sale is $24,000.
The listing agent and the buyer’s agent are splitting the real estate agent commission 50/50 per the listing agreement. When the property sells, the broker for the listing agent will get $12,000, and the buyer’s broker will get $12,000.
The listing broker will split the commission they receive with the listing agent. The buyer’s broker will also split their commission with the buyer’s agent.
The agent’s earnings may be a flat fee or it may be a percentage of the broker’s fee.
Realtors Vs. Real Estate Agents
To understand how much realtors make, it is important to understand the difference between a realtor and a real estate agent.
Many people use the terms realtor and real estate agent interchangeably, but they are not the same: let’s talk about the difference:
Real Estate Agent
A real estate agent is known by many terms. An agent may be called a real estate agent, buyer’s agent, seller’s agent, listing agent, broker, associate broker, or realtor.
No matter what term they are called, to be a real estate agent, they have a real estate license to help people buy, sell, and rent a property.
To become a real estate agent, you must take a test and pass it. Once you have your license, you can work for a brokerage firm or start your own business.
A Realtor is a member of the National Association of Realtors. whereas real estate agents aren’t. That’s really the only difference!
The National Association of Realtors is a professional organization representing 1.5 million members involved with residential and commercial real estate across America.
Members of the NAR include real estate counselors, property managers, appraisers, brokers, and real estate agents.
Types Of Realtors & Real Estate Agents
There are different types of realtors and real estate agents-
Some real estate agents work exclusively with buyers, while others work exclusively with sellers on a home sale. Some work with both buyers and sellers on a home sale.
Real Estate Broker
A real estate broker is an agent who has taken the extra step to get a broker’s license. A broker’s license allows them to work independently and start their own real estate brokerage.
Brokers are usually salaried employees that take on the brokerage’s day-to-day operations and help keep a brokerage in compliance with state and national real estate laws.
The average income for a broker in the United States is $50,934 – $67,850.
A property manager is someone responsible for the day-to-day operations of a property. This can be a commercial or residential property. They are responsible for collecting rent, maintaining the buildings, and dealing with tenant issues.
The average income for a property manager in the United States is $87,206 – $120,750.
A seller’s agent is someone who represents the seller in a real estate transaction. They are responsible for marketing the property, negotiating with buyers, and handling all of the paperwork involved in the sale.
The average income for a seller’s agent in the United States is $97,500 per year.
A buyer’s agent is someone who represents the buyer in a real estate transaction.
The buyer’s agent is responsible for helping the buyer find a property, negotiating with the seller’s agent, communicating with the lender, and handling all the paperwork involved in the purchase.
The average salary for a buyer’s agent in the United States is $95,000 per year.
Becoming A Realtor
If you’re interested in becoming a real estate agent or realtor, there are a few things that you need to do:
1. Start Small – Side Hustle
Many real estate agents start small. This is a great way to get your feet wet and learn the selling process. New agents often work with a real estate office as a side hustle while you keep your day job.
This will allow you to learn the ropes and how real estate agents make money to see if real estate is something that you’re interested in pursuing full-time.
While learning the business, real estate agencies often pay most agents a base salary plus commissions on their sales.
2. Find Someone To Teach You
As a real estate agent, you’ll want a sponsoring broker to show you everything there is to know about how an agent works.
Having a mentor that is a listing broker or buyer’s broker who can teach you all there is to know about being a successful realtor will undoubtedly assist you in becoming successful.
Most real estate agents just starting are often partnered with a more experienced agent when hired by a real estate agency.
Beginning realtors can also ask other real estate agents they know if they will take them under their wing and teach them the ropes of the real estate industry.
3. Or Find A Team
Finding a real estate agency with a team of people specialized in the paperwork, marketing a property with the multiple listing service (MLS), and real estate procedures can be extremely helpful when starting.
Most real estate agents try to work with them as much as possible to learn everything you need about being a realtor.
4. Create A Strong Presence Online
A solid online presence is vital for any business today but essential for realtors.
People looking to buy or sell a property will often start their search online with real estate websites. If you want them to find you, you must ensure you have a solid online presence.
You need a professional website, be active on social media, and ensure that your name comes up when people search for real estate professionals in your area.
5. Develop New Connections
Part of success as a realtor involves developing connections with fellow brokers, investors, buyers, sellers, and others in the industry.
The more people you know, the more likely you will find someone interested in buying or selling a property. It would help if you also kept in touch with your past clients, as they may be interested in working with you again in the future or may know someone looking to invest in real estate or sell a property.
A network of vendors is also important for real estate agents. These people provide the services you need to get a property sold, such as home inspectors, appraisers, and home stagers.
Other Ways To Make Money Off Real Estate
You don’t have to be a real estate agent or a realtor to make money off of real estate. Other real estate business ideas can earn you money each month!
Real Estate Investing
Investing in real estate can be a lucrative way to make money:
Real Estate Development – Another way to make money is by developing properties. To get started, you’ll need to understand the real estate market and the construction process. You’ll also need access to capital, as development projects can be expensive.
Flipping Real Estate – Flipping involves buying a property, fixing it up, and then selling it for a profit. This can be a risky endeavor, as you may not sell the property for as much as you put into it.
Investing in a Real Estate Investment Trust – A REIT is a company that owns, operates, or finances income-producing real estate. You can buy shares of a REIT, which gives you an ownership stake.
Real Estate Crowdfunding – With a company like Fundrise, you can pool your money with other investors to invest in larger projects, such as commercial real estate. Our review of Fundrise details what Fundrise is and how you can start investing with them.
Renting Out Rooms
Another way to make money from real estate is to rent out your spare rooms. This can be an excellent passive income stream, as you will continue to receive money from the tenant as long as they continue to live on the property.
Some ways you can rent out your real estate are:
Renting out a spare room – You can rent a spare room in your house to generate extra income. People are looking for more affordable accommodations, so this can be a great option.
Renting Out an Entire House as a vacation house – You can also rent out an entire house as a vacation home if you have one that you’re not using. This can be a great way to generate extra income, especially if you live in a desirable location. You can list your rooms or house on a site like Airbnb.
Renting out an entire house as a long-term rental – You can also rent out your house as a long-term rental if you’re not using it. This can provide you with a steady income stream and is a good option if you’re looking for passive income.
These options can be an effective way to make money from real estate. However, it is essential to remember that there are some disadvantages when you let someone else use your space.
Renting Out Closet Space
Maybe you have extra closet, attic, or garage space that someone could use as storage! You can earn extra monthly money by renting it out to community members.
To do this, you can list your space on a site like Neighbor Storage. This site connects people who need storage with space owners. You can set up an account on Neighbor Storage and set your rates.
The amount you can charge will depend on the space size and location. You can earn anywhere from $20 to over $100 per month for renting out extra storage space in your home.
Our review of Neighbor Storage can show you more information about how it works.
So how much do realtors make on average? It really depends on a lot of factors, including the market and the services that are offered.
However, it’s safe to say that most realtors earn extra money through their commissions, bonuses, and other income opportunities.
If you are interested in becoming a realtor, consult with your local association to learn more about the licensing process and what is required to work in this field.