If you are thinking about becoming a real estate agent, you may be wondering how much money you can reasonably make in this line of work. You may have talked to some professionals who tried their hand as a real estate agent, but they could barely make ends meet. On the other hand, you may have talked to others who are clearly financially successful in their careers, and they may even appear to have ample free time while earning a fabulous paycheck. With a closer look at how real estate agents make their money, you may be able to determine if this is the line of work you want to pursue.
A Commission-Based Job
A real estate agent is a professional who generally works on a commission basis. They will not get paid until they achieve a certain result for clients, such as assisting them with their purchase or sale. Some real estate agents also earn a paycheck when helping clients with a property rental. Generally, a contract is signed with a client up-front, and the real estate agent may work hard to achieve the desired result that is outlined in the contract. If the real estate agent does not perform and the desired result is not achieved, the real estate agent does not get paid. For example, if the real estate agent is contracted to sell a home, he or she may spend months hosting open houses, showing the home and taking other steps. If the home does not sell, however, this work will not be compensated.
Factors That Influence Compensation of a Real Estate Agent
The commission of a real estate agent will vary greatly, and this generally is a negotiated fee between the agent and the client. Because of this, the compensation from one transaction to another can vary. The fee may be a flat rate, but it is more common for the fee to be based on a percentage of the sales price or of the rental rate for leasing transactions. Because of this, the location where the real estate agent works will have a considerable impact on the total compensation the agent earns. In addition, some agents may focus on lower income housing, and others may focus on luxury housing. Because of these various factors, as well as the importance of the success of the agent in producing results, the compensation that a real estate agent earns can vary greatly from location to location and even from agent to agent within the same city.
Average Compensation of a Real Estate Agent While there is a large degree of variation in the compensation of a real estate agent, the fact is that most agents will earn approximately $30,000 to $60,000 per year. Some of the more successful real estate agents may easily earn $100,000 or more per year, and newer or less successful agents may struggle to make even $15,000 per year.
If you aspire to become a real estate agent, keep in mind that this is a performance-driven job. You will need to find clients and satisfy them with great results if you want to be successful in this line of work.
