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Almost everyone at one point in time will need to engage the service of a real estate agent as they have information about various properties that are either put for sale or rent.
Property owners also give them notice of their available properties that are put up for sale. This provides the listing agent as well as the buyer’s agent the opportunity to make a sizable income from such deals. It should not be noted that both fall under the name, “Real Estate Agent”
Thus, in this post, we will be providing you with the amount of money a real estate agent can make.
1 Who is a Real Estate Agent?
A real estate agent is a person who helps in purchasing or selling a property. They are often known as professionals and work in the best interest of their customers to get the best deals and for their efforts, they get an agreed commission.
Aside from buying or selling real estate, they may also be given the task of looking out for properties in a specific area, leasing out a property, drawing property contracts, accompanying clients to the location of the property, and property maintenance. All these are among the good number of ways they make money.
2 How much do real estate agents make?
The average salary of a real estate agent in the US is $78,252, this could vary depending on several factors. However, real estate is normally commission-based, 5% to 6% which can also be negotiated.
The commissions are shared by the listing agent and buyer’s agent. Each agent is also required to give a portion of their earnings to their broker.
3 How do Real Estate Agents get Paid?
Real estate agents are paid based on the commission agreed. Every time they manage to see to the sale or purchase of a property, they get paid their commission.
After the sale has been completed, the commission will be deducted from the total amount received and then distributed to the escrow company which then goes directly to the listing and buyer agents’ brokerages.
Each agent will allocate a portion to their broker based on the agreed commission which could be 50/50, 60/40, or even 70/30. For instance, if it was decided 50/50, then it implies that the amount received will be halved between the two parties.
4 How much does a real estate broker make?
First, who is a Real Estate Broker?
A real estate broker is a person who is granted a license to operate their own real estate firm after receiving an education, passing the exam, and then earning a state real estate broker license.
They not only work as real estate agents but also could employ other real estate agents. The major difference between a real estate broker and a real estate agent is that a real estate broker can own their own real estate business while an agent cannot until he has been licensed.
A broker who helps in providing additional support during sales and purchases makes an average annual salary of $98,928. Aside from receiving a portion of the money made by agents under them, they also get to keep 100% of the commission received from deals they worked out.
Some brokers may not have split commission agreements in place, but instead, choose to receive a certain amount from the agents under them every month.
5 How do real estate agents earn money?
Without seeing the successful completion of sales or purchases by the agents, there would be no money to earn. Therefore, the success of a real estate agent will depend on his or her overall efforts and the number of deals they were able to complete.
The working area is one of the determinants of how much a real estate agent can make. Big cities are known to record more success for agents. It is expected that an agent who works within New York City or Los Angeles would make more than an agent in Little Rock.
Costs are on the high side in this region plus there are better and more sophisticated properties that are often put on display from time to time in these large metropolitan areas, so you can expect to make more money.
#2 Number of successful deals
Real estate agents make money from sales and purchases. Their success is hanging on the number of deals they can complete. They receive a 5% to 6% commission on sales.
Sales or purchases are not the only way they earn money. They can also get some percentage from leasing properties.
Any business can succeed if we have a vast network of professionals in similar careers as well as past clients. One of the ways to have them is to act accordingly and that alone could ensure that they can call upon when an opportunity arises.
It is very important for a real estate agent to connect with agents from other locations. People are always changing cities and you can benefit more from that. Clients that have value will also be open to vouch if the transaction goes as expected.
#3. Years of experience
Having multiple closed deals comes with experience. If you have been in the business for a long time, you would have gained valuable knowledge on what works and have a good number of professionals and clients.
With every completed deal, you will learn the best ways to go about your business. Agents can also gain people who can always recommend them when necessary.
#4. Cost of running the business
Apart from word of mouth, media ads, and other known traditional advertising methods, a real estate agent will also need to spend some money on digital advertising to advance the business.
Digital advertising includes advertising that happens online. This form of advertising is not only convenient but could also convert more. Social media advertising is a very good one and can be used to target a particular audience.
Other costs that can be incurred are the amount spent on setting up a mini real estate office space, regulatory expenses, brokerage fees, etc.