Real estate agent earnings vary widely based on numerous factors, including experience, location, and niche. Some agents struggle to get by while others earn a comfortable living.
However, some constants exist in how real estate agents work and get paid. For example, most real estate agents work on commission, which they earn at the end of a transaction.
If you’re looking to become an agent or are just curious about how much realtors make, here’s what you should know.
What Does the Average Real Estate Agent Make?
“Location, location, location” is real estate’s mantra, so it makes sense that the average annual income for a real estate agent varies from state to state, city to city.
Homes in major cities like New York, Los Angeles, and Chicago cost more than in rural areas. If you sell 10 houses in San Francisco, you’re likely making more than if you sold 10 comparably-sized homes in Mars Hill, North Carolina.
According to ZipRecruiter, Washington has the highest average real estate agent earnings at $104,032, while North Carolina’s real estate agents average the lowest at $65,393. In 33 out of 50 states, the average real estate agent makes more than $80,000.
But again, these earnings can vary substantially. There are numerous reasons why, but it comes down to commissions.
What is Real Estate Commission?
A commission is the percentage of a real estate transaction that goes to the buyer’s and seller’s agents. Instead of paying for a real estate agent upfront, commission rates are included in a home’s sale price.
For a long time, the standard commission rate was 6%. However, times are changing. Between the rise in discount brokers like Zillow, homeowners listing for-sale-by-owner (FSBO), and negotiable commissions, these rates are prone to fluctuation. The national average commission rate is 5.37%, which varies with every transaction.
How is Commission Split?
Usually, the listing agent and the buyer’s work…