How Much Do Real Estate Agents Make

When Alex passed his real estate licensing exam, he couldn’t wait to start his new career. Like many aspiring agents, he was drawn to the allure of flexible working hours, the potential for high commissions, and the excitement of helping people find their dream homes. However, as the months went by, Alex realized that the road to financial success in real estate wasn’t as straightforward as he had imagined. Some months were incredibly profitable, while others left him worrying about paying the bills. He couldn’t help but wonder: How much do real estate agents make, and what separates the top earners from those who struggle?

Alex’s experience isn’t uncommon. The real estate industry offers the potential for high earnings, but it’s also a field with significant income variability. This article will explore how much real estate agents typically make, what factors influence their earnings, and how agents can maximize their potential income. We’ll also dive into real-world statistics and regional differences in earnings across the United States.

Understanding Real Estate Agent Earnings: Commission-Based Income

Unlike many other professions, most how much do real estate agents make don’t earn a fixed salary. Instead, their income is derived mainly from commissions—usually a percentage of the property’s sale price. The standard commission in the United States is typically 5% to 6% of the home’s selling price. However, this is usually split between the buyer’s and seller’s agents, meaning each agent typically receives 2.5% to 3% of the total sale price.

For example, on a home that sells for $400,000:

A 6% commission would total $24,000.
Split between the buyer’s agent and the seller’s agent, each agent would earn $12,000.
However, agents don’t pocket the total amount. They must also split their commission with their brokerage (ranging from 20% to 50%) and cover other expenses such as marketing, transportation, and professional fees.

Once the brokerage takes its cut, an agent might earn anywhere from $6,000 to $9,000 on selling a $400,000 home. However, as Alex discovered, the real estate market is unpredictable. Some agents might sell multiple homes monthly, while others may go months without closing a sale.

Average Income for Real Estate Agents

The amount a real estate agent earns annually varies widely based on factors like location, experience, and the local housing market. According to the U.S. Bureau of Labor Statistics (BLS), the median annual wage for real estate agents in 2023 was $61,480. However, the range is vast:

The lowest 10% of agents earned less than $30,000 per year.
The top 10% of agents earned more than $112,610 per year. (Source: U.S. Bureau of Labor Statistics, 2023)

Experienced vs. New Agents:

Experienced agents often earn significantly more than those who are just starting. According to a survey by the National Association of Realtors (NAR), real estate agents with 16 or more years of experience earned a median gross income of $85,000 in 2022, compared to just $8,800 for agents in their first year. This highlights the importance of building a client base, network, and reputation in the real estate industry. (Source: NAR 2022 Member Profile)

Factors That Influence Real Estate Agent Earnings

While commission rates may seem straightforward, numerous factors influence how much a real estate agent can make in a given year. Let’s break down some of the most critical variables:

1. Location: Real estate agents working in high-cost housing markets typically earn more simply because they deal with more expensive properties. For instance, an agent selling homes in New York City, Los Angeles, or San Francisco can earn substantially more per transaction than an agent working in smaller, more affordable markets. According to Indeed, real estate agents in California earn an average of $96,480 per year, compared to agents in Ohio, who earn an average of $46,000 annually. (Source: Indeed Real Estate Salary Report, 2023)

2. Experience: As mentioned earlier, experience plays a significant role in an agent’s income. Veteran agents often have a more extensive client network and may handle more high-end transactions, leading to higher commissions.

3. Type of Brokerage: Agents working for luxury or boutique brokerages often handle high-end transactions with more significant commissions. On the other hand, agents at larger, volume-driven brokerages may handle more transactions but at lower average price points.

4. Hours Worked: The flexibility of real estate is both a blessing and a curse. Many agents work part-time, and those who treat real estate as a side job tend to earn significantly less. According to the NAR, real estate agents working more than 40 hours per week earned a median income of $85,000 in 2022, while those working less than 20 hours per week earned a median income of just $19,000. (Source: NAR 2022 Member Profile)

5. Niche Market or Specialization: Some real estate agents specialize in niche markets—luxury homes, commercial real estate, or vacation properties. Specializing in higher-value or more lucrative markets can significantly increase an agent’s earning potential.

Real Estate Agent Earnings by Region

Earnings for real estate agents vary significantly depending on the region in which they work. Agents in states with high property values and active housing markets tend to earn more. According to the Bureau of Labor Statistics (BLS), the states where real estate agents earned the highest average income in 2023 were:

New York: $93,100
Texas: $87,100
California: $96,480
Florida: $73,550

Conversely, agents in states with lower home prices, such as West Virginia and Mississippi, tend to earn less, with average annual earnings closer to $45,000 to $50,000. (Source: U.S. Bureau of Labor Statistics, 2023)

Costs and Deductions: What Eats into an Agent’s Income?

While the commission-based structure can seem lucrative, real estate agents must also deal with significant expenses that reduce their take-home pay. These expenses can include:

Brokerage fees: Depending on their agreement with their brokerage, agents may have to split between 20% and 50% of their commission with their broker.
Marketing and advertising: Agents often cover the costs of marketing their listings, including professional photography, video tours, and online ads. On average, agents spend about $2,000 to $5,000 annually on marketing. (Source: NAR 2022 Member Profile)
Transportation and client meetings: Real estate agents drive to showings, open houses, and client meetings. Gas, vehicle maintenance, and even client lunches can add up.
Licensing and professional fees: Real estate agents must maintain their licenses and often pay for continuing education, association memberships, and MLS (Multiple Listing Service) fees, totalling around $1,500 annually.

Can Real Estate Agents Earn a Six-Figure Income?

Many how much do real estate agents make can earn six-figure incomes, but it often requires significant experience, hard work, and the right market conditions. Agents who focus on high-end properties, luxury real estate, or specialize in commercial real estate are more likely to reach six figures, especially in competitive markets.

According to Real Estate Express, approximately 20% of real estate agents earn over $100,000 annually, and top producers—those in the top 5% of the market—can earn well over $250,000 annually. However, these agents typically work long hours and may have teams supporting their operations. (Source: Real Estate Express, 2022 Market Insights)

Conclusion:

For Alex, the ups and downs of his first few years in real estate taught him that success in the industry requires persistence, dedication, and an understanding of market dynamics. Real estate agents have the potential to earn a comfortable income—or even a six-figure salary—but it’s essential to recognize that success doesn’t happen overnight. Location, experience, and market conditions determine how much an agent can make.

Ultimately, while some agents thrive in the fast-paced, commission-driven world of real estate, others need help to achieve consistent earnings. The potential rewards can be significant for those willing to put in the effort, develop their skills, and build a solid network.