The real estate industry is growing as a lucrative industry. People are seeking for career options in real estates. One such alluring option is a real estate agent. A real estate agent is someone who helps the clients to sell, purchase or rent out buildings or lands. If you are thinking of choosing real estate agent as a career option you must be willing to know how much does a real estate agent makes? Actually not all real estate agents earn the same. They enter into this stream from various channels and different backgrounds of knowledge and skills. But before we talk through the pay slip of a real estate agent let’s take a quick look at the role, function and other related areas.
HOW TO BE A REAL ESTATE AGENT?
In different countries and even in different states of the same country people have to go through different processes to be a real estate agent. However a set of general steps includes:
- Do a good research on the requirements of your state and what procedure they follow to give the license. Some states provide licenses which are reciprocatory to other states this will allow you to find clients in a broader range.
- Before applying for the licensing exam enroll yourself into a pre-licensing course to get a better result. One can easily find related online courses at reasonable prices.
- Get the license. For that you have to clear the licensing exam. Generally the paper offers multiple choice questions.
- Activate your license by submitting the required documents once you clear the exam.
- Join a real estate brokerage to brush up your knowledge and skills.
It is important for a real estate agent to know about the laws, rules and regulations related to real estate. There is no specific qualification required but acquiring a license is necessary. However in some countries real estate agents that work on the basic level and are not involved in legal paper works don’t require license. Whereas in some countries working as a real estate agent without a license is considered as a punitive action.
WHAT DO REAL ESTATE AGENTS DO?
To facilitate the sale and purchase of the properties is the main task of the real estate agents. They work with the clients and offer them their desired property in their suggested budget. For selling and buying properties the agents review the value of the property and similar sale price in an area. Sometimes the negotiations are time taking and drooping but the agent must come up with the best negotiable price. It is in the best interest of all the parties including the agent himself. As the agents generally work on commission based on the final sale price of the property.
To summarize the tasks of a real estate agent:
-working with different parties like sellers, buyers and intermediaries.
-facilitating sales and purchase of properties.
-drafting all negotiations and interactions, that includes legal documents.
-develop relation with clients.
-finding the best and appropriate deal.
HOW MUCH DOES A REAL ESTATE AGENT MAKES?
The real estate agents make money through commissions mostly. A single commission is distributed among various parties like the seller’s agent and broker and the buyer’s agent and broker. This commission split is mentioned in the agreement of the agent with its sponsoring broker. According to the US Bureau of Labor Statistics the median annual income of real estate agents was $48,930 in 2019. The real estate sector was hit by the occurrence of the pandemic resulting in a sudden drop in the wages but since the countries are recuperating, we can expect a hike in this sector real soon.
As per a recent data the average annual salary of real estate agents was between $40,000- $50,000. As you gain experience and reputation in this field your income is uplifted.
HOW MUCH DOES A REAL ESTATE AGENT MAKES DEPENDS ON MANY FACTORS LIKE-
- The income of the agent increases with increasing working hours. It is a fact the more is the investment of time the higher is the income.
- Experienced agents earn much more than the newbies. Agents with experience of more than 20 years are capable of making a six figure earning annually.
- Niche plays a major role. Agents that deal with residential properties earn less than those dealing with commercial properties.
- The higher the sale price the better is the commission split.
The agent’s cut of the commission is specified in the listing agreement with their sponsoring broker. Generally the commission ranges between 4%-6%. However this range can fluctuate. How much does a real estate agent makes is influenced by their commission cut and the sale price of the property. The commission is shared among different people:
Listing agent– listing agents take the listing from the seller.
Listing broker- listing agent works for this broker.
Buyer’s agent– agent representing the buyer.
Broker of the buyer’s agent– buyer’s agent works for this broker.
To exemplify if at a commission rate of 6% agent take listing on a $200,000 house then both the brokers will get $6000 each. Further if the commission split is 50/50 then all of them, both the agents and the brokers will get $3000 each. However this split can be of any ratio.
When working as a real estate agent one should read the agreements properly to avoid any possible treachery.