When talking about income, there is no exact figure which helps to determine how much does a real estate agent make per year. Several factors combine and form the numbers of income of a real estate agent. The experience, the category they belong to (commercial or residential) and the commission rate are few to name.
All these factors have a different impact on the income of various agents, hence the different revenue for each agent.
Here is a brief idea as to how these three factors play their part in determining the income of an agent.
How Much Does A Real Estate Agent Make Per Year – Commission Plan
The Commission is a fee that an agent charges for providing his services in making a property transaction between two parties.
The sum of commission earned from annual sales is the biggest factor that determines how much does a real estate agent make per year.
Although the commission rate varies from agent to agent, the average rate in the US ranges between 2.5%-6%.
That means an agent would charge at least 2.5% to 6% of the actual price of property.
Let’s say an agent sells a property worth $200,000 with a commission rate of 3%. The amount he gets at the closing is going to be $6,000.
However, not the entire sum goes to the agent. The fact that most agents are working for brokers these days means a fair share of commission – anywhere between 20% -50% – goes to the broker. Then there are office expenses which leave the agent with just 10-15% of the actual amount he received. Pretty cheap!
Commercial Real Estate Agent Vs Residential Real Estate Agent:
Commercial real estate involves properties such as restaurants, office buildings, industrial buildings, shopping malls, etc.
The commercial properties play an important part when it comes to understanding how much does a real estate agent makes per year. These properties are worth more than residential properties and generate huge profits for the agents.
The median income of a commercial agent is around $63,054.00 with the lowest income being $33k and the highest income being $160k.
On the other hand, the median income of residential real estate agents is just around $46,129.00. With $25k being the lowest income and $100k being the highest number on the scale.
The annual income of a real estate agent also depends on the experience. An agent with greater experience makes more sums than the one who is just in a beginner phase. Here is an income breakdown of real estate agents on their experience.
- An agent with the experience of 0-5 years earns as much as $43,000.00
- 5-10 years’ experience in real estate can make you around $59,000.00 on average
- The most experienced agents are those with the experience of 10-20 years. Their median income goes around $75,000.00 or above.
These are some of the facts and stats to help you understand how much does a real estate agent makes per year. Although the start can be a little tricky. Once you are up and running, the career can be extremely fruitful.