If you’re a first-time homebuyer, you might be wondering how real estate agent makes money in their field, especially since they spend so much time scouting for the perfect homes for their clients.
Homebuyers have no way of knowing how much a real estate agent gets in the process because they don’t write checks for them; second, their pay rates aren’t discussed with them.
The process can be a bit muddy from the buying side of things. The selling side can also be confusing. But you can surely have a clear answer to the questions, “How do real estate agents get paid?” and “How much does a real estate agent make?” which you’ll find out more about later.
Knowing the incentives involved for these agents can help them make better decisions when buying or selling a house. You have to remember that they don’t make money until they close a deal. That explains why they’re motivated and, at times, aggressive to close as many deals as possible.
I’m going to review Real Estate to decide if it really is the best business model out there.
I’ll talk about whether Real Estate is the right business model for you.
If you’ve read my other articles on real estate investing, you’ll know there are 3 primary ways to invest:
Wholesaling, buy-and-hold, and flipping.
While they each have their pros and cons, there is a ton of potential for success investing in real estate.
Real estate has created some of the largest fortunes in world history.
That being said, you should take some time to think about something seriously:
Is now the best time for YOU to get into real estate investing?
Because despite the potential upside, investing in properties or land takes a lot of capital, and is very labor intensive.
That means if you:
- Have less than 3 hours per day, OR
- Aren’t sitting on $20K+ in disposable income
This may not be the best time for you to start investing in physical real estate.
Don’t get me wrong, real estate investing can be an amazing way to protect your assets while generating cash – but there’s a time and a place for it.
But there’s good news!
All you need is a system to generate the cash (& free time) you need to be ready for real estate investing.
My preferred method of getting there is by becoming a Digital Landlord
It takes the benefits of real estate investing, but removes many of the barriers (& annoyances), like:
- Small cash flow on properties
- Having to take out debt
- Dealing with repairs and upkeep
- Dealing with tenants
The cool part is that the income is mostly recurring (AKA semi-passive).
You could make anywhere from $2,000-$10,000+ per month doing it.
You can build it as big (or small) as you feel like, without the annoyances I listed above.
If that sounds interesting, you might want to think about becoming a Digital Landlord.
Then, you can take the profits and start investing in physical real estate a year or two from now.
If you wanna see what Real Estate Agent Salary looks like on the inside, keep reading.
Real Estate Agent In The United States: How Much Can You Make?
The median gross revenue of real estate professionals has risen from an average of $39,800 in 2017 to $82,898 in 2021, according to the National Association of REALTORS ® (NAR).
It varies depending on your location.
It should be noted, however, that the NAR receives only data from its members. Although that figure exceeded 1.3 million in February, 2 million real estate agents were discovered by HomeLight in the USA.
The report by the Bureau of Labor Statistics or BLS provides a higher average salary of $50,300 for real estate brokers and sales agents.
One thing to bear in mind regarding the real estate agent salary is that it’s a very flexible profession, welcoming both hard-chargers and part-timers alike.
In 2018, it was reported that the majority of NAR members worked 35 hours per week, with an average of 11 transactions in 2018. Based on the 2018 NAR Member Profile, only 72% of the members have full-time jobs.
Real Estate Agent Salaries In Seattle: Rate Depends On Experience Level.
Stephanie Fox, an Oregon accredited real estate broker, says:
“There are just so many different layers. There are teachers who do real estate in the summer. There are retirees that do a couple of sales a year. There are vacation properties. There are mega teams that do 100-plus transactions a year.”
While most agents largely depend on commissions, some agencies still pay basic salaries. Redfin real estate agents, for instance, are salaried, with bonus pay instead of commissions. However, agents from certain smaller regional agencies are compensated with base salary and commission.
How Do Real Estate Commissions Work?
A commission is typically paid to real estate agents for every home that they’ve successfully sold and is collected at closing.
This is deducted from the proceeds of the seller. But some try to arrange for the buyer to shoulder the agent’s commission, whether in part or full, particularly if it’s a seller’s market.
If a real estate agent is an employee of an agency, it will cut commissions on a deal as well.
One risk potential real estate agents should learn is that some of them could go a full year without closing any deal.
In 2018, only 10% made less than $22,750. So, if you are just starting your career path in the industry, it’s wise not to rely only on commissions to make a living.
The commission of real estate agents can differ, but they generally charge 6-7% of the home’s sales price, divided between the buyer and seller agent.
The buyer agent typically receives 2.5% –2.75% of the total sale price, and the seller gets 3.25% –3.5%
So, a house sold at $300,000 would generate an $18,000 commission divided between them. For this sale, each agent would earn approximately $9k.
If an agent sells 11 homes in a year, that would earn them a commission of around $99,000.
This may appear to be a decent wage, but sadly, there are a lot of deductions that lower their take-home pay.
Taxes are the first.
The $99k is before tax. Hence they’re required to give the Government a large percentage of this revenue.
Several fees are also charged. Brokerage fees are paid by real estate agents who operate as brokers connected with an agency. Fox pays $19k annually in brokerage fees and says that this is very common. As per Fox, the strongest brokerages bill between $16,000 and $20,000 a year.
How Much Do Top Real Estate Agents Make?
The potential to make a huge income is one of the notable characteristics of a career in real estate.
According to Fox:
“You can make an endless amount of money doing this. If you think of a $1 million listing and you’re getting 3% of that, and you do it, say, 20 times a year, you’re looking at $600,000 in commissions.”
Real estate agents can make even more if they sell in expensive markets. Imagine if an agent makes an average of 11 transactions worth 5 million dollars each. That would give you $1.65 million in commissions.
So naturally, more expensive properties will give you more income.
So you can certainly make big money as a Real Estate Agent, but if you’re gonna put in the amount of grueling work to become an agent (which, trust me, isn’t easy), you might as well bring in some REAL money while you’re learning the ropes.
Factors That Affect A Real Estate Agent’s Pay
Being a real estate agent comes with a lot of expenses. Among them are:
- Brokerage fees
- RMLS database access
- Membership fees to different local, state, and national organizations; real estate license fees
- Gasoline expenses to and from the properties, plus car insurance and maintenance
- Health care if the agent is self-employed
Commission percentages can also differ based on the sellers’ and agents’ listing agreements. Although 6 percent has been the norm, commission percentages today are changing, most of which are lesser than 6%.
How Much Does An Estate Agent Earn In The USA?
According to salary.com, real estate sales agents’ average annual salary in April 2021 was $43,076.
However, the amount of money real estate agents earn per year is determined by various factors, including the number of real estate sales and commission fees.
It is entirely possible to be a successful Real Estate Agent… but there are better ways to make money in the industry.
Because, unlike Real Estate, it actually provides real proof of real success from real people as recently as a few days ago.
Do Real Estate Agents Make Good Money?
According to the Bureau of Labor Statistics, the average real estate agent makes $45,990 a year, but earnings vary greatly.
About one-tenth of real estate agents made just under $23k, and the other ten percent made over $110k.
Do Real Estate Agents Get A Base Salary?
It’s quite uncommon for real estate agencies to offer a base salary, but some do, even including some health care benefits. One popular agency that does this is Redfin, which gives its real estate agents a base salary and commission.
What Other Jobs Are In The Real Estate Industry?
If you want to deal with residential and commercial properties, below are some jobs to consider apart from being a real estate agent:
- Leasing Consultant
- Leasing Agent
- Leasing Manager
- Foreclosure Specialist
- Property Manager
- Title Examiner
- Home Inspector
- Real Estate Manager
Real estate has several moving parts, which involve a lot of parties in every transaction, and also terms that can differ because of certain circumstances.
There is no fixed amount that real estate agents earn, and not a single way for them to earn it. They can receive both a salary and a fee, and their commissions are subject to separate agreements.
One thing is for sure, though. Depending on the real estate market, real estate agents can earn anything from a few hundred dollars to millions per year, making it a very promising and lucrative career.
Are There Alternative Business Models?
Yes, there are plenty of other business models to choose from if you want to pursue this making money online. Here are just a few:
Is Real Estate A Scam?
So, time for the $1,000,000 question – is real estate a scam?
No, not technically. You can 100% make money with this business model, though it’s not nearly as simple as they make it seem.
As with most businesses, there is A LOT of work to be done upfront & no guarantee of you being successful.
Not to mention the profit margins are typically pretty small.
Don’t get me wrong, I’m a big proponent of front-loading work now so that you can reap the rewards later.
But if I’m gonna do that, I want the rewards to be HIGH and virtually guaranteed.
I’d rather put in that same 3 months of work (in my spare time) & build a handful of Digital Rental Properties that each produce $500-$2,000 checks every single month afterward (AKA recurring income).
And the cool part is that you can do it in a lot less time than 3 months (I personally did it in my first 2 weeks of being a Digital Landlord).
Unlike physical real estate, you can do it from anywhere in the world, so it’s a genuine “laptop-lifestyle” business.
All you need is an internet connection.
Some of my friends are Digital Landlords that run their 6-figure businesses from:
- Camping trips at national parks
- Beachfront in Hawaii
- On the road in a camper van (with a pet pig!)
They focus on living an enjoyable life first, and focus on income second. All thanks to this program.
They can take weeks or months off, and money keeps rolling in.
Living happily is the top priority.
If the thought of living perpetually at your dream vacation spot interests you, being a Digital Landlord might be for you!
What Is My Top Recommendation For Making Money Online In 2022?
I’ve personally tried all of the major online business models:
- I’ve sold fidget spinners through Amazon FBA
- I’ve drop-shipped a toilet bowl putting green on Shopify
- I’ve sold women’s health supplements via Clickbank affiliate marketing
And I made money with all of them, so trust me when I say: there is no “perfect” business model.
It’s worth noting that I FULLY endorse real estate investing as a way to grow wealth, and that’s why I invest my own money in commercial and residential real estate.
That being said, my #1 recommendation for making real money online as a beginner is, hands-down: being a Digital Landlord.
Whether you’re a complete newbie, or you’ve been around the block before but have never had that “big win” to propel you forward, becoming a Digital Landlord is for you.
Time: If you’ve got a spare hour or two each day, you can do this. If you want to drop everything and go all in, you can do this. More time obviously means faster results, but even putting in a few hours per day is enough to see real success.
And because of that flexibility, you don’t need to trade your time for money. Once the income starts, it’s recurring.
That means you can take a month off, travel the country, pursue a passion project, chill on the beach, or charter a boat across the world.
But you can only do that once you’ve created an income stream that doesn’t require YOU to be there all day, every day.
Real estate investing is a FULL-TIME JOB. If you stop finding deals, your money dries up.
Ownership & Control: Unless you’re buying your properties in cash, you don’t technically own the properties – the lender does.
If you miss a single payment, the property can be taken from you.
Why pour your soul into a business that could be taken away from you at the drop of a dime?
When you’re a Digital Landlord, you literally own all of the assets, which means you have ultimate control.
Ongoing costs: With real estate, profit margins are actually pretty slim. Real wealth is made in owning the assets, and owning A LOT of them.
Being a Digital Landlord, your profit margin is nearly 100%. Watch here to learn how.
Just a reminder: these Digital Rental Properties are worth (at a minimum) $500/mo in semi-passive income. And each time you create another one, your income increases, and the effort put into creating the next property decreases.
Best-case scenario, you have properties bringing in over $3,000+/mo on auto-pilot.
It’s Effectively Copy-Paste: Here’s my favorite part: once you have your first Digital Rental Property up, you can literally copy-paste another version of it and find another willing “renter” in a few days. DOUBLING your income doesn’t get much easier than that…
If you wanted to double your income with real estate investing, you would need twice as many properties, or double your profit margins on each property. And I can guarantee you, that’s a lot harder than a few clicks & a phone call.
Make Money Helping Real People: When you’re a Digital Landlord, you’re helping solve REAL problems that people are ASKING for help with:
Small local businesses around the world need one thing: customers. Without them, their business would fall apart. If we can provide those customers, they’re going to be really happy – and they’re going to pay you for it.
You’re helping a struggling mother or father put food on the table for their families, put their kids through college, or simply live life a little bit more comfortably.
Having this type of impact on the world is what will help you sleep soundly at night.
So, the rest is up to you. You could keep looking at other opportunities like real estate investing, which might make you money.
You could keep researching and researching for the next few months (or few years), never making a concrete decision.
OR, you can look deep inside, think about those dreams, hopes, & desires, and make the decision to ACTUALLY make it happen, just like it has for thousands of other students before you.
Making a fortune while actually helping real people that need it.
If this sounds like you, click here to see how it all works.