The Folks That Make a House Your Home: How Do Real Estate Agents Get Paid?

Have you ever wondered how real estate agents earn a living?

The average base salary for a real estate agent is $41,353 and the total compensation (including bonus, healthcare and, retirement), the average is $48,839.

But the truth is that real estate agents can earn far more and far less. This depends on where they work, the dollar value of their transactions, and the total volume of homes bought and sold, among other factors.

If you’ve ever asked, “How do real estate agents get paid?”, read on to find out!

Commissions

The most common way for a real estate agent to be compensated for his or her services is through a commission structure.

Typical real estate commissions are based on a percentage of the sales price of the property. Oftentimes, these can range anywhere from 1% to 10% and can be negotiated.

For example, let’s use a commission rate of 6% of the selling price of a home. If a real estate agent sold your home for $250,000, 6 percent of that figure is $15,000.

But it’s important to remember that a real estate agent often doesn’t collect that entire percentage themselves. They will typically also split a share of that with the broker of record.

The Broker of Record

A discussion about who pays the real estate agent is not complete without explaining the role of the broker of record.

A broker of record is a licensed real estate broker who is responsible for overseeing real estate agents who represent buyers or sellers.

This can be a potentially lucrative position, but also comes with a fair amount of risk and responsibility. That’s because the broker of record is in charge of ensuring that the agents under his or her guidance are operating the right way.

Because of their responsibility and the potential strength of that broker’s brand, real estate agents often have an agreed upon split of their commission with the broker of record.

Commission Advances

The idea of earning a commission may sound exciting, but the reality is that there can be some uncertainty about what you will earn.

For example, when you are first starting out in the industry or if the housing market slows, you may not have a consistent income stream.

In fact, you may go periods of time without earning any income at all! That can be scary for some prospective real estate agents and drive them away from the field.

But the goods news is that commission advance for real estate agents can give an agent the opportunity to receive a commission on a pending sale.

For example, a real estate agent may be waiting for a closing on a home 60 days from now. Receiving a commission advance for a percentage of their commission early can help them stay afloat and pay their bills!

Wrapping Up: How Do Real Estate Agents Get Paid?

When asking, “How do real estate agents get paid?”, it’s important to remember that there is a lot to that answer.

It’s not so simple as looking at a real estate commission as pure profit for the agent. That’s because there are built-in splits and other costs that an agent has to cover on their own.

Are you looking for other ways to market your real estate?

Check out our blog post on ’10 Real Estate Marketing Tips to Gather More Leads’!