How Much Commission Do Real Estate Agents Make? 5 Things to Know!

Posted by Casandra Properties on Tuesday, March 16th, 2021 at 10:24am.

Making your own schedule, working from home, and meeting interesting people are just a few of the perks of being a real estate agent. But how much commission do real estate agents make?

While a real estate agent career may seem attractive at first glance, take a closer look at the often complex pay structure agents must learn to navigate. Here are five things you should know about real estate agent pay. 

Real Estate Agent Commission

1. What Is A Real Estate Agent?

A real estate agent is a salesperson that has completed a 60-hour real estate course and passed the state's licensing requirements. Real estate agent job responsibilities vary depending on whether the agent represents the buyer or the seller in a real estate transaction. 

As the seller's agent, responsibilities include establishing a fair list price, listing the home on at least one MLS, showing the home to potential buyers, and negotiating the details of the sale. 

As the buyer's agent, responsibilities include locating properties to meet the buyer's needs, arranging showings, and negotiating the details of the purchase. 

2. Agents Work On Commission (Usually)

A real estate agent is rarely offered a base salary. Most agents work on a commission-only basis, meaning they only get paid when a sale is completed. Commission rates vary but are usually 4-6%. Unfortunately, agents don't get to keep the entire commission for themselves. 

3. Commissions Are Shared With Brokers

Agents aren't allowed to work on their own. They must work under the umbrella of a licensed real estate broker with whom they share commissions. A broker is similar to an agent but has taken their education a step further and passed a broker's license exam. 

While the usual commission is 4-6% of the selling price, that commission must be split between the listing agent and the listing broker as well as the buyer's agent and broker. The typical commission split between broker and agent is 60% for the agent and 40% for the broker, but each agent contract is negotiated individually. 

Let's see how this might be broken down in real life. 

A house sells for $100,000 and the commission is 6% or $6,000. That commission is split between the seller's broker and the buyer's broker. So each broker receives $3,000 and the agent receives their commission from the $3,000. At a 60/40 split, each agent would receive $1,800. 

  • Buyer's Broker: $1,200
  • Buyer's Agent: $1,800
  • Seller's Broker: $1,200
  • Seller's Agent: $1,800

4. How Often Do Real Estate Agents Get Paid?

There are no weekly or even monthly guaranteed paychecks for real estate agents. Payments are collected from the broker after each closing. So how often an agent gets paid is directly related to how often he closes a sale. 

5. How Much Commission Do Real Estate Agents Make?

According to Salary.com, the average real estate agent salary in the US is just over $74,000 yearly based on statistics collected in February 2021. The more experience in the business, the higher the income. 

 

The Bottom Line

How much commission do real estate agents make? That's dependent on many factors but mainly on how many properties an agent can close on. Click here to learn more about real estate. 

If you've enjoyed this article, be sure to check out more articles here on the blog. 

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