Do Real Estate Agents Make Good Money?

How real estate agents make income and whether this amount is good money that can be dependable is always asked. Well, most buyers and sellers who decide to buy and sell their property may for once involve the real estate agents to close on deals.

The real estate agent will help close the deal, and they earn their money through commission based on the percentage of the home selling price. In this article, we have crunched the numbers and figured out whether real estate agents earn a good amount of money.

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There are two methods for a real estate agent to profit from the sale of a house.

A real estate agent has a bilateral contract with a customer under which the agent has a fiduciary obligation to meet the client’s needs in exchange for a commission from the client. The realtor can potentially profit from the sale of their own house. Well, it may not look so when you are at the closing table and watch your agent collect a hefty check for what appears to be very little labor. However, trust me on this. Behind the scenes, much effort is made. It is a very competitive industry. At the very least, the 80/20 rule applies in each given market. Eighty percent of the agents fail or live on a subsistence level. Many, like aspiring performers, have part-time or full-time jobs to supplement their income while attempting to make it in real estate. So, on average, 20% of agents are successful.

There are also more reasons why real estate brokers do not make a good living. In the United States, there are far too many licensed real estate agents. Many people obtain a license solely to conduct their transactions or work part-time in the industry.

A substantial majority of licensees conduct only one or two transactions per year on average. This significantly reduces the average wage. Most of the successful full-time agents I know earn many times the average compensation you indicated, and they handle at least 10–12 deals each year or more. To achieve and sustain that level of sales, an agent must rank in the top 10–15 percent of the profession. Top agents work hard and long hours, and it is estimated that they cannot earn more than $40,000 per year.

Related: Full-time vs. Part-time Real Estate Agents

Conclusion

The amount of money that agents make each year is determined by various factors, including the number of deals they complete, the commissions they earn, and the split the agent has with their sponsoring broker. Above are how real estate brokers are compensated — and how much they earn.

Sources - Miggins Real Estate in New Jersey and John Kinnunen of Join eXp Realty