In this article, you will get the answer to the question “How much do Real Estate agents make?”. Here, we will discuss topics like Who is a Real Estate agent? Types of Real Estate agents, Real Estate agents’ salaries, How Real Estate agents’ commissions are determined and much more.
Who is a Real Estate agent?
One who represents sellers or buyers of real estate or real property is known as a real estate agent, also known as a Realtor and/or a real estate broker. Although a broker may work alone, an agent usually supports a broker with client-representation rights. To manage the paperwork required to conclude real estate deals and negotiate sales contracts, the state offers licenses to brokers and agents. Both buyers and sellers should seek the advice of a registered real estate agent if they want a written explanation of the laws of agency in a particular state. Several governments mandate that all parties sign written disclosures outlining their obligations.
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Types of Real Estate agents
Broker, realtor, and real estate agent are all terms that are occasionally used interchangeably. There are, nevertheless, some notable differences between these specialists.
Real estate agent vs. Realtor
A Realtor is a real estate broker or agent. Yet, not all real estate brokers or agents are realtors.
All realtors are guided by the National Association of Realtors (NAR). A further purpose of the Realtor trademark is to stop brokers from misrepresenting themselves as Realtors.
The NAR would argue that its members are held to higher professional standards and have more expertise than other real estate brokers, which argument might be justified (they must pass additional exams).
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Real estate agent vs. Broker
A real estate agent is a person who has passed the required exams and been given permission to engage in real estate brokerage. A real estate license is the absolute minimum requirement to permit the buying and selling of property.
The standards for exams and ongoing education are unique to each state. Getting a license is easier in certain states than others.
By passing additional examinations, a real estate broker has gone above and beyond. They should therefore be more knowledgeable and skilled than an agent, theoretically speaking. A broker is also typically in charge of overseeing the activities of other agents and is more likely to hold a prominent position in a real estate firm.
In 2020, the national median pay for real estate agents was $51,220, according to the Bureau of Labor Statistics. The BLS also found that salespeople make around $10,000 less annually than real estate brokers on average.
How much do Real Estate agents and Brokers earn?
A real estate agent receives a commission for each home they successfully sell. Normally, the fee ranges from 5 to 6 percent of the sales price. It’s improbable that one agent will retain the entire 5-6%, therefore. Real estate agent commissions are frequently split 50/50 between the buyer’s agent and the seller’s representative, also referred to as the “listing agent.”
Yet, whether they are representing the home seller or the buyer, both varieties of real estate brokers are paid by the seller once the sale is closed. In light of the potential for high commissions, shopping around for your real estate agent makes sense.
Look for the best possible balance between price and service, just like you would when choosing a mortgage lender.
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Real Estate agents’ salaries
Real estate agents’ salaries are not based on their hourly or yearly pay. The bulk of agents, however, only get paid when a home sells.
This cash is provided in the form of a commission, which is equal to a percentage of the home’s selling price. A real estate agent’s income is determined by the home sales prices in the neighborhood where they work.
The typical commission received from clients is estimated to be between 5 and 6% by both Redfin and the National Association of Realtors. That is a lot. The median sale price of a property in the United States in May 2021, according to Zillow, was little over $287,000.
On a $287,000 home, a 6% commission would amount to $17,220. Even after a 50/50 fee split, an agent may still earn $8,610 off the sale of the home.
At the high end of the market, the figures must make even wealthy people cry. In tears, the seller of a $50 million Hollywood Hills or Manhattan property would sign a $2.5 or $3 million commission cheque.
But, bear in mind that not all real estate experts are headquartered in New York or California, and not all real estate transactions are for seven figures, before you decide to start your new career as an agent.
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Who pays the Real Estate agent’s commission?
The seller typically pays the real estate agent commissions, which is good news for home purchasers. If you’re a seller, the news isn’t positive.
Smart buyers frequently hire their own “buyer’s agent,” which may be great because it gives you a certified professional who is wholly on your side and who contributes skills, expertise, and information (assuming you pick yours correctly). Usually, the seller will cover the costs of both the seller’s agent and the buyer’s agent.
Of course, you could argue that the vendor is paying commissions with the buyer’s money. So, in this instance, it is unclear “who pays the whole commission.”
No matter your point of view, buyers won’t pay more to work with their own agent. If you don’t have a buyer’s agent, the seller’s agent will keep the entire commission without your representation. Moreover, bear in mind that most real estate agents charge “commissions” rather than “fees,” which suggests they are paid for their accomplishments rather than by the hour or for services rendered.
So, they are unlikely to gain anything from a broken contract. As a result, it occasionally happens that an agent makes a lot of money on a straightforward and quick deal. Nonetheless, they frequently put in a lot of effort for nothing in return.
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How Real Estate agents’ commissions are determined
According to realtor Kevin Deselms, a lot of factors affect the commission rate. Possible inclusions include local real estate market circumstances. “The sum is frequently set through conversation between the seller and the listing agent or the agent’s agency,” he clarifies.
So, the commission can be changed. Also, some agents are open to discounts, either away or later. The truth is that almost three out of every five sellers get a break on the fee they pay to their agent. “Commission rates in recent years, have been dropping.” says real estate broker Matt Buttner.
He asserts that the internet and technology are mostly to fault. The MLS now immediately syndicates the listing to websites like Realtor.com and Zillow. Thus, a listing agent’s job is easier.
There are many different reasons why discounts are given. “For example, assuming a client hires the same agent to sell a house and buy another. Realtor and real estate lawyer Bruce Ailion claims that in this circumstance, the agent is more likely to provide a discount.
Saying that the residence is in high demand and priced affordably would be appropriate. Selling could need less work. That can lead to a discount.
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Advantages of working with a Real Estate agency
If you have a real estate agent on your side, house hunting can be less stressful. Also, you might locate better properties or a greater offer than you otherwise would have.
It’s an improved method for home sellers to list their property and draw in more interested buyers. Also, both buyers and sellers benefit from having a pro by their sides who can help them navigate the difficulties of such a large real estate transaction.
Buttner added that “buyer’s agents work substantially harder for their money,” frequently working with the same customer for months at a time. Before anything is accepted, multiple residences are shown to them and numerous offers are made.
As a result, the buyer’s agent occasionally makes a little bit more money than the seller’s agent.
Buttner claims that a few brokerages that charge less than 6% nonetheless give the buyer’s agent a full 3% commission. Remember that not all clients will compensate an agency for their work. The national average salary estimates collected by the BLS and other sources do not account for these uncompensated work.
Ailion claims that not all transactions result in them getting paid a commission. Ailion recognizes that 6% can seem excessive, but it is important to consider the costs associated with deals that fail to finish. But as he goes on to say, you definitely get what you paid for.
Like a good physician or attorney, in my opinion, a good agent is worth their money, says Ailion. “You’re probably dealing with your life’s most important asset. Therefore choosing the best representation makes sense.
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Frequently Asked Questions (FAQs)
How much money does a real estate agent in Nigeria make?
An average month’s salary for a real estate agent in Nigeria is 83,333 Naira. A real estate agent in Nigeria earns an average yearly salary of $999,996. The starting salary for a real estate agent is $849,996 per year. Senior Real Estate Agent positions with experience have an annual salary cap of $1,149,996.
Which real estate agent makes the highest salary?
Despite the fact that the average salary for real estate brokers in California is considerable, the range of remuneration goes from $24,970 at the low end to $123,700 at the top.
Do real estate agents in New York City have a happy life?
According to the Bureau of Labor Statistics, the average yearly wage for real estate agents in the New York metropolitan area was $86,650 as of 2021. Compared to the average national real estate salesperson’s annual salary of $61,480. In Manhattan, realtors make a respectable living!
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Who is the richest real estate agent in Nigeria?
The award-winning Copen Group, a business that has smashed multiple real estate records, is led by GMD and CEO Ugochukwu Obiora Chime. He has more than 40 years of broad industrial expertise across the public, commercial, and civil service sectors of the Nigerian economy.
Is Nigeria a respectable location to buy a home?
Nigeria is a top investment destination and a ready market for a variety of investments, including those in technology, financial services, and real estate, thanks to its fast expanding population.
What are the starting and final pay for real estate agents?
Although ZipRecruiter reports yearly incomes as high as $199,500 and as low as $18,000, the majority of Real Estate Agent salaries now fall between $60,000 and $100,000, with top earners making $150,000 nationwide.
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In New York, is it possible to become a real estate agent?
A minimum of three years in general real estate or two years working as an agent is required. Must possess a four-year real estate degree from college or 120 hours of real estate training from a recognized institution. Needs to pass the test. Must allow their fingerprints to be taken and pass a background check2.
Your income does not have to be based on what is “average” for your industry, your level of expertise, or the amount of time you put into your work. There are always ways to beat the odds and earn more money than the median. We’ve found that agents who earn more money frequently possess exceptional skills in managing their marketing budgets, finding quality leads, obtaining profitable real estate listings, and being up to date with industry best practices.