According to research from the National Association of Realtors, the median real estate agent salary in 2015 was $27,260.
These figures don’t account for variables like experience, part-time vs. full-time status, or the fact that many new agents entered the field last year. In this guide, we’ll break down the numbers so you can get a better idea how those factors affect how much money you can make as a real estate agent. Specifically, we’ll cover the following:
- How Much Real Estate Agents Make
- What Factors Affect Real Estate Agent Salary
- What Expenses Real Estate Agents Have
- How New Agents Can Maximize Income
Ready to take the plunge? Before you start working as a real estate agent you’re going to need to take a pre-licensing course and pass your state’s real estate exam. For pre-licensing courses, we recommend Brightwood, which offers top-notch real estate licensing programs online. Click here to visit Brightwood, or read more in our Step-by-Step Guide to Becoming a Real Estate Agent.
How Much Is a Real Estate Agent Salary?
The first thing to note is that the vast majority of real estate agents are independent contractors who work on a commission basis. That means they earn a commission on homes they sell, rather than a fixed annual compensation (aka salary). For the sake of simplicity, however, we’ll use both terms interchangeably in this article.
The median 2015 income for real estate agents–$27,260–might not seem like much. But if you’re planning on becoming a full-time real estate agent, don’t fret. The median income is dragged down by part time agents who only spend a few hours per week working on real estate. Once you become a full-time real estate agent with 3+ years experience, you’ll likely make a lot more than the median. As we’ll explain more below, a real estate agent salary varies widely depending on experience, weekly hours worked, and other factors.
Before we get into these variables, let’s take a look at some of the expenses you’ll incur as a real estate agent.
What Factors Affect a Real Estate Agent Salary?
Two of the biggest factors that affect how much real estate agents make are their experience and number of hours worked per week.
Let’s take a look at how the median number of hours worked per week affected median gross income (income before expenses are taken out):
Median Annual Income of Realtors by Number of Hours Worked
|Gross Income||All Realtors||Less than 20 hours||20-39 hours||40-59 hours||60 hours or more|
|Less than $10,000||26%||59%||35%||16%||11%|
|$10,000 - $24,999||13%||20%||19%||9%||7%|
|$25,000 - $34,999||8%||6%||11%||9%||4%|
|$35,000 - $49,999||9%||6%||10%||11%||7%|
|$50,000 - $74,999||12%||4%||10%||16%||13%|
|$75,000 - $99,999||9%||2%||7%||12%||11%|
|$100,000 - $149,999||9%||1%||5%||13%||18%|
|$150,000 - $199,999||5%||1%||2%||7%||10%|
|$200,000 - $249,999||3%||1%||1%||4%||7%|
*Source: NAR 2016 Member Profile
As you may have guessed, as the number of hours worked per week increases, so does the median gross income. For example, 59% of Realtors who earned less than $10,000 worked less than 20 hours per week. On the other hand, only 11% of Realtors who worked 60 or more hours per week earned less than $10,000.
Many agents work in real estate part-time. They may moonlight another job, take time off to raise kids, or just cut back near retirement age. Whatever the reason, this drives down the median income for real estate agents, compared to those who work full time.
Agents who work more than 40 hours per week make a median gross income of $60,100 or higher. Those who work more than 60 hours per week make a median gross income of $93,400.
Now let’s take a look at how experience affects median income for real estate agents.
Median Annual Income of Realtors by Number of Years of Experience
|Gross Income||All Realtors||2 years or less||3-5 years||6-15 years||16 or more years|
|Less than $10,000||26%||59%||20%||14%||9%|
|$10,000 - $24,999||13%||16%||18%||13%||10%|
|$25,000 - $34,999||8%||8%||13%||9%||7%|
|$35,000 - $49,999||9%||6%||12%||11%||10%|
|$50,000 - $74,999||12%||5%||13%||15%||16%|
|$75,000 - $99,999||9%||3%||9%||12%||12%|
|$100,000 - $149,999||9%||2%||8%||12%||14%|
|$150,000 - $199,999||5%||1%||4%||7%||7%|
|$200,000 - $249,999||3%||(less than 1%)||2%||4%||5%|
*Source: NAR 2016 Member Profile
As you can see from the chart, although the vast majority of Realtors are paid on a commission basis, Realtors with more experience made significantly more money than those with less experience. For example, 59% of Realtors with 2 years or less experience made less than $10,000. Only 9% of Realtors with 16 or more years experience made less than $10,000. Also note the sharp rise from 2 years or less experience, with a median gross income of only $8,500, to a Realtor with 3-5 years of experience with a median gross income of $34,600.
This chart also shows the huge number of new and newer agents working in 2015. A whopping 59% of all agents have been in the industry for 2 years or less. Many of these agents won’t stay in the industry very long, and many will continue to work part time.
Another factor that skews the median income of real estate agents is the fact that many people work other jobs in addition to working as a Realtor. Here’s a quick breakdown of the percentage of Realtors whose sole occupation is real estate, compared to the number of years they’ve worked in real estate.
Percentage of Realtors Based on Experience Level Whose Sole Occupation is Real Estate
As you might have guessed, the percentage of Realtors working solely in real estate increases as the number of years in the industry increases. As you can see from the table only 63% of agents with two years or less of experience work in real estate as their cole occupation. However, even with 16 or more years in real estate, some agents still work in other occupations while they work in real estate, though the percentage is significantly lower. This means that even at this level, part time agents can still skew median gross incomes.
Number of Referrals/Repeat Clients
One more factor that affects a real estate agent salary is referrals and repeat clients. As you might expect, agents that earn more money get a much larger percentage of their income from the same clients over and over, or through referrals from those same clients. What you might not realize is just how stark the difference is between low and high income Realtors:
This is another result you’d probably expect: Top earning agents tend to generate more business from referrals and repeat clients. What’s startling, however, is the width of this gap. Based on data collected by NAR, low earning agents receive a mere 20% of their business through referrals. For top earning agents, that number is closer to 60%.
This is largely due to the fact that earning money in real estate is something like rolling a snowball down a hill. It may start out small, but after a few years, it will grow much larger. This is due to the fact that the more deals you close, the more satisfied clients you’ll have, which will lead to a large increase in both repeat clients and referrals.
This also means that as you progress in your career, generating new clients will become less and less important as you will get the bulk of your income from repeat and referral clients. Generally speaking repeat clients and referrals come only with experience.
What Expenses Do Real Estate Agents Have?
Realtors (sales agents and real estate brokers) spent a median $6,300 in 2015 on various expenses related to their business. This includes marketing, training, technology, automobile expenses and more. As you can imagine, Realtors who earned higher incomes generally had higher expenses. This shows that generally speaking, the more money you can invest in your career, the more money you can make. For example, the median expenses for Realtors earning $10,000 or less per year was only $1,720. The median expenses for Realtors who earned $150,000 or more per year was $39,909.
Here’s a quick breakdown of where that money goes.
Median Expenses for Realtors (2015)
|Expense||Median Cost (2015)|
|Administrative Expenses (office supplies, equipment, phone bill)||$1100|
|Marketing and Promotion (online ads, print ads, email marketing)||$1100|
|Professional Development (real estate coaching, seminars, continuing education, etc.)||$900|
|Business Promotion Expenses||$930|
|Technology (website, CRM)||$800|
*Source: NAR 2016 Member Profile
When you add up all of these expenses, the total is $6970 – slightly higher than the median of $6300. That’s because some agents pay additional expenses like office rent and lead referral fees. While this drives up the median overall, the majority of agents do not pay for these expenses.
We recommend new agents spend the bulk of their budget on marketing. Investing in growing your customer-base early on can pay off tremendously down the line. As we’ll explain more further on, top-earning agents receive a lot of business through referrals and repeat customers, which can take years to build up.
For ideas on how to start marketing your real estate business, check out our guide 50 Real Estate Marketing Ideas The Pros Use.
How Can New Agents Maximize Income?
As we explained above, new agents face a certain “chicken and egg” problem: Without a network of past clients to give you referrals, it’s tough to make new sales. Without new sales, however, it’s impossible to build a network.
How can new agents solve this? While there isn’t any one-size-fits-all solution, we generally recommend new agents use online marketing to find new leads. Then, utilize a CRM and email marketing software to maintain a long term relationship (called lead nurturing) and generate referrals. Focusing your marketing efforts on a specific geographic region (known as a “Farm Area”) is also a great way to ensure success.
Since it’s by far the largest real estate site online, advertising on Zillow can also be a great way to generate leads. However, as a new agent, you will need some positive reviews built up first. If you’re interested in learning more about Zillow and other online marketing tools, check out some of our additional guides:
- How Zillow Premier Agent Works
- Real Estate Agent Reviews: How to Handle Your Reputation Online
- 50 Real Estate Marketing Ideas The Pros Use
The Bottom Line
Real estate is an industry that rewards hard work and experience and a real estate agent salary reflects that. Agents who have been in the industry for 16 years or more earned a median gross income of $73,400 in 2015. Those who pull in 60 hours a week or more earned $93,400, regardless of experience.