According to the National Association of Realtors (NAR) 2017 member profile, the average real estate broker salary was $69,640 in 2016. In this guide, we’ll show you how much a typical real estate broker can make, as well as discuss the different types of brokers and expenses they might incur in order to run their business.
We would like to thank Brightwood Real Estate Education, a provider of online real estate courses, for sponsoring this article. All views expressed in this article belong exclusively to Fit Small Business.
How Much Is a Real Estate Broker Salary?
How much real estate brokers make varies widely depending on whether you run your own brokerage and/or engage in selling.
Source: 2017 Member Profile Data
The first thing to note is that most real estate brokers do not actually make a salary. Instead, they earn a commission on real estate that they or their agents sell. However, for the sake of simplicity, we’ll use the term salary in this article.
The gross median salary for licensed real estate brokers in the U.S. was $69,640 in 2016, according to NAR data published in 2017. This is up slightly from 2015, when the median gross salary for real estate brokers was $66,670.
Compared to this, licensed real estate agents in 2016 had a median salary of $31,690. A big part of the reason that salaries for real estate brokers were significantly higher than sales agents’ salaries is that it’s common for agents to work part-time while in other jobs. Additionally, most real estate brokers have years of industry experience, which means they get a larger percentage of their income from repeat and referral business.
If you’re a real estate agent who is interested in becoming a real estate broker, learn more about the process in our step-by-step guide on how to become a real estate broker. As you’ll see below, there are many paths you can take if you become a broker.
The income of real estate brokers varies widely based whether they’re an associate broker or a managing real estate broker/broker-owner, and on whether or not they sell homes themselves.
Types of Real Estate Brokers
There are three main types of real estate brokers: associate real estate brokers, managing real estate brokers, and broker-owners (also known as designated brokers). Managing real estate brokers can be broker-owners or could simply be brokers working within a firm who manage agents and the agency. Associate brokers work for a brokerage almost as an agent might.
Associate Real Estate Broker
A licensed associate real estate broker is a real estate professional who has a real estate broker’s license, but chooses to work for a brokerage instead of opening their own. While there are many reasons why someone with a real estate broker’s license would choose to work for another broker instead of opening their own brokerage, the most common ones are lower risk and generally lower monthly expenses.
As you can see from the chart above, the median salary for an associate broker in 2016 was $55,360. While this is significantly higher than the median salary for sales agents, it is still much lower than the median salary for managing real estate brokers or broker-owners.
Managing Real Estate Brokers and Broker-Owners
If a real estate broker owns the agency they are working at, they are what is known as a broker-owner or designated real estate broker. And if they choose to manage the agents and associate brokers working there, they can also be called a managing broker.
Managing Brokers
It is common for broker-owners to hire another broker to manage their agents and associate brokers rather than perform this task themselves, especially when scaling their firm. In this case, the person hiring would be considered a designated broker or broker-owner, while the person they hire to manage their agents would be considered the managing broker.
Managing brokers who sell have the highest incomes of the group at $96,150, but also a significant workload and some of the greatest responsibilities. They are managing their own client load and have the added responsibility of managing agents under their license.
Broker-Owner
Broker-owners are sometimes called designated brokers. Within the firm, all real estate agents must be sponsored by a broker-owner or managing broker. Some agents seek to become managing brokers/broker-owners so they can sponsor other agents, and thus keep a portion of their commissions in return for sponsoring them. Others become brokers so they can “sponsor themselves” and keep 100 percent of their own commissions. They may or may not sponsor other real estate agents and keep a portion of their commissions.
As you can see from the chart below, there is also a vast difference in expenses for broker-owners who continue to sell property and those who do not. This is because these brokers still have to pay for marketing their own listings.
If you’re thinking about taking the leap from agent to broker, start now. The process can be time consuming, but the benefits are great. You’ll be able to negotiate higher commission splits, truly work for yourself, and open your own brokerage. If you want to learn more about how real estate commission splits work, check out our guide.
How Many Real Estate Brokers Own Their Brokerages?
As of the 2017 NAR report, approximately 33 percent of all Real Estate Brokers had sole ownership of their brokerage. In other words, most of these brokers started their own small, boutique firm that they own outright. A small percentage (5 percent) owned franchises of larger franchise brokerages. Another 51 percent have no ownership at all of the real estate brokerages they work for. They might be associate brokers working essentially as agents, or managing brokers working under another broker-owner.
Common Real Estate Broker Expenses
While real estate brokers can make a sizable income, they also have fairly large expenses. From advertising to equipment, technology, automobile expenses, and more, associate real estate brokers spend a median of $9,650 per year. Median expenses for broker-owners who also sell was $16,250 in 2016. There’s a pretty wide range of how much real estate brokers spend:
Typical Expenses for a Real Estate Broker-Owner (who also sells)
| Expense | |
|---|---|
| Administrative Expenses (office supplies, equipment, phone bill) | |
| Marketing and Promotion (online ads, print ads, email marketing) | |
| Professional Development (real estate coaching, seminars, continuing education, etc.) | |
| Office Lease/Building Expenses (from 2015) | |
| Technology (website, CRM) | |
| Vehicle Expenses | |
| Total: |
Source: NAR 2017 Member Profile
There is certainly a variation in expenses for real estate brokers. That’s because there’s a pretty wide range of expenses, whether you’re a broker-owner and run your own business or whether you’re an associate real estate broker and work for another broker. If you’re a broker-owner, you may have to pay office and technology costs for your entire team of agents as well as expenses for recruiting and training new agents.
Real Estate Broker Average Salary & Hours Worked
An interesting finding of the NAR 2017 report is that while managing brokers make the most income, they also work the most hours compared to any other type of broker or those licensed as sales agents.
Sales agents had a median work week at 35 hours, while the average broker reported a work week of 40 hours. While most brokers worked between 40 and 45 hours a week, managing brokers who sold property worked the most and also reported the highest income of the group. While the median income of a managing broker was $96,150, they also reported working 50 hours a week.
The Bottom Line
Although there’s a pretty wide income range for real estate brokers, in general they make significantly more than real estate agents. The median gross income for real estate agents in 2016 was $31,670—less than half as much as the $69,640 median income for brokers overall.
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Charlie
I have a question about the table under the heading “How Much Is a Real Estate Broker Salary?” What is the difference between a Broker-Owner “with selling” vs a Broker-owner “without selling”? In other words, what do those terms mean?
Emile L'Eplattenier
Some brokers who run their own firms still actively sell homes or commercial real estate, while others stay in a purely managerial role.