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How Much Do Real Estate Agents Make? A 2025 Guide for Aspiring Agents

The question of "how much do real estate agents make" is one of the most common for anyone considering a career in the industry. Unlike a traditional salaried job, a real estate agent's income isn't a fixed number. It’s a dynamic figure that can range from less than minimum wage in the first year to well over six or even seven figures for top producers in thriving markets. The truth is, there's no single answer, as earnings are tied directly to performance, market conditions, and business acumen.

According to the U.S. Bureau of Labor Statistics, the median annual wage for real estate sales agents was around $56,320 in May 2024. However, this number only tells part of the story. Because most agents work on 100% commission, their income potential is technically unlimited, but it also comes with significant risk and variability.

This guide breaks down every component that contributes to the earnings of real estate agents, from commission structures to the hidden costs of running your own real estate business.

What to Know

It's Commission-Based: The vast majority of real estate agents are paid via commission, not a salary. This means their income is directly tied to the number of properties they successfully help clients buy or sell.
Income Varies Wildly: A real estate agent's salary depends heavily on factors like geographic location, years of experience, local market conditions, and their chosen niche (e.g., luxury homes, commercial properties).
Agents are Business Owners: Most agents are independent contractors, not employees. This means they are responsible for their own taxes, insurance, marketing costs, and other business expenses, which are deducted from their gross commission income.
Commission is Always Split: The standard 5-6% commission on a home sale is not what an agent takes home. It's first split between the buyer's and seller's brokerages, and then each agent splits their portion with their own sponsoring broker.

Understanding the Foundation: Real Estate Commission Structures

how much do real estate agent make

To understand a real estate agent's income, you first need to understand how they get paid: through commissions. The commission is a percentage of a property's final sale price. While rates are always negotiable, the industry standard typically hovers between 5% and 6%.

This total commission is not paid to a single agent. It's split multiple ways. First, it's divided between the brokerage representing the seller (the listing brokerage) and the brokerage representing the buyer (the buyer's brokerage). In most cases, this is a 50/50 split.

Let's walk through an example:

Home Sale Price: $500,000
Total Commission (at 6%): $30,000

This $30,000 is split between the two brokerages, so the listing brokerage gets $15,000 and the buyer's brokerage gets $15,000. But it doesn't stop there. Each agent then has to split their portion with their sponsoring broker. This is known as the "commission split." For a new agent, a 50/50 or 60/40 split (60% to the agent, 40% to the broker) is common.

An experienced, high-producing agent might have a split of 80/20 or even 90/10.

Continuing the example with a 70/30 split for both agents:

Listing Agent's Gross Commission: $15,000 x 70% = $10,500
Buyer's Agent's Gross Commission: $15,000 x 70% = $10,500

So, on a $500,000 home sale, each agent might take home $10,500 before taxes and business expenses. This illustrates why looking at the total commission rate can be misleading when trying to figure out an agent's actual earnings.

What Factors Influence a Real Estate Agent's Income?

An agent's success is not determined by a single factor but by a combination of variables. Two agents in the same city can have drastically different incomes based on their strategy, effort, and circumstances.

Geographic Location

Where an agent works is arguably the biggest factor influencing their earnings. An agent in a high-cost-of-living area like San Francisco or New York City has a much higher potential income because the median home prices are significantly higher. A 3% commission on a $1.5 million property is vastly different from a 3% commission on a $250,000 property.

Hours Worked

Real estate is rarely a 9-to-5 job, and it's definitely not a get-rich-quick scheme. According to data from the National Association of REALTORS® (NAR), there is a direct correlation between the number of hours worked and an agent's income. Agents who treat it as a full-time career (40-60 hours per week) consistently earn more than those who work part-time.

Niche and Specialization

Generalist agents can do well, but many top earners build their business around a specific niche. This allows them to become the go-to expert for a certain type of client or property. Popular niches include:

Luxury Homes: High price points, but fewer transactions and a more demanding clientele.
First-Time Homebuyers: More transactions, but lower price points and more hand-holding required.
Commercial Real Estate: Involves properties like office buildings, retail spaces, and warehouses. Deals are complex and take longer, but commissions can be enormous.
Investment Properties: Working with investors who buy and sell frequently.

Personal Network and Marketing Efforts

Real estate is a relationship business. An agent's ability to build and nurture a network is critical for generating leads. Successful agents invest time and money into marketing themselves through social media, local events, email newsletters, and other channels to ensure a steady stream of clients.

A Look Across the Map: Average Real Estate Agent Salary by Region

how much do real estate agent make

As mentioned, location is a primary driver of a real estate agent's income. States with high property values and bustling metropolitan areas typically offer the highest earning potential. While salaries can fluctuate year to year, some states consistently rank at the top.

Based on data from various job sites and industry reports, states like New York, Massachusetts, California, Hawaii, and Alaska often report the highest average real estate agent salaries. This is directly tied to the high cost of real estate in these areas. For example, the median home price in California is significantly higher than the national average, meaning each commission check is larger.

Conversely, states with lower costs of living and more affordable housing markets, such as Mississippi, Alabama, and Arkansas, tend to have lower average incomes for agents. This doesn't mean agents in these states can't be successful; it just means they need to close a higher volume of transactions to achieve the same income as an agent in a more expensive market. According to the U.S. Bureau of Labor Statistics, metropolitan areas often provide the most opportunities for agents due to population density and a higher number of property transactions.

Residential vs. Commercial Real Estate: A Tale of Two Incomes

When people think of real estate agents, they usually picture someone selling single-family homes. This is residential real estate, but there's another, often more lucrative, side of the industry: commercial real estate.

Residential Real Estate

This is the world of helping people buy and sell the places they live. The sales cycle is typically shorter (30-90 days), and the transactions are often driven by emotional life events like marriage, having children, or relocating for a job. While the volume of potential deals is high, the average commission per deal is lower compared to commercial.

Commercial Real Estate (CRE)

The earnings of real estate agents in the commercial sector can be substantially higher, but it's a different ballgame. CRE agents deal with income-producing properties like office buildings, retail centers, industrial warehouses, and apartment complexes. Deals are based on financial analysis and investment returns, not emotion. The sales cycle can last for many months or even years, and the transactions are far more complex. However, with property values often in the millions or tens of millions, a single commission can be life-changing.

The Experience Curve: How Earnings Evolve Over a Career

Real estate is a field where experience pays dividends. An agent's income typically grows as they build their reputation, client base, and market knowledge over time.

First Year: The first 12-24 months are often the most challenging. Many new agents earn very little, sometimes less than $20,000, as they spend time and money on licensing, training, and building a client pipeline from scratch. A high percentage of agents leave the industry within their first two years.
Years 2-5: This is the growth phase. Agents who survive the initial struggle begin to see more consistent income. They've closed enough deals to generate referrals, have a better understanding of their local market, and have refined their marketing and sales processes. Their real estate agent income starts to stabilize and grow steadily.
Years 5-10+: Experienced agents are often established professionals in their communities. A significant portion of their business comes from repeat clients and referrals, reducing their need for constant prospecting. These veterans often have a deep understanding of market trends and complex transactions, allowing them to command higher commission rates or move into luxury or commercial markets. Many also start building teams to handle more business.

Pro Tip: New agents should have at least 6-12 months of living expenses saved before starting their career. This financial cushion allows you to focus on learning and building your business without the stress of needing an immediate commission check to pay your bills.

Your Broker's Cut: The Role of Brokerages in Agent Earnings

Every real estate agent must work under a licensed broker. The brokerage provides the legal framework, brand recognition, training, and support systems an agent needs to operate. In exchange, the brokerage takes a portion of the agent's commission.

The brokerage model an agent chooses has a direct impact on their net income. There are several common models:

Traditional Split-Commission Brokerages: These firms (like Keller Williams or Coldwell Banker) take a percentage of every commission. The split can be anywhere from 50/50 for new agents to 90/10 for top producers. These brokerages typically offer significant training, mentorship, and office resources.
100% Commission / Desk Fee Brokerages: In this model (popularized by companies like RE/MAX), agents keep 100% of their commission. In return, they pay the brokerage a flat monthly "desk fee" and a transaction fee for each deal. This model is best for experienced, self-sufficient agents who don't need the hands-on support of a traditional brokerage.
Cloud-Based or Virtual Brokerages: Companies like eXp Realty operate without physical offices, reducing overhead. They often offer attractive commission splits, revenue sharing opportunities, and stock options, appealing to tech-savvy and entrepreneurial agents.

Choosing the right brokerage is a personal decision. A new agent might benefit from the training at a traditional firm, even with a lower split, while an established agent might maximize their net income at a 100% commission firm.

Beyond the Sale: Exploring Additional Income Streams

how much do real estate agent make

Many successful real estate professionals don't rely solely on sales commissions. They diversify their income by adding related services and revenue streams, which helps create more financial stability in a fluctuating market.

Property Management: Some agents manage rental properties for investor clients, charging a monthly fee (typically 8-12% of the rent) for handling tenants, maintenance, and rent collection.
Broker Price Opinions (BPOs): A BPO is an estimate of a property's value, often performed for banks and lenders for situations like foreclosures. While the pay per BPO is small (usually $50-$150), it can provide supplemental income during slow periods.
Referral Fees: If an agent has a client moving to another state, they can refer them to an agent in that area. If the client buys or sells a home, the referring agent receives a percentage of the other agent's commission (typically 25%).
Starting a Team: A high-producing agent can form a team of other agents who work under them. The team leader provides leads and training in exchange for a percentage of their team members' commissions.

The Hidden Costs: Common Expenses That Reduce Your Take-Home Pay

One of the biggest misconceptions about real estate agent income is that gross commission equals take-home pay. Since agents are independent contractors, they are responsible for all the costs of running their business. These expenses can easily add up to 20-30% or more of an agent's gross income.

Common expenses include:

Licensing and Education: Initial course fees, exam fees, and ongoing continuing education. * Association Dues: Annual fees for the National Association of REALTORS®, state associations, and local boards. * MLS Fees: Monthly or quarterly fees for access to the Multiple Listing Service. * Marketing and Advertising: Costs for professional photography, virtual tours, online ads, print materials, and client gifts.
Business Software: A CRM is crucial for managing clients. Top-earning agents treat their work like a business, which means meticulously tracking leads, follow-ups, and transactions. This is where a robust CRM (Customer Relationship Management) system like Follow Up Boss or LionDesk becomes essential. It helps manage the sales pipeline so no opportunity slips through the cracks, directly impacting the bottom line.
Insurance: Errors & Omissions (E&O) insurance is a must, along with health insurance. * Taxes: Agents must pay self-employment tax (around 15.3%) on top of federal and state income taxes. It's recommended to set aside 25-35% of every commission check for taxes.

The Blueprint for Success: Habits of High-Earning Real Estate Agents

While market and location play a role, top-earning agents aren't just lucky. They cultivate specific habits and systems that set them apart and generate a consistent, predictable real estate agent salary.

They Treat it Like a Business: They have a business plan, a budget, and income goals. They track their metrics, understand their conversion rates, and know exactly how many calls they need to make to close a deal.
They are Lead Generation Machines: Top agents don't wait for the phone to ring. They proactively generate leads every single day through a mix of activities, such as calling their sphere of influence, hosting open houses, networking, and running online ad campaigns.
They Master Follow-Up: The fortune is in the follow-up. High earners use systems, often powered by a CRM, to stay in touch with past, present, and potential clients. This ensures they are the first person someone thinks of when they're ready to buy or sell.
They Invest in Themselves: They are committed to lifelong learning. They attend conferences, hire coaches, read books, and take courses to sharpen their skills in negotiation, marketing, and sales.

Frequently Asked Questions About Real Estate Agent Income

Here are answers to some of the most common questions people have about the earnings of real estate agents.

Can you make $1,000,000 a year in real estate?

Yes, it is possible, but it is extremely rare. Agents who earn seven figures are typically in the top 1% of the industry. They often work in high-end luxury markets, run large teams that close hundreds of deals per year, or specialize in high-value commercial real estate.

How much does a real estate agent make on a $500,000 sale?

As shown in our earlier example, it depends on the commission rate and splits. Assuming a 6% total commission ($30,000) split between two sides ($15,000 each), an agent with a 70/30 split with their broker would earn a gross commission of $10,500 before taxes and expenses.

Is it hard to make money being a real estate agent?

Yes, especially in the beginning. The industry has a low barrier to entry but a high failure rate. Success requires immense self-discipline, strong people skills, an entrepreneurial mindset, and the financial stability to survive for months without a paycheck while you build your business.

How many houses do I need to sell to make $100,000?

This depends on the average home price in your market and your commission splits. Let's say the average home price is $400,000. Your average gross commission per deal (after all splits) might be around $8,400. To make $100,000 in gross commission income, you would need to sell approximately 12 homes per year, or one per month.

Do agents get paid hourly?

No. Real estate agents are almost exclusively paid on commission. They only get paid when a transaction successfully closes. All the time spent showing homes, marketing listings, and writing offers is unpaid if the deal falls through.

How often do realtors get paid?

Payment is irregular and depends entirely on when deals close. An agent might close three deals in one month and then go two or three months without another closing. This unpredictable cash flow is one of the biggest challenges of the career, requiring careful financial planning and budgeting.

Final Thoughts: Is a Career in Real Estate Right for You?

The potential earnings of real estate agents are alluring, with no ceiling on what you can make. However, the reality is that success is earned through hard work, strategic planning, and perseverance. It's a career that offers incredible freedom and flexibility but demands the discipline and drive of a business owner.

If you are considering this path, it's crucial to go in with a realistic understanding of the costs, the risks, and the immense effort required in the first few years. For those with an entrepreneurial spirit and a passion for helping people achieve their homeownership dreams, it can be an incredibly rewarding and lucrative profession.