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How much can I earn as an agent?

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How much can I earn as an agent?

One of the benefits of a career in real estate is the unlimited earnings potential. Unlike salaried or wage-paying jobs, a commission-based job allows you to get back in income what you put into it in effort and energy. If you watch enough TV programs about real estate, you might think that all real estate agents make millions. Realistically, that’s not the case. According to the NAR 2016 Member Profile Report, the median gross income of REALTOR® (and remember, REALTOR is a professional designation; not every real estate agent is a REALTOR) was $39,200 in 2015. Those with 16 years or more experience earned the highest income: approximately $73,400 on average.

Good to know

Some progressive brokerages are moving to a salary-based structure to appeal to new agents—particularly Millennials. See how it works.

How commission works

How much will you make when you sell a home? On real estate reality television, we often see agents sell a home for $400,000 at a 6% commission rate. That would be $24,000 with just one transaction. Or would it be? Commissions are typically paid by the property sellers and—by law—are negotiable. “Standard” commissions typically range from 3% to 7% for residential sales, depending on the local area. That commission is split between the buyer’s agent and the seller’s agent. For the purposes of this example, we’ll use 6%. If you sell a home for $400,000, the 6% commission is $24,000. If another agent was involved in the transaction, your split becomes 3%, or $12,000.

Variables that impact your pay

Your location

While the commission rates tend to stay in that 3% to 7% range, the dollar amounts of commissions vary greatly depending on the location and the average sales price in your community.

The local economy

When job growth is high, and more people are moving to your area, home sales rise. If the local economy is depressed, you’ll need to work harder to make transactions happen.

Your real estate expenses

As an independent contractor, you’ll usually be responsible for your own health insurance, errors and omissions insurance, vehicle expenses, marketing and advertising, internet service, MLS fees, brokerage fees, continuing education, and many other expenses. According to the NAR study mentioned above, a REALTOR’s average expenses in 2015 were $6,300.

The amount you network

Real estate is a relationship-based business. Selling homes is directly correlated to how well you network and make connections, and your ability to turn those connections into transactions. In your first year, when you’re just starting to build your business, this can be difficult. Make a point of connecting with at least five new people each day, and grow your sphere of influence to maximize your potential earnings.

How to get started: real estate licensing

Understanding the real estate licensing process

Before you can become an agent, you need to become licensed. Depending on the pre-licensing program you choose and your dedication to your studies, this process could take weeks or months. The requirements for real estate licensing vary widely from state to state. Some states require a certain level of education, and/or a certain number of credit hours in real estate coursework, before you can take your licensing exam.

Getting your real estate license: a roadmap

Understand eligibility requirements

There is no national standard real estate licensing checklist. Each state sets its own requirements. You may face residency restrictions, requirements for pre-licensing coursework, and a lot of paperwork. You may have to complete various training programs, go through a background check, be fingerprinted, and show proof of employment with a sponsor or managing broker/ brokerage.

Other eligibility requirements that differ from state to state include:

  • Education requirements
  • Hours of coursework minimums
  • On-the-job training requirements
  • Exam pass rates
  • Proof of employment with a sponsor or managing broker/brokerage
  • Errors and omissions insurance

Pre-licensing education

All states require some type of real estate pre-licensing education. Once you complete your coursework, you will have to pass a state administered exam in order to continue. Some states require you to have a certain number of hours of on-the-job training in addition to your pre-licensing coursework. Students who take exam preparation courses are more likely to pass the final state licensing exam on their first try. Consider test prep products like those from Real Estate Express, which allow you to practice real-life test questions from your state’s exam, give you pointers on how to conquer the math section, and more.

Choose the right pre-licensing school

Be sure to choose a real estate licensing school that is accredited in your state. You’ll need a copy of your certificate of completion or your transcripts in order to complete your license application. You’ll also want to ensure that the school provides the types of classes that best suit your learning style. Do you want an online course or an in-classroom experience? Do they have a quick study program, or will you be studying for months?

Take the real estate license exam

In most cases, a third party—not your real estate licensing school—will administer your licensing exam. Your local real estate board should be able to direct you to the appropriate testing center. It’s important that you confirm that the testing center you’re using has been approved to administer the test. You will need to pass both the national and state portions of the exam, which can be taken together in some states, in order to get your license.

The application process

Only after you have met all requirements and passed your real estate license exam can you apply for a real estate license. You will need to know the application deadline in your particular state, and whether or not you will need to show proof of errors and omissions (E&O) insurance before you apply.


The total cost of earning your real estate license, again, will vary depending on your state’s requirements. You may have to pay for:

  • Pre-licensing coursework
  • License application fees
  • State licensing exam fees
  • Background check fees
  • Fingerprinting fees


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About The Author
Edward Winfrey

Edward S. Winfrey is the Founder/CMO of Nikindi Business Solutions (NBS Global). NBS Global is a marketing Consulting firm located in Chicago Illinois. We at NBS Global specialize in everything in the marketing dimension. We conduct all marketing activities and also function as an external marketing department for some firms. An “external marketing department (EMD)” is when a consultant firm develops a marketing department for the purpose of establishing a marketing department to later turn the duties over to group of new internal employees who will become the primary MKT department once they are trained properly on the new activities, strategies and tactics that were designed and created my the consultant firm.