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Since 2000, the median home price in the United States has . That has brought plenty of wealth to homeowners, but it’s made the market especially difficult for first-time homebuyers.Ìý

Today, real estate agents are more important than ever in helping buyers and sellers navigate a hot market. In 2023, 89% of home listings , and 89% of buyers worked with one, too. The housing market has made life good for real estate agents.

How do real estate agents get paid?

Most real estate agents get paid only when they help complete a real estate transaction. Whether they’re employed by a brokerage or have their own company, agents typically earn their income through commissions. Some agents may charge a flat fee for their services, and some discount brokerages or specialized real estate firms may pay agents' salaries or offer a bonus structure.

When a property is sold, a commission is split between the listing agent and the buyer’s agent. The home seller usually pays this commission in full during closing, and the money is paid to brokerages who then compensate the respective agents. Depending on an agent’s work situation, they may pocket the entire commission or pay a portion of the commission to their brokerage

How much do real estate agents make per sale?

When you sell a home, and hope to make a profit, you may wonder how much your real estate agent is going to make off the sale.Ìý

While the standard commission the seller pays is 6% of the home sale price, that commission is negotiable. The listing agent and their client (the seller)Ìýare responsible for agreeing on a commission fee structure.ÌýListing agents and buyers agent typically split the fee and make 2.5% to 3% of the final sale.

Average commission of Realtors

After a sale, how much of the commission the listing agent actually receives may be far less:ÌýThe listing agent has to split their commission with the buyer’s agent. Often, this is an even split, but the seller may choose to negotiate an uneven split. For example, the seller may decide that the listing agent gets 4%, and the buyer’s agent gets 2% of the total commission.

Once the commission is divided between the two agents, each agent will then split their commission with their broker. There is no exact standard here: Every agent will have a different arrangement for how they split their commission with their broker. Typically, newer agents take a smaller commission split than ones who are more experienced, or who sell a lot of pricey properties. (Technically the seller pays the broker, and they’re the ones who pay the agent.)Ìý

Example: How real estate commission is calculated

Let’s say a listing agent sells a home for $500,000. The Realtor fees are set at 6% commission rate, with 3% going to each agent. The agents also have an equal split with their brokers. Once the transaction closes:

• The seller pays $15,000 in realtor fees.
• The listing agent and buyers agent each get $7,500, after dividing the commission in half.
• The listing and selling agent make $3,750, after splitting with their respective brokers.

How is Realtor commission determined and who pays the agent?

The home seller pays the real estate agent’s commission, but the fee is subtracted from the proceeds of the sale (which, of course, the buyer supplies the money for). Most sellers can account for the realtor fee in the listing price of their home.Ìý

How large of a commission percentage real estate agents make depends on the terms spelled out in their contract with the seller. (This contract ensures the agent gets paid once the property sells.)ÌýWhile most agents are paid around 6% commission, the exact amount can vary. Agents may offer to lower their fees, and it's always worth negotiating with them. However, in a hot market, it may be harder to get a deal.

Sellers may feel frustrated when they have to hand over a chunk of their profit after they sell their home, but there’s a lot of work and expense that goes into a real estate transaction. Both listing agents and their brokers spend time and money to advertise a home and to prepare it for sale.

If the home doesn't sell, the seller typically doesn’t reimburse these costs to the agent — the agent and their brokerage are taking on that risk and the relate expenses upfront. They also make it easier and less stressful to sell or buy a home, so it’s important not to underestimate the value they bring.Ìý

Related: Do buyers pay realtor fees?

How much do real estate agents make per year?Ìý

The median annual pay for real estate agents in 2023 was $54,300 according to the . Brokers earned an average of $63,060.

It’s important to remember that these are nationwide numbers and that many agents earn a lot less, or a lot more, than the median salary. For example, the highest 10% of real estate agents earned more less $31,410, and the top 10% of brokers earned more than $$119,590.

• Low-end salary: $31,400
• Median salary: $63,100
• High-end salary: $119,600

How much an agent earns depends on how much they sell, how they choose to split commission with their brokerage, and what types of properties they sell. Real estate agents that live in an area with high property values (like a big city, like New York) generally earn a much larger salary without necessarily doing any more work than agents who work in sleepy suburbs.Ìý

Because most real estate agents are paid on a commission-only basis, how many houses they sell also determines how much money they will bring home. However, some agents do receive a base salary plus bonuses from their firm, but this is more common amongst agents employed by large companies.Ìý

How much do real estate agents make per hour?

Realtors aren't usually paid by the hour, and clock in more than 40 hours a week. The hourly pay is around $27.22 per hour.

Factors impacting an agent’s income

There are a number of reasons why one agent may make more or less than another.

Location

First and foremost, an agent’s take-home pay is very influenced by the market they work in. The average home price in the Boston area is $755,536, while the average home price in Knoxville, TN is just $357,307. Since real estate agents mostly work on commission, one working in the Boston market can expect to make a lot more per commission than one working in Knoxville.

Types and number of properties sold

An agent who can sell multiple properties per month will make more money than one who only sells one every month or two. Likewise, an agent who mostly sells condos, which tend to sell for less than single-family or multi-family homes, will likely earn less in commissions unless they’re able to sell a higher volume of units.

Some brokerages and agents, like Sotheby’s or Berkshire Hathaway HomeServices, specialize in high-end homes likely to sell for millions of dollars. Agents at these brokerages can also expect to pocket significantly more in commissions than the average Coldwell Banker agent.

Experience and brokerage fees

Generally, agents who work at brokerages earn more in commissions the more experience they have. While independent real estate agents can keep more of their commissions, they likely have to work harder to find clients than a major brokerage does, which is the primary reason why so many agents work at brokerages.Ìý

Experienced, highly sought-after agents will have greater leverage to negotiate with a brokerage for a higher take-home commission. Ultimately, more experienced real estate agents tend to make more money.

Out-of-pocket expenses

Some brokerages reimburse or provide discretionary funding to real estate agents for business expenses like marketing and advertising costs, Multiple Listing Service (MLS) listing fees, hosting open houses, and more. Independent agents will have to cover those costs, as well as additional operating costs, like office space, themselves. Depending on the situation, business expenses can cut into an annual take-home salary.

Likewise, all real estate agents are responsible for membership fees to the MLS and local real estate boards, as well as the costs of licensing, education, and continuous training to stay up-to-date and board-certified.

What happens if a sale doesn’t close?

Despite their best efforts, every agent will likely come across a property they just can’t seem to sell. Real estate agents don’t earn commission until the home they’re listing sells or they find a buyer for a home. Listing agents spend a lot of time and money when they attempt to sell a home and it is very frustrating when months of effort go unrewarded.Ìý

In some cases, the broker is still eligible to make money even if the home one of their agents is attempting to sell doesn’t close. If a buyer is ready and able to purchase the home, the broker may be entitled to a commission even if the seller:

• Decides they don’t want to sell
• Has a spouse who signed the listing agreement but won’t sign the deedÌý
• Has a title with uncorrected defects
• Commits fraud in relation to the sale of the home
• Can’t deliver possession to the buyer within a reasonable amount of time
• Insists the buyer meet terms that aren’t listed in the listing agreement
• Comes to a mutual agreement with the buyer to cancel the transactionÌý
  

For those curious about how much the real estate agent they plan to work with is likely to make, you can get a pretty good idea by calculating what 6% of your ideal sale or purchase price will be and then dividing it by four. Until you get a contract in place, you won’t know the exact commission amount and even then, you’re unlikely to know what the split between agent and broker will look like.