How Much Does a Real Estate Agent Make Per Sale?

According to the National Association of Realtors, the US is home to more than 100,000 real estate firms. That should be no wonder, considering how lucrative a real estate career can be.

However, the amount an agent earns on an annual basis depends on how many sales they make each year and how much they can command per sale.

How much does a real estate agent make per sale? And how can you maximize your commission? We are answering these questions and more in this guide, so read on to find out.

How Much Does a Real Estate Agent Make Per Sale?

A real estate agent makes anywhere from 1% to 1.5% per sale. That means if a home sells for $1,000,000, a real estate agent may take home $100,000 to $150,000 on the sale.

If you have ever sold your own home, you may be wondering why you paid a much higher real estate commission. The average real estate commission a home seller must pay is between 5% to 6%.

However, this fee is split between the seller's and the buyer's agent. Once the commission is split, it is split again between the agent and their brokerage firm. We will talk more about how commissions are split up between these parties in a moment.

Some real estate brokerages offer an alternative structure. For a monthly or annual fee, buyer's and seller's agents can take home 100% of the commission they earn per sale.

How Much Does a Luxury Real Estate Agent Make Per Sale?

A luxury real estate agent makes less per sale than an agent working with lower-priced homes. You may think it should be the other way around. However, agents often compete for high-priced homes and are willing to take a smaller percentage in exchange for the sale.

There is no average luxury real estate commission. Agent fees are usually determined on a case-by-case basis. However, the more expensive or covetable the home, the lower the commission.

How Real Estate Agent Commissions Are Split Up

The average 5% to 6% real estate commission is split up between the seller's agent, the buyer's agent, and their respective brokerages. Here's how much each party can expect to make on an average sale.

Seller's Agent and Brokerage Commissions

The seller's agent and their brokerage usually earn half of the commission on a real estate transaction. So, say the total fee is 6%. The seller's agent and their brokerage would receive 50% of that commission or 3% of the overall home price.

That 3% fee would be split between the seller's agent and the brokerage that represents them. Most brokerages split this commission 50/50 with the agent who made the sale. In this case, that means the seller's agent and their brokerage would bring home 1.5% per sale each.

Let's use an example. The average home sale price in California is around $800,000. With a 3% commission and a 50/50 split, a seller's agent would bring home $12,000 off that sale.

There are exceptions to this rule. A highly experienced agent with a steady and large book of business may receive a more favorable commission split from their brokerage. For example, seasoned seller's agents may be able to take home up to 80% of the fee.

Buyer's Agent and Brokerage Commissions

The buyer's agent and their brokerage usually earn the other half of the commission on a real estate transaction. In our example above, that means the buyer's agent and their brokerage would take the other 3% of the overall home price.

In some cases, a buyer's agent and their brokerage may receive a higher percentage of the total commission. This can happen when a seller's agent wants to incentivize the buyer's agent to bring in more leads. It is possible but much less common for a seller's agent to take home a higher share of the sale.

As with seller's agents and brokerages, buyer's agents and brokerages split that 3% fee. It is more common to see the commission split down the middle, where the agent and the brokerage each take home 50% of this commission.

Again, agents with more experience may be able to command 70%-80% of the commission. It all depends on the agent, the brokerage they work for, and the home sale price. With an 80/20 split, an experienced buyer's agent could earn nearly $20,000 on an $800,000 home.

How Much Do Real Estate Agents Make?

According to the Bureau of Labor Statistics (BLS), real estate agents make a median annual wage of $54,300. The highest-earning real estate agents can make more than $119,590 per year.

In California, the average real estate agent income is between $65,950 and $73,110 per year. However, this average is much higher in popular areas like Napa, Thousand Oaks, and Ventura. In these areas, the mean annual income is more than $100,000 per year- and that's just for the average agent!

Do Real Estate Agents Pay Their Own Taxes?

Yes, real estate agents are considered independent contractors in California and, as such, must pay their own taxes. Each time a real estate agent receives a commission check, they must subtract income taxes from the total amount.

The average real estate agent in California will pay 15.3% in taxes annually. This amount is applied to the total amount of commissions an agent makes per year.

For example, say you earn an average salary of around $70,000 before taxes. With the 15.3% independent contractor tax rate, you would pay more than $10,000 per year in taxes. At the end of the day, you would take home a little less than $60,000 per year or $5,000 per month.

Want to Earn 100% of Your Commissions?

So, how much does a real estate agent make per sale? A real estate agent makes 1% to 1.5% off the home sale price. The more experience you have as an agent, the higher your commission, but that all depends on the brokerage you work under.

Are you looking for a better brokerage? Rise Realty offers 100% commissions and no monthly or yearly fees to help you earn more from your hard work. The only thing you pay us is a small transaction fee that is capped for home sales over $1 million.

Contact us to learn more about our brokerage program and start earning more as a real estate agent today!

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