How Much Money Does a Real Estate Agent Make Per Year? (By State)

CEO Khai Intela
Real estate agents have the potential to earn a substantial income with the right skill set. The amount of money they make can vary from state to state, depending on factors such as the market...

how much money an agent makes

Real estate agents have the potential to earn a substantial income with the right skill set. The amount of money they make can vary from state to state, depending on factors such as the market conditions, years of experience, negotiation skills, and the types of properties they deal with. In this article, we'll explore the average yearly salaries of real estate agents in each state, how these salaries are determined, how commission works, agent fees, and the difference between agents and brokers. So, let's dive in!

How Much Money an Agent Makes Yearly (By State)

A real estate agent's earnings depend on the state and the commission structure in place. Some states offer lower commission rates, while others offer higher rates. However, the market conditions and home prices have the biggest impact on an agent's earning potential in a particular state.

It's important to note that the following data is based on the most recent information from the U.S. Bureau of Labor Statistics, and the figures for 2021 have not yet been published. These average salaries also vary depending on the cost of living in each state. While $50,000 may seem like a decent income in a state with a lower cost of living, it may not be as comfortable in a state with a higher cost of living.

Real Estate Agent Salaries Per Year in the U.S.

  • Alabama
  • Alaska
  • Arizona
  • Arkansas
  • California
  • Colorado
  • Connecticut
  • Delaware
  • Florida
  • Georgia
  • Hawaii
  • Idaho
  • Illinois
  • Indiana
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Maine
  • Maryland
  • Massachusetts
  • Michigan
  • Minnesota
  • Mississippi
  • Missouri
  • Montana
  • Nebraska
  • Nevada
  • New Hampshire
  • New Jersey
  • New Mexico
  • New York
  • North Carolina
  • North Dakota
  • Ohio
  • Oklahoma
  • Oregon
  • Pennsylvania
  • Rhode Island
  • South Carolina
  • South Dakota
  • Tennessee
  • Texas
  • Utah
  • Vermont
  • Virginia
  • Washington
  • West Virginia
  • Wisconsin
  • Wyoming
  • National Average

Please keep in mind that these figures are subject to change when the official reports for 2021 are released. The average salary in each state depends on various factors such as the local real estate market, commission percentages, and the agent's individual performance.

Commission Basics

Real estate agents typically earn a commission, which is a percentage of the sale price of a property. Unlike a fixed salary, agents only receive income when a sale is completed. This means that earnings can be irregular, especially for beginners who may go weeks or months without a sale.

The standard commission for a real estate agent is usually around 5-6% of the home's sale price. For example, on a $350,000 sale, the commission would be between $17,500 and $21,000. However, it's important to note that the agent may not receive the full commission amount. In most cases, the buying and selling agents split the commission evenly.

If the selling agent represents both the buyer and the seller as a dual agent, there is no commission split since they are the only agent involved. The commission is typically paid by the seller and settled at the closing of the home. It's worth mentioning that the commission is separate from the closing costs and can range from 2-5% of the sale price, covering various fees.

Negotiating Commission Fees

While commission fees are technically negotiable, it's important to note that it's a violation of federal antitrust laws for agents or brokers to try to impose uniform commission rates. Established agents who have a strong track record and sell multiple homes may be less likely to negotiate their commission rates. However, in competitive neighborhoods, agents may be more willing to negotiate. Sellers can always ask the listing agent if there's any flexibility regarding the commission. If the seller agrees to a lower commission, it will also affect the commission for the buyer's agent.

Broker Fees

In addition to splitting the commission with other agents, real estate agents also have to share a portion of their commission with the broker they work under. The amount that the broker takes from the agent's commission depends on their agreement and can range from 30-70% of the commission.

On average, a real estate agent typically walks away with around 1.25-2% of the commission after accounting for the split and the broker's share. However, these percentages can be negotiated between the agent and the broker. High-performing agents may be able to negotiate a higher percentage of the commission. It's important for agents to carefully consider the services provided by their chosen broker, such as office space, administrative staff, lead generation, and marketing materials, among others.

Fees for Agents

Real estate agents often incur upfront fees since they are only paid when a transaction closes. One significant fee that affects an agent's income is the MLS (Multi Listing Service) fee, which provides agents with access to information about real estate properties. This fee typically costs around $400 a year.

Agents also have to pay a broker desk fee, which is the cost of "hanging" their license with the broker they work under. This fee can range from $100 a year or more, depending on the brokerage. Additionally, agents are required to pay annual fees to the National Association of Realtors and their local real estate board. These fees can add up to approximately $1,000 per year.

Advertising Fees

Advertising expenses can vary greatly for agents. Some may choose to advertise for free on social media, while others may opt for paid ads. Advertising is effective but can be costly. Agents can choose from various advertising methods, including newspapers, flyers, mailers, event sponsorships, and more.

Setting up a personal website and hosting can also be considered an advertising expense. The costs of advertising can range from $1,750 to $3,500 per year, depending on the depth and method of advertising.

Agents must also factor in the costs of business cards, which can include professional headshots. Business cards can cost around $500 per year, but there is room for negotiation. Open houses are another expense for agents, including signage, refreshments, and other amenities. These costs can vary, and agents need to carefully manage their expenses to maximize their earnings.

Real Estate Agent Duties and Responsibilities

A real estate agent's primary role is to assist clients in buying, selling, and renting properties. When a seller contacts an agent to sell their home, the agent will meet with them to discuss a listing agreement. They will take photos and create a detailed listing that highlights the home's features and amenities.

Agents are experts in real estate and will determine a competitive but fair price to maximize the seller's profit. They will also address any potential issues or repairs that could arise during the inspection process. The agent then lists the home on the MLS and other platforms for potential buyers and agents to view. Throughout the process, agents handle all aspects of the sale, including negotiations with interested buyers' agents.

On the buyer's side, agents help clients find homes within their budget and preferences. They show properties, provide feedback, negotiate prices, and guide buyers through the homebuying process. They can also provide referrals for inspections or brokers specialized in certain programs, like a First Time Home Buyers Program.

Types of Agents

The terms "real estate agent," "Realtor," and "broker" are often used interchangeably, but there are some distinctions between these roles. All Realtors are real estate agents or brokers, but not all real estate agents or brokers are Realtors.

Realtors are agents or brokers who are members of the National Association of Realtors (NAR). They have to pass additional exams and adhere to higher professional standards. Brokers are agents who have completed additional training and exams, enabling them to work independently and hire other agents.

Real estate can be a lucrative and rewarding career, but it takes time to establish oneself and build a reputation. As agents gain experience and establish their presence in the industry, their earnings are likely to increase.

How Much Money Does a Real Estate Agent Make Per Year? (By State)

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