“Think real estate agents make easy money? The truth is far more complex than just cashing big commission checks.”
For many people, the image of a real estate agent conjures up thoughts of flexible schedules and large commission checks. But how much do real estate agents really make? The answer isn’t as simple as it seems. Agent income varies widely depending on market conditions, experience, and how commissions are split between agents and brokerages.
In this guide, we’ll break down the nitty-gritty details, covering:
- How much real estate agents make per year and per sale?
- The typical commission structure and splits with brokerages.
- Common expenses that impact take-home pay.
By the end, you’ll have a clear picture of what it really takes to succeed in real estate—and why those “big checks” aren’t always as big as they seem.
How Much Do Real Estate Agents Make on Average?
Let’s talk about the big question: “How much do real estate agents make?” You might have seen the reality TV shows about agents pulling in six and seven-figure incomes—or the opposite, where new agents barely scrape by. The truth is, it’s somewhere in the middle, and your earnings depend on a mix of factors like experience, location, and how many deals you close.
When I first started as a real estate agent, my first-year income was about $150,000. Not bad, right? But once I subtracted the expenses—marketing, brokerage fees, licensing—it felt a lot smaller. Fast forward five years, and I had built a steady pipeline of clients and referrals, enough to form a team and eventually a brokerage. I was ranking among the top condo agents in San Francisco and making in the upper 6-figures.
Here’s what you can realistically expect:
- New Agents: If you’re just starting, assuming the average sale is $ 400,000, expect to make around $40,000 to $50,000 in your first year. Those early months can be tough as you learn the ropes and hustle to find clients. I remember my first open house vividly—it felt like I spent more money on the staging and snacks than I made on the deal!
- Experienced Agents: Once you’re established (say, 3-5 years in), your income can rise closer to industry average. According to Indeed, the average annual salary for a real estate agent in the United States is $100,351. By this point, you’ve likely built a solid reputation and a steady stream of repeat clients and referrals. The agents who focus on niche markets, like luxury homes or commercial properties, can break into six figures or more.
But let’s not forget: location matters. Agents in cities with high-priced homes, like Los Angeles or Miami, can earn more per deal than those in smaller towns with lower average home prices. I’ve seen agents in rural markets working twice as hard, closing more deals, but earning less overall because of smaller commissions.
What about globally? While U.S. agents have some of the highest earning potential, international markets often yield lower income due to smaller commission percentages and lower-priced properties. For example, in many European countries, commission rates are typically 1-3%, compared to the U.S. average of 2-3%.
Why does income vary so much? Factors such as market size, home values, and agent experience play a huge role. Agents in major metro areas with high home prices—like New York or San Francisco—can earn significantly more than those working in rural markets with lower price points.
The confusion is that a listing agent USED to charge 5-6% but that was always split with the buyer agent. so in reality that was 2-2.5%… after the NAR LAWSUIT, the seller / listing agent is going to negotiate their own commission (i.e., 2-2.5%).
How Do Real Estate Commissions Work?
Let’s dive into the heart of how real estate agents make their money: commissions. When you see agents posting “Just Sold!” photos online, you might think, “Wow, they must be raking in cash.” But before you assume every sale is a jackpot, let me break it down for you.
When a home sells, the commission a listing agent charges is typically 2.5-3% of the sale price. For example, on a $400,000 home, the total commission due to the listing agent would be $10,000 at 2.5%. But here’s the catch: agents don’t keep that entire amount.
Brokerages take a cut: The listing agent would pay a percentage to the brokerage. If you’re a new agent, your brokerage might take 50%, leaving you with $5,000 from the original $10,000 commission. If you are a veteran agent, your split may be 90% or sometimes more!
So, let’s revisit that $10,000 commission on the $400,000 home. After splits with the brokerage, your share might look more like $5,000—and often even less after various brokerage and transaction fees.
Real-Life Example
Here’s a personal story to illustrate. My first big sale was a $650,000 condo. I was thrilled when I realized the total commission would be $16,500. I thought, My Keller Williams split at the time was 75% and so I netted $12,187. This is also before tax!
You have Federal AND in California, state tax, and if you earned $150,000, your federal tax was 28% and state was 9.3%, so after taxes, your net pay is $7,574!
And don’t forget all the expenses you had to market the listing including photography, auto expenses, statements, postcard farming, expensive wine-and-cheese evening open houses, snacks for the open houses, etc, and you are maybe netting $6,000.
What Determines the Commission Rate?
The commission rate isn’t set in stone. It’s usually negotiated between the agent and the seller when listing the home. While the 2.5-3% range is standard, in highly competitive markets or for luxury properties, the rate might be lower (or even higher for niche properties requiring extra marketing).
While commissions are a significant part of an agent’s income, understanding what a real estate agent does daily shows just how much work goes into earning that paycheck.
Splits with Brokerages: What Do Agents Really Take Home?
When you’re starting out in real estate, one of the biggest surprises is how much of your commission you don’t get to keep. Even if you’ve closed a deal and earned a solid commission, your brokerage will always take a slice of the pie. Let’s break it down so you can see how this works in real life.
How Splits Work
Think of your brokerage as your partner in running your business. They provide resources like office space, marketing tools, and legal support—but in return, they take a percentage of every commission check.
Here are a few common split structures:
- New Agents (50/50 Split): If you’re just starting, you’ll likely split 50% of your commission with your brokerage. For example, on a $6,000 commission, you’d walk away with $3,000.
- Experienced Agents (70/30 or 80/20 Splits): Once you’ve built a reputation and start closing deals consistently, you can negotiate a better split. At 80/20, you’d keep $4,800 of that same $6,000 commission.
Top Producers (Flat Fees or 90/10 Splits): For agents selling high volumes of real estate, some brokerages offer flat fees per transaction or 90/10 splits. This means you keep most of your commission and only pay a small portion to the brokerage.
Brokerage Fees and Deductions
On top of the split, many brokerages charge additional fees that can eat into your earnings:
- Desk Fees: Monthly fees for using the office space, even if you don’t close a deal. This can range from $100 to $1,000 per month.
- Transaction Fees: Some brokerages charge a flat fee per transaction, often between $300 and $500.
- Marketing Fees: Some brokerages take additional deductions to fund company-wide marketing campaigns.
Real-Life Example
Here’s an example to put it into perspective:
- You sell a home for $400,000 with a total commission of $20,000.
- Your share, after splitting with the other agent, is $10,000.
- With a 70/30 brokerage split, you keep $7,000.
- After a $500 transaction fee and other minor deductions, your final take-home might be closer to $6,300.
Independent vs. Franchise Brokerages
The type of brokerage you work with also impacts your splits.
- Franchise Brokerages: Think RE/MAX or Keller Williams. They often have more structured splits but may provide more tools, training, and brand recognition.
Independent Brokerages: These can offer more flexible splits, but you may have to invest more in your own marketing and resources.
Expenses That Impact Real Estate Agent Take-Home Pay
Let’s get real: not every dollar you earn as a real estate agent ends up in your pocket. In fact, after brokerage splits and expenses, the money you take home might surprise you. When I first started, I was shocked by how quickly the costs added up. From marketing to licensing fees, being an agent is like running your own small business—and that means paying for everything it takes to close a deal.
Common Expenses for Real Estate Agents
Here’s a breakdown of the most common costs you’ll encounter:
- Marketing and Advertising
- Professional photography starts from $300 per home for up to 999 sq ft.
- Staging: $500–$1,500 (or more for luxury properties).
- Online advertising (social media, Google ads): $300–$1,000 per month.
- Signage, flyers, and brochures: $100–$200 per listing.
- My experience: Early in my career, I was spending $10,000 every month just on marketing, and it paid off in a huge increase in leads and new listings. But if a property doesn’t sell quickly, those costs can feel like a gamble.
- Licensing, Training, and Membership Fees
- As an agent, you’ll need to maintain your real estate license through annual renewals and continuing education, which can cost several hundred dollars each year.
- Continuing education courses: $100–$300 per course.
- NAR and local association dues: ~$600 per year.
- Transportation and Gas
- Driving clients to showings, previewing properties, and attending closings can add up fast. Depending on your market, you might spend $2,000–$4,000 per year on gas and car maintenance.
- Technology and Tools
- Customer Relationship Management (CRM) software: $25–$100/month.
- Listing platforms like Zillow or Realtor.com: $50–$300/month.
- Virtual tours or video marketing tools: $100–$500 per listing.
- Client Gifts and Closing Costs
It’s common to thank clients with closing gifts, like a $50 bottle of wine or a $200 gift card. These little touches build relationships but add up quickly.
Real-Life Example
Let me show you what this looks like in real life.
Let’s say you close on a $400,000 home with a $10,000 commission after splits. From that:
- $1,200 goes to marketing expenses (photography, ads, and staging).
- $500 covers transaction and brokerage fees.
- $300 is for gas and travel costs.
- $100 goes toward a closing gift.
By the time everything is said and done, you might take home about $7,900 from that $10,000 commission. And remember—this doesn’t include taxes, which can reduce your income even further.
Why Tracking Expenses Matters
- When I started tracking my expenses closely, it changed my approach to running my business. It became clear where I was overspending and where I could cut back. Tools like QuickBooks or even a simple spreadsheet can help you stay on top of your finances and maximize your profits.
How Much Do Real Estate Agents Make Per Sale?
One of the most common questions I hear is: “How much do real estate agents make per sale?” It’s a great question because, unlike most jobs, your income as an agent is tied directly to the homes you sell. But as with most things in real estate, the answer depends on several factors: the price of the home, the commission rate, and your splits with the brokerage.
Breaking Down Per-Sale Earnings
Let’s look at an example of how much you could make on a single transaction:
- The Home Sale Price: $500,000
Commission rate: 5% = $25,000 total commission.
- Split Between Agents: $25,000 divided between the listing agent and buyer’s agent = $12,500 each.
- Split with Your Brokerage: Assuming a 70/30 split, you’d keep 70% of your $12,500 = $8,750.
Subtract Expenses: After marketing, transaction fees, and other costs (let’s estimate $1,500), your take-home for this sale would be around $7,250.
Earnings by Market
Your per-sale earnings also depend on your market. For example:
- Luxury Markets: Selling a $2 million property at a 5% commission could earn you $25,000 after splits and expenses. But these sales are rarer and require more marketing dollars upfront.
- Affordable Markets: Selling a $200,000 home at the same commission rate might net you just $2,500 after splits and costs. These deals are quicker, but you’ll need to close more of them to reach a significant income.
Personal Story:
When I first started, I worked in a mid-priced market where the average home sold for $250,000. My first sale earned me about $2,700 after all deductions. It felt like a big win at the time, but it also made me realize I’d need to close several deals a month to hit my income goals.
What About Discounted Commissions?
In competitive markets, sellers may negotiate lower commission rates to attract buyers or close a deal faster. For example, a 4% total commission on a $400,000 home would reduce your share significantly. After splits and expenses, you might take home closer to $5,000 instead of $7,000.
This is why some agents focus on higher-priced properties or higher-volume sales—it helps balance out these occasional lower commissions.
Factors That Affect Real Estate Income
By now, you’ve seen how much real estate agents can make per sale, but your overall income depends on more than just commission checks. There are several key factors that can determine whether you’re scraping by or thriving in this industry. Let’s dig into the biggest ones.
1. Market Location
Your market can have a huge impact on your income. In high-cost cities like Los Angeles or New York, where home prices are regularly in the millions, commissions are naturally higher. On the flip side, if you’re working in a smaller or rural market where the average home price is $200,000, you’ll need to close more deals to make the same income.
I once mentored an agent who moved from a suburban market to a major city. While they initially struggled to adjust to the competitive nature of the luxury market, their income more than doubled within two years because the higher sale prices outweighed the challenges.
2. Experience and Skill Level
Let’s be honest: as a new agent, you’re unlikely to hit the ground running with six-figure earnings. Building your reputation, learning how to close deals effectively, and mastering negotiations take time.
- New Agents: Most new agents spend their first year learning the ropes, and their income reflects that. You may only close 2-5 transactions in year one while building your network.
- Seasoned Agents: Once you’ve built a name for yourself, the sky’s the limit. Experienced agents can rely on repeat clients, referrals, and a steady stream of leads.
3. Specialization and Niches
Specializing in a niche can dramatically increase your earnings. For example:
- Luxury Homes: High commissions but more competition and marketing expenses.
- First-Time Buyers: More volume, but lower-priced homes.
- Commercial Real Estate: Larger deals but a longer sales cycle.
My Experience:
When I started specializing in move-up buyers—clients selling their starter homes to buy bigger ones—I found my income growing steadily. These clients often needed both a buying agent and a listing agent, which doubled my opportunities for commissions.
4. Personal Branding and Lead Generation
Your ability to generate leads consistently will make or break your income.
- Building a personal brand and a steady stream of leads doesn’t happen by accident. A solid real estate business plan can help you set clear goals, prioritize tasks, and create a strategy to grow your income.
- Those who rely solely on brokerage leads or cold calls may struggle to maintain consistent income.
5. Market Conditions
The housing market has a direct impact on your income. In a seller’s market, where homes sell quickly and prices are high, agents tend to earn more. But in a buyer’s market, where homes linger and sellers negotiate harder on commission rates, you might have to work twice as hard to close deals.
Example:
During the 2008 housing crash, many agents saw their income plummet because of fewer sales and falling home prices. On the flip side, the post-2020 real estate boom led to record commissions for agents in hot markets.
Real-Life Example: Agent Income Breakdown
Let’s bring all this information together with a real-world example of what a real estate agent’s income might look like after factoring in commissions, splits, and expenses. This will give you a clear picture of what it means to manage your earnings as an agent.
Scenario: First-Year Agent
Agent Profile:
- New agent working in a suburban market where the average home price is $350,000.
- Commission rate: 2.5%.
- Brokerage split: 50/50.
- Annual expenses: ~$15,000 (marketing, fees, and other costs).
Annual Breakdown:
- Sales Volume: Let’s say this agent closes 8 transactions in their first year.
- Total home value sold: $350,000 x 8 = $2,800,000.
- Total commission earned: 2.5% of $2,800,000 = $70000.
- Brokerage Split: The agent splits the $70000 commission with their brokerage (50/50 split).
- Agent’s share: $70,000 ÷ 2 = $35,000.
- Expenses: Subtract annual expenses of $15,000 (marketing, licensing, gas, etc.).
- $35,000 – $15,000 = $20,000.
Take-Home Pay: After expenses, this first-year agent would take home $20,000. However, this is before taxes, which could reduce their net income even further.
Scenario: First-Year Agent
Agent Profile:
- Established agent working in a high-priced urban market where the average home price is $750,000.
- Commission rate: 3%.
- Brokerage split: 70/30.
- Annual expenses: ~$25,000 (higher marketing costs for luxury listings).
Annual Breakdown:
- Sales Volume: This agent closes 10 transactions in a year.
- Total home value sold: $750,000 x 10 = $7,500,000.
- Total commission earned: 3% of $7,500,000 = $225,000.
- Brokerage Split: The agent splits the $225,000 commission with their brokerage (70/30 split).
- Agent’s share: 70% of $225,000 = $157,000.
- Expenses: Subtract annual expenses of $25,000.
- $225,000 – $25,000 = $205,000.
Take-Home Pay: After expenses, this experienced agent would take home $205,000 before taxes.
Key Insights
- Volume Matters: New agents in lower-priced markets need to focus on volume to earn a sustainable income.
- Specialization Pays Off: Experienced agents in luxury or urban markets often earn more per sale, which allows them to close fewer deals while maintaining a high income.
- Expenses Are Key: The more efficiently you manage your expenses, the higher your take-home pay.
