How much you’ll make – or have the potential to make – is an important factor to consider when choosing a new career. Real estate seems interesting, and you may have heard it can be lucrative, but how do real estate agents get paid?

Real estate agent celebrating after a home sale.

How Much Do Real Estate Agents Make?

Real estate agents aren’t paid hourly wages or a yearly salary. A real estate agent will most likely work entirely on commission and only make money after a house has sold. The average commission for a home sale is 5-6% percent. Of that, half will go to the buyer’s agent, half to the seller’s agent. An agent will usually pay some of their commission to their brokerage, taking home an average of 1.5%. However, with rising home prices, 1-2% of the value of a home is still an impressive number. In 2020, the nationwide median income of a real estate agent was just over $50,000. Real estate brokers make approximately $10,000 more. However, location makes a big difference. The higher the home prices in your area, the more you have the potential to make.

Who Pays the Agent?

In most cases, the seller pays the entire commission, which will then be disbursed to the agents and brokerages. However, because the buyer has paid for the home and the seller understands that the commission will come out of the purchase price, they will usually price their home accordingly. Remember, because real estate agents are paid by commission only and do not charge a fee or an hourly rate, they are driven to make sure each deal goes through.

Types of Real Estate Agents

Often, the terms “Realtor”, “real estate agent” and “real estate broker” are used interchangeably. However, there are some key differences.

  • Realtors are members of the National Association of Realtors. Realtors have gone through additional training and exams and are held to higher professional standards.
  • Real estate agents have passed their state’s exams and are licensed to practice real estate.
  • Real estate brokers have taken additional exams and are likely to have a senior position in the real estate brokerage, which generally means managing other agents.

Is Becoming a Real Estate Agent a Good Career Choice?

Is this career path worth taking on a commission only role? In many cases, yes. If you have a driven personality, willing to hustle in your first few years while establishing your reputation and client list, and are willing to work hard, you can do well as a real estate agent. Real estate agents need to be personable, professional, and knowledgeable. Your goal is to inspire confidence in your clients that you are always working to meet their needs.

How to Become a Real Estate Agent in California

When researching how to become a real estate agent in California, you may feel overwhelmed at first. However, although there is a process, it doesn’t need to be daunting. Anyone over 18 and a California resident can start the process. You’ll begin with 135 hours of education, including real estate principles, real estate practices, and real estate finance. After passing the course exam, to which you’ll have two tries, you’ll take the California salesperson licensing exam, which is a three-hour exam. Once you’ve passed your licensing exam, you will need to find a sponsoring broker to work with. After you have your sponsor, you can apply for your license.

Getting paid only when you sell a house (or represent a buyer) and not being able to rely on a yearly salary can be intimidating. Real estate agents go into the career knowing that they will have to work hard and hustle to make a good income. However, with the right drive and personality, becoming a real estate agent can be a great career choice with a lot of flexibility in your working schedule. We are always looking for talented agents to join our team. If you’ve ever thought about becoming a real estate agent, there’s no better time than now. Contact Amberwood Real Estate to learn more about this rewarding career.