If you have ever wanted to peek at your real estate agent's tax return to find how much your agent earns a year, you're not alone. However, not all real estate agents earn the same amount of money. For starters, real estate agents enter the profession from all walks of life with varying levels of education and motivation. Some become a real estate agent for the money, while others are attracted to the glamour, excitement, and challenges of selling property.

Others want to be part of a profession that helps others to accomplish dreams. For many, a real estate career offers the opportunity to be your own boss, and that reason is a motivating factor for those who want to get out from under the thumb of corporate America. Whatever the reason for becoming a real estate agent, the fact remains that most first-year real estate agents earn very little at first, primarily because they are struggling to learn the business while they build a client base.

As the years go by, agents can rely on referrals from satisfied clients to continue building their business. They learn other ways to attract clients. On average, though, according to Salary. The top producer agents make a lot more, and the agents who sell one home every few months earn so much less that some of those agents are part-time.

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The part-time agents tend to supplement income through a full-time day job doing something else. How much agents make depends on the number of transactions they complete, the commission paid to the brokerage and their split with the sponsoring broker.

Agents who are just starting out typically receive a low commission split while they learn the business. It is not unusual for a first-year agent to receive about 50 percent of the commission paid to the broker.

Apart from buyer broker agreements , which allow for direct payment to a buyer's broker, most real estate agents are paid through a listing agreement , which is signed by the seller and the listing agent.

The agent signs on behalf of the brokerage. The listing broker then shares part of that commission with the brokerage that represents the buyer. All real estate commissions are negotiable , but agents set their own rates with fees paid directly to the broker, not the agent.

Agents work for the broker. Typically, it is the seller who designates how much the buyer's agents are paid but it is also based on local custom. When I started in real estate some 40 years ago, the fee paid to the selling side was often split, but today, where I sell in northern California it is more lopsided, with the listing broker receiving up to 1 percent or more than the selling broker.

In San Diego, it seems more common to split the commission evenly. Let's look at an example of how much a listing agent earns if the commission paid is, let's say 7 percent, with a 50 percent split for ease of computation only with the brokerage who produces the buyer.

Contrary to popular belief, most real estate agents sell only 4 to 6 homes a year. The saying is 20 percent of the agents do 80 percent of the business.

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Agents don't generally go into the business wanting to be part of that 80 percent, but that's often the stark reality. Top producers earn a lot more than the average real estate agent. Each real estate office sets its own standards for top producers, but it's probably safe to say that a top producer would need to sell at least one home a month to qualify. You can look at the dollar volume of a top producer, most of whom incidentally are listing agents, and you can pretty much figure out how much they earn a year.

Some agents have formed teams and hire other agents to work for the team.

Often, but not always, in this type of arrangement, the team leader earns credit for each sale, even if the team member originated the transaction. Most team leaders are strong listing agents. Discount real estate brokers have to sell more property than a traditional full-service real estate brokerage to earn the same amount of money. What discount brokers may sacrifice in service is made up by quantity of transactions.

At the time of writing, Elizabeth Weintraub, CalBRE , is a Broker-Associate at Lyon Real Estate in Sacramento, California.

How Much Real Estate Agents Earn a Year

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