How Realtors Earn Money
Realtor income varies widely based on several factors. Some of these are outside of your control, like location and market conditions. But your level of success also depends on your dedication and ambition, as well as your willingness to keep up with the market trends. There is no such thing as a realtor salary; instead, earnings come from realtor commissions on the sale or purchase of properties.
What this means is that instead of a salary, realtors earn a percentage of the final sale price of a property as their commission. The exact percentage can vary, but it is commonly around 5% to 6% of the sale price. However, this percentage is typically split between the buyer’s agent and the seller’s agent, with each receiving a portion of the commission.
As an example, suppose you sell a house for $500,000 with a 6% commission rate. The total commission for the transaction would be $30,000. If you represent the seller and the commission is split evenly between the buyer’s agent and the seller’s agent, you would earn $15,000. If you are an agent who works with a broker, that fee is split again based on the agents agreement with their broker.
Successful realtors who have built a strong client base and work in lucrative markets can earn a substantial income, while those who are starting out or work in less active markets may earn less. One key element of becoming a realtor is finding the right market to work in. Realtors in healthy markets will earn more than realtors in stagnant markets.
How Much Do Realtors Make?
According to the Bureau of Labor Statistics, the median annual real estate agent earnings in the US was $49,980. This varies widely per state and by market; for instance, a realtor in New York will make more money than a realtor in Alaska.
In Oklahoma, the annual average that a realtor makes is $66,400. The average overall salary in Oklahoma is $39,625 per year, meaning that realtors make about 1.7 times the average salary in the state.
Real estate brokers make more than most real estate agents. In addition to keeping 100% of their own commission, brokers also receive a portion of the commission that their agents make. This is in return for the services the broker provides. Being a broker requires extra licensure and more liability as brokers are responsible to some extent for their real estate agents actions. In addition, brokers typically have much higher business expenses than a real estate agent. Brokers make an average of $90,930 per year in the US.
What Drives A Realtor’s Income Up?
On top of the high value of commissions, there are other factors that can drive your earnings up as a realtor. As you progress in your career, you will develop a good understanding of market trends, negotiation, pricing strategies, and the other elements of a high-earning, successful realty career.
Customer Service
The experience you offer your clients also contributes to your earning potential. When your clients are happy with the experience you offer, they will refer you to their friends and family. Building a solid reputation for professionalism, integrity, and excellent customer service can attract more clients and increase the likelihood of repeat business and referrals. You’ll develop a local reputation that drives up demand for your services– which leads to higher earnings.
Specialization
Many realtors also find that specialization helps increase their earnings. Some become experts in specific property types, like luxury homes, commercial properties, or vacation homes. Others cater to serving a specific demographic, like first-time homeowners or retirees. When you specialize, you can attract clients seeking the specific types of services you offer. Specializations tend to come with higher average transaction values, which translates directly to increased earnings.
Transaction Volume
Because realtors work on commission, the more you work, the more you earn. If you can consistently close a high volume of deals, you can increase your income. You will have to know how to handle multiple listings and a larger client base, but a high transaction volume can make a huge difference to your bottom line.
Professional Development
The real estate market is fast-paced and can be volatile, and a smart realtor stays up with the industry trends. Through continuing education, networking, and attending local realty events, a realtor can master the market and enhance their skills and knowledge. Continuing education courses in real estate can also be extremely helpful; learning and earning go hand in hand. Ongoing learning helps you provide better service to your clients and increase your earning potential.
What Drives A Realtor’s Income Down?
There are some factors that have a negative impact on a realtor’s income. The biggest concern you have to watch out for is market trends. Real estate markets are always subject to fluctuations, and when you have high inventory and low demand, you will have a harder time moving properties and closing deals.
Business Expenses
Realtors are typically responsible for covering their own business expenses, such as marketing costs, office space, transportation, insurance, and association fees. If expenses are not managed effectively, they can eat into your earnings. It is important for realtors to budget carefully and keep their expenses in check to maintain profitability.
Another way to lower your up-front expenses is to join a real estate team. When you join a great team, you’ll have access to their resources, including leads, marketing materials, coaching, administrative staff, office space, mentors, and technology. The team design is to make your job easier and more profitable.
If you’re interested in a fun, exciting, and lucrative career as a realtor in the Oklahoma City area, look no further than Homes By Breann. We’re always looking for new team members who want to make waves in OKC. Contact us today to find out more!
