You’ve taken all the required classes, you’ve started doing some research, and you’re ready to get started in your new position as a real estate agent! You may have dreams of selling fancy houses in the best neighborhoods, but it will probably take some time before those properties are on your list.
Do you have a realistic picture of what kind of salary you will be making as a beginning real estate agent software?
The most common pay structure for agents is the split-commission, where for every commission that is earned, you split the amount along a percentage line with your brokerage. Most groups have a standard split percentage for new agents that has potential to be changed more to your advantage as time goes on, though you can certainly try to arrange for a better rate when you initially sign on to work. As a sample exercise, consider that you work with buyers to purchase a $350,000 house. If the average agent commission is 6%—3% each for buyer’s and seller’s agents—then the total commission would be $10,500.
If you are on a typical 60/40 split with your brokerage, you will take home $6,300 less taxes and expenses, which you will have to pay yourself as an independent contractor. Some points to consider:Taxes can be estimated to be 30-35% of your gross income for independent contractors. In the sample above, a 30% decrease to account for taxes means take-home pay of $4,410. Less-expensive properties will generate less income than this sample, though of course, more-expensive properties will generate more income. While it may take many hours of time for the work to come to fruition, remember that you will likely be working with many properties at the same time, each of which could generate this amount. It is worth noting that you could invest hours of time over months for a potential buyer and if they decide not to purchase a property at all, you have earned nothing for that time. Commission-based earnings are inherently unpredictable, but with careful planning and contingency arrangements, your real estate agent salary can be a very successful way to provide for your family.