What Kind of Money do Real Estate Agents Really Make?

Real estate commissions differ by location and between individual agents in the United States. Currently, the national average real estate transaction fee is between 5%-6%percent of the final sale price of a home. This fee is usually split evenly between the listing and buyer’s agents handling the transaction; and is deducted from the seller’s money collected. 

What is a Real Estate Agent

A real estate agent is a professional who helps people buy, sell, or rent properties. Some realtors have full-time jobs and operate on a part-time basis only.

If you’re trying to sell your home, realtor fees will account for the majority of your expenses. As a result, consumer advocates argue that the current structure of real estate commission has been both too costly and too confusing. 

The other large cost for sellers will be the title policy. However, if you are a seller and are in an extremely competitive market, you might be able to get the buyer to pay for your title policy. 

Furthermore, while commission for a real estate agent is potentially up for negotiation, agents in real estate are frequently unable to compromise on fees. 

Fortunately for consumers, the old compensation model is expected to be on the verge of change. Class action lawsuits, antitrust lawsuits, and burgeoning real estate business concepts are changing the percentage of a sale that realtors typically make.

Sell with Redfin 

There is no need for negotiation when selling your property with a Redfin agent. They believe in openness and honesty and charge the same fee to every client. Instead of the typical 2.5 percent to 3 percent listing fee, Redfin charges only a 1.5 percent listing fee, or 1% when you purchase or sell with them. In addition, they never consider charging fees for services such as professional photography and digital marketing. They also work with a local agent in your area, so you won’t have to communicate through a website. 

What Do Residential Real Estate Agents Earn

How much a Realtor makes per year is a question that gets asked quite a bit by consumers. Real Estate can be quite lucrative for the upper echelon top producers in the industry. Remember a real estate agent doesn’t have a salary and makes their income by helping clients sell properties. Realtors also help buyers make offers on homes too. 

Whereas realtor commission amounts vary by location, according to our research, the typical seller can expect to pay over 6% percent of the home’s final sale price.  

In our state of Texas, the listing agent typically receives 3.00 percent of the sale price. The buyer’s agent receives the remainder of the commission fee, which averages 3.00 percent.

Let’s Work the Numbers for Agents

Assume you sold your residence for $300,000 and incurred commission costs. 

You would pay $18,000 in commission fees under the conventional 6% commission rate. This fee would be split with the buyer’s agent, so each would receive $9,000. 

Now consider what you’d pay a reduced real-estate agent. The total commission would be $12,000 if you paid a 4 percent commission (1 percent listing fee, plus 3 percent buyer’s agent commission). You would save $6,000!

Typically, the seller must pay the listing agent the full commission fee. Your listing agreement will detail the specifics of your realtor’s commission (the listing agreement that you sign with your agent). 

The listing agent would then divide a fraction of the commission with the buyer’s agent, typically half. In most cases, both agents split the fee with their brokers.

What is the commission rate for real estate agents?

On paper, listing agents earn $16,500 from the average home sale of $300,000. But they don’t actually bring home that much. 

The majority of real estate agents work for a brokerage firm such as Keller Williams, Coldwell Banker, or RE/MAX. Because brokerages must cover definite overhead expenses, agents must pay them a fraction of their commission fees after the sale is closed.

The exact take-home pay of an agent is determined by the agreement they’ve reached with their brokerage. More seasoned agents, on average, keep a greater percentage of their commission than less skilled agents.

Can you bargain for a lower realtor commission?

Realtor charges are, in theory, up for negotiation and other types of deals. Depending on the amount of experience, a real estate agent may be more willing to lower their fees if they are just starting out in the business.   In practice, however, agents are frequently unwilling to lower their rates. If you can find a real estate agent who owns their own company or works on their own, you might be able to work a deal as well.

There are a few instances in which you will have a greater chance of attempting to negotiate a commission: 

  1. Using the same agent for both buying and selling 
  2. Accepting dual agency 
  3. Selling in a seller’s market with limited inventory in a highly competitive seller’s market

In the first two scenarios, one agent can obtain both a listing fee and a buyer’s agent fee.  The realtor can make more money, they might be willing to negotiate a lower rate. 

Alternatively, if you live in a tough market, you may have more bargaining power to negotiate reduced costs. However, agents are not required to agree, and many politely refuse.

Final Thoughts

Although negotiating a listing agent commission by yourself can be difficult,  there are many discount brokers that offer reduced commission rates. There are even companies that exist that will charge you a low flat fee for listing your property on the MLS.  They will even write up all of the paperwork. But you will be responsible for negotiating with the other agents and getting photos for the MLS.

Frequently Asked Questions 

How do real estate agents get paid?

 Real estate agents get paid a commission based on the sale price of the home.

Who do real estate agents help?

Real estate agents help people buy and sell homes. Agents have access to the MLS and can see the homes for sale in the marketplace. They can also see data for homes that have sold too.

What is the most important thing for Realtors?

The most important thing for real estate agents is to provide excellent customer service to their clients. This typically includes honesty and integrity and to put the clients needs and wants ahead of everything else. 

We hope you found this blog post What Kind of Money do Real Estate Agents Really Make? useful. Be sure to check out our post How To Be Successful As A Realtor: First Year Tips for more great tips!


What Kind of Money do Real Estate Agents Really Make?Have Experience in the Moving Industry? Want an Additional Income Stream? Work With All Around Moving!

Be a part of this program and we’ll help you make money. If you want to apply your expertise in the moving industry, team up with us today. Click here to learn more.