One of the benefits of a career in real estate is the unlimited earnings potential. Unlike salaried or wage-paying jobs, a commission-based job allows you to get back in income what you put into it in effort and energy.
According to the National Association of REALTORS® 2016 Member Profile Report, the median gross income of REALTOR (and remember, not every real estate agent is a REALTOR) was $39,200 in 2015. Those with 16 years or more experience earned the highest income: approximately $73,400 on average.
So, besides experience, what makes some agents thrive in their real estate profession? Learn four ways your income range will vary based on both market-specific conditions and personal decisions.
1. Your location
While the commission rates tend to stay in that 3% to 7% range, the dollar amounts of commissions vary greatly depending on the location and the average sales price in your community.
2. The local economy
When job growth is high, and more people are moving to your area, home sales rise. If the local economy is depressed, you’ll need to work harder to make transactions happen.
Below is a chart showing the hottest real estate markets in the United States in 2017, according to Realtor.com.
|2017 Rank||Hottest Real Estate Markets in the U.S.|
|2||San Francisco, California|
|5||San Jose, California|
|7||Colorado Springs, Colorado|
|8||San Diego, California|
|9||Santa Cruz, California|
|11||Santa Cruz, California|
|14||Fort Wayne, Indiana|
|15||Grand Rapids, Michigan|
|17||Ann Arbor, Michigan|
3. Your real estate expenses
As an independent contractor, you’ll usually be responsible for your own health insurance, errors and omissions insurance, vehicle expenses, marketing and advertising, internet service, MLS fees, brokerage fees, continuing education, and many other real estate expenses. According to the NAR study mentioned above, a REALTOR’s average expenses in 2015 were $6,300.
4. The amount you network
Real estate is a relationship-based business. Selling homes is directly correlated to how well you network and make connections, and your ability to turn those connections into transactions. In your first year, when you’re just starting to build your business, this can be difficult. Make a point of connecting with at least five new people each day, and grow your sphere of influence to maximize your potential earnings.
As you gain experience, you will build a client network through referrals from past clients and repeat business.
To find more ways to evaluate your career as a real estate agent, download our free guide: Is a Real Estate Career Right for You?