How do Real Estate Agents Make Their Money?

Here’s my full explanation of how real estate agents make their money.

How do real estate agents get paid? It seems like a simple question, but I think people often misunderstand how the ins and outs of the business work. Today I’ll explain step by step how real estate agents make their money. 

One of the biggest misunderstandings I hear is that our money is completely contingent on the market. Since the market is crazy right now, we must be making bank, right? Not exactly. The average Florida real estate agent makes about $62,000, which is an average salary in our state.

More than this, people want to know how  we get paid. For example, if we sell a $300,000 house, the total commission is 6%. However, this is split between the agents on each side of the transaction, so each agent’s commission is really 3%. That comes out to $9,000. 

​​​​​​<div class="pullquote">“We aren’t bigshots; we’re just local members of your community trying to help people get the best deals they can. ”</div>

At this point, we have to pay the broker. How much the agent keeps is dependent on how high their production is or maybe how long they’ve been with the brokerage. To keep it simple, let’s say the broker commission is 25%. This means the agent ends up keeping $6,750 before taxes. 

However, this number ignores all the miscellaneous costs that come with selling a home. Professional photos, staging, local membership dues, national membership dues, and advertising all come from the agent’s personal funds. However, the biggest miscellaneous costs are all the things that are automatically taken out of traditional paychecks. Social security and retirement accounts being the two biggest offenders. 

After all the fees and costs, the average agent probably takes home $3,500 in commission on a $300,000 sale. It’s important to remember that we aren’t bigshots; we’re just local members of your community trying to help people get the best deals they can. 

If you have any questions about today’s topic or anything else, do not hesitate to reach out to me. I am always willing to help.