You want to buy a home or a rental property. But to whom would you go to in order to get help or an advice? Surely it is none other than an expert in the field. It is none other than a Real Estate Agent. They are people who are the Real Experts in this field. In 2001, 69% of buyers choose to buy properties through a Real Estate Agent. This value is steadily increasing and has reached a percent of over 87% in 2017. These are people who choose to have an expert do the hard decisions for them. This is, in actuality, a good step indeed. Only 8 % of buyers decide to buy lands on their own without any assistance. Best allow the experts to make the right decision for you. But how do Real Estate Agents get paid?
There are a lot of ways a Real Estate can make money. On average, a Real Estate Agen makes about 40,000$ every year. But this can depend on a lot of factors and situations the Real Estate Agent finds himself in. These factors may be the total number of transactions the Agent completes or the commission paid to the brokerage. The Real Estate Agent’s split with the Sponsor.
Commissions Through Real Estate
The most common type of money flow for Real Estate Agents is the commissions earned through the successful transactions from each trade they make. This can refer to the services they have offered to their various clients. From the provision of advice to the buying and selling of the property owned by prospective clients. This “commission” is usually a percentage of the price for which the property is bought or sold. Real Estate Agents differ from Brokers based on their mode of respective income flow. The State License is something both the Broker and the Real Estate Agent of the land should have in order to perform their activities without any trouble.
The listing agreement contains has the necessary details like the broker’s compensation. The listing agreement is a contract between a buyer and seller containing the conditions of the listing. If you are aspiring to be a Real Estate Agent, then it is possible to negotiate the commission you obtain for each successful transaction. It is not a rule to have a fixed amount as a commission in any Real Estate Transaction.
Difference Between A Broker and A Real Estate Agent
Although both the Real Estate Agent and the broker are to be license holders of the state there are few subtle differences between the two of them. For example, A Real Estate Agent will not be able to assist clients directly and the consumer prohibits any direct payment to the Real Estate Agent. The payment is through a broker. In essence, A Broker can hire a Real Estate Agent(Salesperson) for managing clients. Not the other way around. This is just one of the ways for the topic on “how do Real Estate agents get paid”. The broker after receiving the payment can split the commission between the Agents involved in the transaction.
A Shared Commission – May Reduce Your Cut!
Although you receive your commission, this “commission” can belong to other people as well and it is not surprising to have people claiming it. Usually, there are fours ways to share a commission. Based on this you can get a general idea of how real estate agents get paid based on external factors as well.
- The Listing Agent’s broker
- The Listing Agent
- The Buying Agent’s broker
- The Buying Agent.
There are a lot of ways the dealing can happen. For example, if a particular agent were to act as both the buyer’s and listing agent, then he needs only to pay the commission to the respective broker. This will allow to have a bit of profit. The best of both worlds. It is the same rule for a broker. If he lists the property and finds the buyer without the help of a Real Estate agent, then he gets to keep the totality of the commission.
No Successful Transaction = No Successful Money Making
It is note worthy that you will not be making commissions if you do not make the transaction as successful as possible. There are a lot of reasons a transaction can fail. Ranging from personal to professional reasons. The personal reasons being the buyer or seller’s state of mind. Because they are tangible and subject to change and doubt. They are prone to have a lot of doubts and uncertainty. It is the job of the Sales person(Real Estate Agent) to make the transaction as successful as possible.
Online Property Search sites such as redfin.com employ full time Real Estate agents in order to help their potential clients to perform successful transactions. But these employed Real Estate agents can also get a commission apart from their salary based on the customer satisfaction. This is why many of the online services ask to leave a review rating star based on the user experience.
Conclusion
A successful transaction is the only thing that ensure that the Real Estate agent gets his cut of the share. Usually the more experienced Agents who are at the top of the Real Estate food chain receive a good amount of commission. There are a lot of ways the money splitting can happen. But the most common way of splitting is between the buyer’s agent and broker and the listing agent and broker. If you make your way to the top with all the experience you have gathered over the years, you can very well make a boatload of money.
Frequently Asked Questions
The answer is “it depends”. There are a lot of factors associated with this. An average Real Estate Agent earns about 45,000$ according to the Bureau of Labor Statistics. But it is normal for new Real Estate Agents to sell fewer properties before they reach the 40,000$ mark. Hence the range of income is massive.
The most common way in which you get paid in Real Estate is through commissions. For each successful trade of a particular property you get paid a commission. The amount of the commission can depend on the kind of property you are selling. On average a Real Estate Agent can make about 40K a year.
The Reason why some Real Estate Agents fail is because they do not put in their full effort. They are driven into the Real Estate Business because they are in it for the advertised revenue. Not being aware that it will take a long time and hard work in order to reach the goal a few Real Estate Agents have.
Yes! You can very well be a Part Time Real Estate Agent. Not only can you be a Part Time Realtor. You can very well boost your income representing buyers and sellers in your area of town and take care of your main activities at the same time.
The answer for this question is the same as one of the ones above. “It depends”. Some times it take about 6 months before a Real Estate Agent can begin to make a decent amount of money. It can take some just 6 months depending upon their working hours and the amount of hours they put into it, while for others it can very well take more than a year or so.