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What is the average real estate agent salary?
According to yesterday’s Forbes’ article, it’s right around $60,000 per year*.
But that’s not the full picture…
Since real estate agents are paid on a commission-basis, their income is tied to the value of the homes they represent. This creates a few complications in calculating an average real estate agent salary:
- States with high property values naturally skew the average higher. If you work in a state where homes are expensive, you’re going to earn a higher income than agents who work states with lower housing costs (all other factors being equal).
- There’s a large gap between pay for agents working lower-value homes and agents working luxury estates.
- Efficiency (or lack thereof) also creates large discrepancies in pay. Income is basically limitless for efficient and skilled agents with their own teams. But inefficient and unskilled agents may struggle to make a living in real estate sales.
In this post, we’ll take a closer look at the average real estate agent salary in each state. Then we’ll show you how to beat the average!
Where the Average Real Estate Agent Salary is Highest
As expected, high property value states like New York, Hawaii, and California all make an appearance on the list of states with the highest average real estate agent salary. As do states where the population is growing thanks to the quality of life afforded by the state (like Texas and Colorado).
Is your state in the Top 10?
Where the Average Real Estate Agent Salary is Lowest
The Midwest, on the other hand, struggles to provide a solid average real estate agent salary. Property values are generally low, and not many people are clamoring to move to these states with notoriously difficult weather and lack of employment prospects. On the plus side, the cost of living is lower in these states. So you don’t need to make as much money to live comfortably as you would in a high cost-of-living state.
Is your state in the Bottom 10?
5 Ways to Beat the Average
But, as we mentioned earlier, the average real estate agent salary figures are skewed by specific factors, like which properties an agent represents and how efficient and skilled the agent is.
So let’s look at a few ways you can beat the average!
1. Work Luxury Properties
You’ll earn more money in fewer transactions by working luxury properties. But you’ll need to work to break into the luxury market.
There are fewer luxury properties in each market than there are middle-class properties. So competition can be fierce. Especially with the stakes so high. A 3% listing agent commission on a million dollar home is $30,000, so (assuming a 50/50 split with your broker) you stand to make $15,000 on one sale! And in some markets, a million dollar property isn’t even luxury. Homes in high-end markets aren’t considered luxury until the $5MM mark. And that will get you a $75,000 commission after a 50/50 broker split.
To work luxury, of course you need to understand your market and your clients better than most agents. But you also need to invest in the luxury image. Everything about you and your business needs to feel luxury. You need to wear designer clothing, drive luxury cars, wear expensive jewelry, and provide concierge-level service.
2. Prospect, Prospect, Prospect
No clients = no closings = no commission.
You need a constant string of clients in your pipeline. And that means prospecting every. single. day.
If you want to beat the average real estate agent salary, increase your prospecting efforts.
3. Negotiate for a Higher Commission Split
A quick way to boost your income is to negotiate a higher commission split with your broker. 50/50 is fairly standard for new agents. As you make more money for your brokerage, your broker is more likely to give you a better commission split.
If you can boost your commission split from 50% to 70%, you’d pocket an extra $3,000 on a $500,000 home. Top agents can often get as high as 80%.
4. Invest in Your Online Presence
Buyers and sellers of today (and tomorrow!) are online. They’re looking for agents via Google and social media. So the only way they’re going to find you is if you have a solid online presence.
Today, a website of your own is mandatory. Your broker’s site won’t cut it. You need a professional website to legitimize yourself in the eyes of today’s buyers and sellers. Luckily, it’s never been easier or less expensive to launch your own website.
You also need to be blogging. Agents hate hearing that, but it’s one of the best ways to distinguish yourself in your market.
Blogging:
- increases your website rank on Google so you can be found in the search results for local real estate agents
- demonstrates your real estate expertise
- builds trust and increases engagement with prospects
- builds your email list
- can be turned into an entirely separate income stream
Blogging provides too many benefits to be ignored. If you hate the idea of writing a blog, check out our tips for creating the perfect real estate blog (when you suck at writing!).
5. Add Income Streams to Your Business
Don’t rely on only one stream of income. Build your real estate business around multiple sources that will generate revenue even in the worst real estate market conditions.
Property tax appeals are a perfect example of a service that will recession-proof your business. And most agents don’t even know what property tax appeals are!
As a real estate agent, you already have all the skills you need to file property tax appeals on behalf of your clients to get their property taxes lowered. You just need to learn how your local appeal process works.
Here are the basics:
- Property taxes are usually based on the County Assessor’s estimation of the value of the property. But Assessors are often wrong because they apply broad value increase formulas by submarket (they can’t possibly value each property individually every year).
- If the homeowner (or their representative – that could be you!) can show the County that the actual value of the property is less than the estimated value used to calculate their taxes, the homeowner will be granted a tax reduction.
- Then you earn a commission on the amount of the tax savings.
This is an ideal recession-proofing service because the opportunity for appeals increases in a down real estate market. When property values are slipping, County Assessors constantly over-value properties. Which means they over-tax homeowners. So when your real estate sales slow because of a down market, your property tax appeal business kicks into high gear.
I was actually in the property tax industry full-time during the recession, so I wrote a post to help agents navigate property tax appeals.
Of course, property tax appeals aren’t the only income stream available to you. Check out 55 Different Ways to Make Money in Real Estate for more ideas. And enjoy making far more than the average real estate agent salary!
*The average real estate agent salary figures are based on 2017 data that has recently been compiled by the Bureau of Labor Statistics and analyzed by Forbes.
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