Almost everyone employs a real estate agent while buying or selling a house. So did you.  Yet, when you stop to think about the amount you paid to the person, you draw up a blank. It’s because the exact amount you pay your realtor gets lost in all the other expenses while closing a deal. 

Now that you want to get into the real estate business, this is a bit of a problem. You are unsure how much commission a realtor makes and how much you should charge initially.

How much does a realtor make from the commission?

You have to remember that a real estate agent fee is the commission. It’s unlike a job where showing people properties would ensure they get paid weekly or monthly. Only when the deal between the buyer and the seller is signed does the agent receives part of the amount. 

The realtor and the seller draw up a contract with the commission rate stated in no uncertain terms. They often negotiate the rate, though a realtor usually gets at least 4%. Those with more experience or someone who sells a high-end house can get 6%. So, if a house is sold at $100,000, the commission will be $6,000. 

While the commission ranges between 4 to 6 percent, it’s not legal to have a uniform rate. 

Even though it’s the seller who hands over the commission to the realtor, it’s appropriate to say it’s the buyer who actually pays. When sellers list an amount for a house, they tend to factor in the brokerage fee anyway. 

If it’s an independent realtor, say, they are the broker themselves, then the commission fee is their total earning. If the realtor works with a broker, they will split the commission evenly. However, this isn’t always the case. The broker and realtor could have a 40/60 deal too. 

How much do realtors make?

Now, you have some ideas about how much commission a realtor makes. You are naturally wondering about the amount you could realistically make in a year this way. 

According to one statistic, the median salary for realtors in 2020 was $49,040. However, the elite 25 percent made a whopping $76,720. 

Some of the ways the agents increase their commission:

• Dealing in high-end houses. Luxury living and poolside properties have a higher selling price. Of course, it can take some time to find the right buyer, but the deals go through easily once you do. 
• A realtor who provides photographs, videos, and other additional services for their listings is valued more. Sellers are likely to pay higher commissions for their effort. 
• If they can remove brokerage and be the agent on both buyers’ and sellers’ sides, they are the only ones pocketing the commission. 
• Renegotiate the terms with the broker. If they feel the brokerage fee is too expensive, they can find those who will play fair. 
• Make a property look attractive. So much that the buyer naturally pays a higher amount, so the commission fee will be high too.

Final Thoughts

How much does a realtor make? This question is now answered, and you should be excited to get into the real estate business. The rates are attractive, even more so if it’s a side hustle for you. Still, you don’t want to go blindly. Look up some house listings and check how other realtors do their thing. Your future competitors are your best teacher. You can check out Jake’s Houses for some ideas and for any house you want to buy in the future.