Do Real Estate Agents Get Paid Hourly? (Rates For 2023)
If you’re new to the real estate industry or considering joining, you might be wondering how much money you can expect to make in your new career. How are real estate agents paid? Do real estate agents get paid hourly?
In this post, I’ll answer all your questions related to how real estate agents get paid so that you can feel confident beginning your journey in the real estate business.
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How Are Real Estate Agents Paid?
Before learning how much real estate agents can expect to earn, it’s important to understand how real estate agents make their living. Do real estate agents get paid hourly?
No, real estate agents do not get paid hourly. Instead, agents work on a commission basis. The amount of money an agent earns in commission will depend on various factors and will likely be different for every agent.
Of course, the amount of real estate agent commission you earn is directly related to how many deals you close, whether you are working as a buyer or listing agent.
Typically, the seller of the home is almost always the one responsible for paying the real estate agent. In fact, the seller factors the price of the commission into the cost of the home when they list it on the market.
Experience and Skills
The amount of deals you close is likely to depend on your sales skills, experience, and reputation.
For example, if you’re a brand new agent you might have a harder time at first because you don’t have a solid reputation behind you yet that will encourage people to work with you. As you get more experience, your reputation will naturally grow as a result.
In addition, your sales skills will determine how many homes you sell. You can learn sales skills from others in your industry. They will also grow over time as you get more experience.
Similarly, the type of real estate you practice will influence how much you make in commission. For example, luxury real estate agents and commercial agents often make more than residential ones.
The state you practice real estate in, and specifically your housing market, will also affect how much you earn. For example, if you work in an area with more expensive homes, you will get higher commissions.
Likewise, if the homes you work with are on the cheaper end, you can expect to make smaller commissions. But if this housing market was popular and had a lot of activity, you might make up for it by selling a larger quantity of homes.
The brokerage you join also affects how much you make as a real estate agent. Brokers will take a percentage of your commission, so you will splitting your profits with them. For this reason, you’ll want to find a real estate broker that offers a fair split.
However, keep in mind that you shouldn’t just pick the brokerage with the lowest commission split. Instead, focus on the value the brokerage provides. If the real estate broker offers on-demand training, guidance, and other resources, then it may be worth paying a higher commission split.
Check out my post to find the best real estate company for you.
The last factor that will determine how much commission you make is whether or not you make real estate your full-time career.
If you’re only a part-time real estate agent, you’ll end up making less commission simply because you work fewer hours.
What is the Average Salary of a Real Estate Agent?
According to the Bureau of Labor Statistics, as of 2020, the average real estate agent salary is $62,990 per year.
According to Glassdoor, the top 20% of agents make an average of $129,000, while the bottom 20% make $35,000 a year.
Typically, real estate agents charge a six percent commission fee, which is always paid by the seller. Six percent is fairly standard in the real estate industry, and sellers will factor this cost into the listing price of the home.
Of course, the price you charge for commission is up to you. You can adjust it to be lower or higher depending on certain factors, such as the price of the home.
For example, if you’re working as a luxury real estate agent in a housing market with higher-priced homes, you might lower your commission rate to be more competitive. Because the price of the home is higher, your commission might be the same, if not more, despite a lower percentage.
Another important aspect to keep in mind as a real estate agent is that you will also have to split your commission with the buyer’s side of the real estate transaction. Usually, the listing agent’s real estate broker and buyer’s agent broker will split the commission at the settlement table before paying you and the buyer’s agent.
What is the Average Hourly Pay for Real Estate Agents?
While agents don’t get paid by the hour, it can still be helpful to see what the average hourly pay is. This can help you effectively plan your real estate business and give you a good idea of what you could be earning in this career. So, how does the average commission for real estate agents break down by the hour?
According to the Bureau of Labor Statistics, as of 2020 the average hourly pay for a Realtor is $30.28 per hour.
This translates to $12.07 per hour for the bottom 10% percentile and $54.05 per hour for the top 90% percentile. In the middle 50% percentile, agents earn $23.58 per hour.
Commission vs. Hourly Pay: Which is Better?
While real estate agents do not get paid hourly, a real estate agent commission payment structure can offer many benefits when you compare it with an hourly one.
First, it can encourage a competitive and drive mindset that can help motivate you to succeed. As a real estate agent, you’re technically an independent contractor, which means you are in charge of your own business. This means you can take on as much or as little work as you want.
When you receive hourly pay, you have to commit to a certain schedule and amount of hours per week. But with real estate commission, you have more flexibility and more chances to make as much money as you want.
At the end of the day, if you’re seeking guaranteed stability in your paycheck, you might want to reconsider joining the real estate industry. Otherwise, you could come up with a comprehensive real estate business plan to make sure you earn a good income.
Final Thoughts on Do Real Estate Agents Get Paid Hourly
Ultimately, the answer to the question “do real estate agents get paid hourly?” is no. However, based on the average annual commission rate for agents, working in the real estate industry can definitely be a lucrative career.
You may struggle in your very first year as a real estate professional. But if you stick with it consistently, you will see your real estate career become successful in no time!
What are your thoughts on a commission vs. hourly pay structure? Do you enjoy the freedom of working as a real estate sales agent? Let me know in the comments below!
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