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How Much Do Agents Make – Do you do more than agents in New York? Take a look at how much real estate agents earn in New York and what factors contribute to commission.
If you’re considering a career in real estate in New York, the biggest question is probably how much money you’ll make.
How Much Do Agents Make
Unlike salary-based jobs, where pay is fairly standardized and often tied to your seniority, commission-based fields like real estate have wide salary variations between agents. It makes sense if you think about it: the more you sell, the more you earn.
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Some agents go into real estate for the flexibility and choose to work fewer hours and make less money. Others grind all day every day to bring home those fat commission checks.
Whatever your work style and goals, however, it’s important to go into the business with your eyes open. So let’s talk about the average agent pay.
According to the Bureau of Labor Statistics, as of May 2021, the median real estate agent salary in New York was $81,020 per year. That’s $38.95 per hour.
Agents in the five boroughs earn a bit more on average (and if you’ve ever gone home shopping in NYC, you’ll know exactly why). Indeed.com estimates that the average New York real estate agent brings home $120,000 a year.
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For an upscale real estate agent in the city, Zip Recruiter puts the average annual salary at $125,683.
They are not small potatoes! But you might be looking around and wondering how every property you see is listed for millions of dollars and the agents are taking home six figures. The answer has to do with commission splitting. Let’s get into the details!
In New York, as in much of the country, 6% commission is considered standard, but the commission is always negotiable. In areas where there are a lot of real estate agents competing for the same business, you may find that the rates are slightly lower.
A recent survey found that the average commission percentage in New York is 5.75%. With luxury properties (things in the $10 million+ range), this percentage will likely be lower, but the total commission amount will be higher because the sales price is so high.
How Much Do Real Estate Agents Make In New York?
Generally, in New York, you should expect the commission to be in the 4%-6% range. But that doesn’t mean you’ll take home 6% of the sale price of every offer you make. Why? The commission is split between a bunch of people. Let’s do some math.
The term “commission splits” refers to both the split between the buyer’s agent and the seller’s agent and the split between a sales agent and their broker. Yes, that committee does more splits than a cheerleading squad.
Let’s look at an example. Let’s say there is a property listed at $1,000,000. The seller agreed to pay a 6% commission, which comes to $60,000.
This $60,000 is generally split between the seller’s agent (sometimes called the listing agent) and the buyer’s agent. This is called co-broking. The seller’s agent does all the work of marketing the property and the buyer’s agent brings in the buyer. Both co-brokers want to be paid for their work.
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There is no hard and fast rule that determines how much of the commission each agent receives. Typically, the seller’s agent will decide which subdivision to offer (and will be listed in the MLS listing for the property). Sometimes buyer’s agents can negotiate a higher discount than is offered. Note that it is unethical for a buyer’s agent to refuse to show a property to a client just because they don’t like the split.
In this example, let’s say they split the commission equally: a 50/50 commission split. Each agent receives $30,000 from the sale. But wait! I’m not done sharing yet!
When you get your first New York real estate license, you will be licensed as a sales agent. This means that you are working under the supervision of a licensed broker. Your broker’s job is to make sure you’re acting legally and ethically as an agent (and if you’re not, they can be held liable for your mistakes).
However, brokers do not supervise agents out of the goodness of their hearts. In the real estate business, sellers split their commissions with their brokers to pay them for their oversight service.
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When you’re brand new, it’s common for your broker to take a pretty big discount. Brokers will often give salespeople bigger splits the more they sell. This is both an incentive for agents to sell a lot and a reflection of the fact that more experienced agents need less broker supervision.
To make life simple, let’s say for our example that you and your broker have a 50/50 commission split. That means of the $30,000 going to your brokerage, your share will be $15,000.
Then you have to pay taxes on that money – remember, most agents are not employees, they are independent contractors. This means that your brokerage will not take any fees out of your paycheck and it will be up to you to submit quarterly estimated fees.
A good rule of thumb is to save 30% of each paycheck for taxes. In our example, that gives you $9,000 to put in your bank account. So you can see that while a million dollar sale sounds like a lot, your cut is much more modest.
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Are you excited to start making those commissions? Learn more about getting your New York Real Estate License!
Sorry, Microsoft no longer actively supports your browser. Are you ready to become a real estate agent? Call our friendly experts with questions: 855-637-1886. Earnings per sale | Earnings by State | How Agents Are Paid | Are commissions negotiable? | Annual earnings | Hourly earnings | Frequent questions
The average annual salary for a real estate agent is $61,480, but individual earnings vary widely.1 Source US Bureau of Labor Statistics. (2021, May). Employment and Wages. Retrieved June 22, 2022, from https://www.bls.gov/oes/current/oes419022.htm While top sales agents can earn six- or seven-figure salaries, half of agents earn less than $48,340 per year.
Most real estate agents make money through commissions – which typically give sellers 5-6% of the sale price of their home (although the rate can be negotiated).
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While the seller’s agent technically collects the commission, the buyer’s agent also receives a share – and both agents share their earnings with their supervising brokers.* Brokers are real estate agents who have completed additional education and licensing requirements. While real estate agents must work for a sponsoring broker, brokers can work independently and hire other real estate agents to work for them.
Commission splits between agents and brokers vary, but 50/50 is common for new agents, while more experienced agents might keep 70%. After commissions are split, an agent’s net pay for a $400,000 home sale will be about $5,500-$8,400 – or 1.5-2.1%.
Listing agents charge sellers an average commission of 5-6% of the sale price of their home. However, this amount is generally split with the buyer’s agent.
However, agents don’t get to keep their entire commission from a sale – each gives a portion to the broker they work for.
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At the end of the day, most agents walk away with about 1.5% per sale. On a $200,000 home, that equates to $3,000. However, on higher priced homes, agents pocket a lot more.
For example, real estate agents in New York City earn an average of $102,200 per year. Agents in South Dakota, by comparison, earn $45,550 a year.
The amount of the commission – including the buyer’s agent percentage – is specified in the listing agreement between the home seller and their agent.
When a home sale closes, commissions are deducted from the proceeds and distributed through the escrow or title company directly to the buyer’s and seller’s brokerages.
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Each broker then pays the appropriate share to their agent based on the agreed commission split, which usually starts at 50/50 and goes to 70/30 or more as the agents increase their number of sales.
Some agents (like those who work for Redfin) receive a base salary from their brokerage and earn a smaller commission on each sale — but most work exclusively on commission.
$19,214 (equivalent to 5.37% on a typically priced home) in real estate agent commissions – making them one of the biggest expenses you’ll pay when selling a home.
However, commission rates are not standardized across the industry. They range from a low of 4.45% to a high of 6.34%, depending on the market.
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While commissions are generally set by an agent’s broker, some real estate agents have the freedom to set their own rate.
If you feel comfortable starting the conversation, your agent may be willing to give you a discount. Or you can skip the negotiations and work with an agent who offers lower rates right away.
Our friends at Clever have pre-negotiated commission with agent partners across the county, so you’ll only have to pay your listing agent 1.5% when you sell your home!
The US Bureau of Labor Statistics sets the average annual salary for a real estate agent at
How Do Real Estate Agents Make Money?
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