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How Much Do Real Estate Agents Make In San Diego – Do you do more than agents in New York? See how much real estate agents make in New York and what the commission factors are.
If you’re thinking about a career in real estate in New York, your biggest question is probably how much money you’re going to make.
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Unlike salaried jobs, where the pay is fairly standardized and often tied to your seniority, commission-based fields like real estate have big pay variations between agents. It makes sense if you think about it: the more you sell, the more you make.
Why Do Real Estate Agents Make So Much Commission? [infographic]
Some agents go into real estate for flexibility and choose to work fewer hours and make less money. Others grind all day every day to bring home those fat commission checks.
Regardless of your work style and goals, however, it’s important to go into business with your eyes open. So let’s talk about the average salary of an agent.
According to the Bureau of Labor Statistics, in May 2021 the average New York real estate agent salary was $81,020 a year. That equates to $38.95 per hour.
Agents in the five boroughs make slightly more on average (and if you’ve ever shopped for a home in NYC, you’ll know exactly why). Indeed.com estimates that the average NYC real estate agent takes home $120,000 a year.
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For a real estate agent in the city, Zip Recruiter puts the average annual salary at $125,683.
That’s small potatoes! But you may be looking around and thinking how every property you see is listed for millions of dollars while agents are taking home low six figures. The answer has to do with commission splits. Let’s get into the details!
In New York, as in much of the country, a 6% commission is considered standard, but the commission is always negotiable. In areas where there are many realtors competing for the same business, you may find that rates are slightly lower.
A recent poll found that the average commission percentage in New York is 5.75%. With luxury properties (things in the $10 million+ range), that percentage will likely be lower, but the overall commission amount will be higher because the sale price is so high.
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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 sales price of every deal you make. Why? That commission is divided between a handful of people. Let’s do some math.
The term “commission splits” refers to the split between the buyer’s agent and the seller’s agent and the split between a seller and their broker. Yes, that commission has more cleavage than a cheer squad.
Let’s look at an example. Say a property is listed for $1,000,000. The seller has agreed to pay a 6% commission, which works out to $60,000.
That $60k is usually split between the seller’s agent (sometimes called the listing agent) and the buyer’s agent. This is called joint brokerage. The seller’s agent is doing all the work to market the property, and the buyer’s agent is bringing the buyer. Both co-brokers want to be paid for their work.
Real Estate Agents
There is no strict rule that determines how much of the commission each agent receives. Usually, the seller’s agent will decide which split they are offering (and it will be listed in the property’s MLS listing). Sometimes, buyer’s agents can negotiate a larger cut than what is being offered. Note that it is unethical for a buyer’s agent to refuse to show a property to their client just because they don’t like the split.
In this example, let’s say they are splitting the commission equally: a 50/50 commission split. Each agent receives $30,000 from the sale. But wait! We’re not done cracking yet!
When you first get your New York real estate license, you will be licensed as a salesperson. That means you work 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).
Brokers do not supervise agents out of their own good, however. In the real estate business, sellers split their commissions with their brokers to pay them for the oversight service.
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When you’re brand new, your broker will usually take a pretty big cut. Brokers will often give larger splits to their sellers the more they sell. This is an incentive for agents to sell lots and a reflection of the fact that more experienced agents require less broker supervision.
To make life simple, let’s say for example that you and your broker have a 50/50 commission split. That means out of the $30,000 that goes to your brokerage, $15,000 is yours.
You then have to pay taxes on that money – remember, most agents are not employees, they are independent contractors. This means that your brokerage will not deduct taxes from your paycheck and you will be responsible for filing quarterly estimated taxes.
A good rule of thumb is to save 30% of each check for taxes. In our example, that gives you $9,000 to put into your bank account. So you can see that while a million dollar sale may seem like a lot, your cut is much more modest.
Infographic] Why Do Real Estate Agents Make So Much Commission?
Excited to start making those commissions? Learn more about how to get your New York real estate license!
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