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How Much Do Real Estate Agents Make Per Sale – The first question that many home sellers and new real estate agents ask is how much do Realtors make? What do real estate brokers in NYC make on an annual basis? Is it more profitable than being a professional working in finance, law or medicine?
Don’t Real Estate Agents Get Salaries That Realtors Pay Commissions? How Much Can Realtors Earn in NYC? How much do realtors in NYC typically earn?
How Much Do Real Estate Agents Make Per Sale
The first thing you need to understand is that being a real estate agent means being a commission-only salesperson. There is no salary or generous pension in real estate sales.
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Real estate agents literally eat what they kill. They will only get paid when they close a deal and earn a commission. If they slack off and don’t make a deal, they don’t get paid. There is no minimum wage in real estate.
The only exceptions to this are office managers, or managing brokers in large brokerage houses. Although managers are legally licensed brokers, they typically do not engage in sales and focus primarily on team and office management. Managers may indeed receive salaries and pensions, or at least 401Ks. However, many principal brokers at small or medium-sized real estate firms will not draw a salary for themselves, and will rely on commission income.
Note: Did you know that agents in New York City are not technically Realtors? This is because the dominant real estate association in NYC (REBNY) split from the National Association of Realtors long ago. As a result, real estate agents in NYC are not technically Realtors, which is a coined and trademarked pseudonym for a real estate agent.
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Realtor fees are always paid by the seller. The seller will pay a typical NYC real estate commission of 6%. This fee will go to the listing agent unless a cooperating agent brings in a buyer. This cooperating agent is known as the buyer’s agent.
If a buyer’s agent is involved, the listing agent will split the commission with the buyer’s agent, usually in accordance with local MLS rules.
This means the buyer never pays a commission. This is part of the reason why over 90% of all home buyers are represented by buyer’s agents. Why would they turn down a free service? Why would a first-time homebuyer turn down professional advice and someone who offers to show them listings, arrange property tours and help them with their co-op board package? Additionally, since the majority of home buyers are represented by agents, home sellers have no choice but to engage buyers’ agents with the NYC Multiple Listing Service offering a commission agreement. Fortunately, as a homeowner today you can list your home online and in the local MLS without paying a 6% commission. Even if you’re too busy to show your home yourself, you can sign up for our agent-managed listing service and save over 50% on a full-service listing with one of our brand-name partner brokers. can do
Realtors in NYC enjoy some of the highest commission earnings in the country. That’s because property values are among the highest in the nation and among the highest in the world. The average home in NYC sells for $2 million while the average property price nationwide is around $200,000.
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And since commission rates across the country are fairly standard at 6%, New York agents earn ten times more than their compatriots for the same amount of work.
However, the math is not that simple because of how many agents there are in NYC and the resulting competition. Because the potential income is so high as a real estate agent in NYC, there are as many agents competing for a piece of the dream as you can imagine. In fact, there are nearly 50,000 licensed real estate agents in the NYC metro area! Considering that there are only 5,000 closed deals a year on average, that means the average agent closes zero deals! In fact, it’s a widely quoted statistic that 90% of deals in NYC are closed by the top 10% of real estate agents. Assuming an average commission rate of 6% and an average sales price of $2 million, this would mean that the average annual income of a top real estate agent in NYC is $108,000. Of course, that may seem low for New York City, especially considering all the high-flying luxury brokers you see on TV. However, keep in mind that even among the top 10% of agents in NYC, there is a very lopsided income disparity between the top producers and the rest. Of the $540,000,000 in commissions earned by the top 10% of agents in NYC, according to our calculations and previously stated assumptions, the bulk will go to the top producing agents and teams in NYC. These would be well-known luxury brokers and brokers who star in reality TV shows and such. To their credit, these agents have really taken advantage of old and new media to make themselves mini-celebrities. There is no doubt that this has helped their business in a way that has never been seen before.
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Even though there are 50,000 licensed real estate agents in NYC with 30,000 in Manhattan alone, that doesn’t mean they are all actively working in real estate and closing deals. This is because many people are lured by the high incomes of the top brokers they hear about, so they get their real estate license and park it with the sponsoring broker.
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However, many of these agents will be working full-time or part-time in another job or industry, and will not be actively working in real estate.
Others get licensed and quickly give up and settle. As a result, there are a large number of licensees in New York City who are not even actively trying to source and close deals. For these typical real estate agents in NYC, the answer to how much Realtors make is zero. In fact, the answer to how much Realtors earn is zero even for many agents who work solely in real estate. This is because closing a deal is not easy, and a lot depends on luck. For example, in real estate sales you can’t just advertise a listing. This is because all listings are for the listing agent only. An exclusive listing agent is the only person who can advertise their listing on popular search websites like the NY Times or StreetEasy. Additionally, buyers are free to work with whoever they want because exclusive representation agreements for buyers in NYC are extremely rare. As a result, even if an agent finds a friend or family member who agrees to work with them on their purchase, they can lose them at any time! However, just by closing an average $2,000,000 deal and earning a 6% commission, an agent will earn $120,000 and automatically become an above average earner in real estate. In fact, the commission from one deal is more than many professionals make in a year! Maybe a career change for some!
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Disclosure: ® and its affiliates do not provide tax, legal, financial or accounting advice. This material is prepared for informational purposes only, and is not intended to provide, and should not be relied upon for, tax, legal, financial or accounting advice. No representation, guarantee or warranty of any kind is made as to the completeness or accuracy of the information provided. Realtor fees are usually around 5-6% of the final sale price of the home. This amount is split between the listing agent (who represents the seller) and the buyer’s agent.
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In most cases, the seller is responsible for paying the realtor’s fees to both agents after the sale is completed.
If you want to save on realtor fees, a company like Clever Real Estate can be a good option. Clever matches you with the top agents in your area and negotiates a 1.5% listing fee up front — saving you thousands of dollars in real estate commissions.
Most real estate agents only make money when they help a client buy or sell a home. This amount comes in the form of a commission or a small portion of the home’s total sales price.
Agents typically earn about 1.5% of the sale price of the home after closing. However, how much an agent will earn per sale depends on several factors, including:
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While the amount an agent earns is directly related to the sale price of the home, the sale price and location are important.
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