How much do Real Estate Agents Make?

Check out my video explaining how commission works or check out info below!


Who pays real estate commission?

The seller pays the entire commission at closing or settlement (4-8 weeks after the home is under contract typically).  The commission is negotiated between the listing agent and the seller when the listing agreement/contract is signed to put the house on the market.  In our area 5-6% commission is typical but it is negotiable.

  • commission-picGenerally, the commission is divided four ways: to the listing broker, the listing agent, the selling (buyer’s) broker and the selling (buyer’s) agent. Once the listing agreement is signed the listing agent uploads the home into our MLS system.  The MLS is a system agents use and pay for to share listings.  The commission offered to the selling agent is shown in the listing of the seller’s home in the MLS.  So if it is a total of 5% commission then it will show 2.5% commission to the selling broker.  6% commission will show 3% to the selling broker.

    How is it split with the brokers?

    That depends on the agent’s agreement with their real estate broker and company.  Many companies start new agents at a 50-50 split and as you sell more your percentage increases.

    What other expenses are there for agents?

  • We are independent contractors/1099 employees so we pay self employment tax of 15.3% of our income.  Many experts recommend agents set aside 40% of our income for federal income tax, self employment tax and state income tax.
  • We basically are our own business so we have to pay for office supplies, computers, smart phones, cars, gas and any other expenses that are needed to be a successful real estate agent.
  • We often have to buy leads (Zillow, Trulia or or pay a referral fee of 25-35% of our commission if the lead is referred to us by a website.  (Here’s a fun fact:  realtors pay a lot of money to use the MLS system to market and research homes.  Zillow pulls listings from our MLS system that we pay for.  Then Zillow charges hundreds of dollars a month per zipcode to agents for leads that are captured using our listing information in our MLS.)
  • We have marketing costs.  If you are a listing agent you pay for professional photographs, marketing material, advertising and blasting out a lot of information to every real estate website.  For finding buyers we have to market to them.
  • We pay dues and membership fees to belong to the MLS and realtor associations.  Also, we have to pay a monthly fee to access the electronic lockbox on listings.
  • We pay money to the Real Estate Commission of Pa for our license.  We have continuing education classes that are required to keep our license active and we have to pay for them.
  • Health Insurance for self employed or business owners is very high.  It’s a big consideration when thinking of being a real estate agent.
  • Here’s the other expense to take into account.  Often homes don’t sell or fall through due to inspection issues, the appraisal is too low or (happened to me many times) the loan falls through.  So as realtors we spend a lot of time selling a house and we spend money (listing agent is more) and it did not pay off and actually costs us money because we don’t get paid unless we go to closing and transfer of the home happens.
  • For new agents it can take 6 months to a year before you make your first sale and make your first commission.

Any other fees?

NOT FROM ARTISAN REALTY!  Most real estate companies charge an administrative fee to both sellers and buyers.  It should be explained beforehand and they put it on the settlement sheet.  It can be $200-$600 depending on the company.  Artisan Realty does not charge this fee to buyers or sellers because we are a local, boutique real estate company that focuses on utilizing technology for our clients.

Note:  There are other options to sell your house:  For Sale By Owner, Discount Brokers etc…  I based the above on how it typically works.

3 Books for Real Estate Agents

You need to be constantly learning and improving on your business and career if you want to be a successful real estate agent.  You can find inspiration & new ideas from your broker, your colleagues, online, YouTube but I think the most important resource for agents are books.  They provide a long form, detailed guide to improving your career, business and life.  I recently joined Amazon Audible to listen to books on my phone.  You can receive 2 free audiobooks & a month free trial from audible by clicking here:

Here are 3 of my favorite books for real estate (Click on the book to see them on Amazon):

I just listened to this on audible 2 weeks ago.  I loved this book.  I found it practical with lots of good ideas from an author who is from Baltimore!  I’m from Maryland so I knew the areas he was referring to.  Pat Hiban lays out 6 steps which includes advice on goal setting, investing and he does it in a unique way.  It felt like a mentor was talking to me.  I downloaded the book on the audible app & would go to a local park and go on an hour walk listening to it on my iPhone.  In 4 walks I finished the book.  It is 4.5 hours long but I put the speed at 1.25x.  Pat reads it himself stumbling over words occasionally but it just made it that more of an authentic experience.  I think this is a must read.

This is not a real estate book.  It is a think big and bold book.  Here are my biggest takeaways.  You need to love what you do or you will fail.  In our new large world it is technology bringing people together and allowing everyone to make their business or job their art.  Being a real estate agent can be creating art and you can draw your own map (business plan) for your career and business.  If everyone was bolder and pushed through their fear to do what they want the way they want to do it then it would make the world better because we would have a world full of artist & better art!  How great is that idea!  I also listened to this on Audible.

I believe this is the #1 book for real estate agents.  I read this almost 10 years ago.  It shows how to treat your real estate career as a business and they give you models to follow.  Modelling is basically saying that it’s all been done before so copy what successful people have done in real estate.  Once you set up systems in your business then they say you need to get creative and innovative and improve on the models.  I did like how they said fear is caused by myths that can be defeated by truths.  Last they say success in real estate can come in 3 L’s:  Leads.  Listings.  Leverage.  There’s much more to the book but those were the highlights for me.

Those are my 3 must read books for every real estate agent!

New Agents: 5 things to do to get started. They are all free!

So you have your license and joined a brokerage.  You know all of the protected classes and you know the definition of unilateral contract.  Now What? Here are 5 things you can do today that are free.

  1. Put an ad on craigslist under apts/housing for rent  Find a hot rental in your area that would rent easily.  It should be priced well and the pictures should look great.  Advertise it on craigslist with pictures.  Here’s an example of a post:

I’m a licensed real estate agent. There is no cost to you to be represented by an agent to tour homes and negotiate a lease. My fee is covered by the landlord.  Email me the areas you would like to search in, minimum amount of bedrooms, your price range and if you have pets. My email is and I can set you up on an automatic search and you’ll be emailed listings automatically.  Feel free to email, call or text and I can send you detailed information about available MLS rentals.

Take a screenshot of available rentals from the MLS and add it to the post.  At the end of the post include all the cities you work in so when people search craigslist your post comes up.  You won’t make much money working with renters (depends on your local market) but as a new agent you need to build confidence, learn the processes in real estate and find clients.  There is no easier, low pressure way then working with renters.  This will get the phone ringing and guess what.  Renters turn into buyers!

2.  Set up Automatic Searches  As soon as you have an email and any information from potential renters or buyers set up an automatic search in the MLS.  Make sure the search includes at least 50 homes so they get frequent emails.  Clients don’t want emails reminding them of a time change or a recipe.  They want emails showing new homes that hit the market or if there is a price drop.  Make sure your MLS profile has all your contact information and a professional picture.  As they open these emails containing new homes and price reductions your information will pop up with it.  It’s easy marketing.  Also, set up searches for yourself so you can keep an eye on the market and you can see what it’s like to receive emails from the MLS.

3.  Professional Profiles on Real Estate Websites  Zillow, Trulia,  Sign up and set up professional profiles on these websites with your professional picture.  It’s free!  It’s a must.  This is where buyers without agents are looking at real estate.

4.  Social Media  Facebook, Twitter, Instagram, Snapchat.  Sign up and set up professional profiles.  This is completely free.  Post local information and original content.  Hashtag away so people can find you.  I use all these except Snapchat.  I have an account on Snapchat but I don’t get it.  Hey, I’m a Gen-Xer.

5.  Work with a Busy Agent  Find a successful, busy agent.  Offer to help with an active buyer for 25% of their commission if they go to closing.  You may never make money but this is what you will get:  you’ll gain experience, build confidence, learn real estate processes & if it sells you can promote yourself on those real estate websites and social media accounts (see steps 3 & 4) that you sold it.

I did this when I first got started.  A busy agent was going away for a weekend trip.  She had these high end buyers that were very picky and they wanted to look at houses while she was gone.  I offered to my coworker to show them houses and if they bought a house I showed them I told her I would take 25% of the total commission.  I talked to them and sent them houses 20% more expensive than their budget.  I showed them 3 houses in the higher price range.  They called their agent the next day made an offer and bought one of the houses I showed them.  It was a $700,000 house.  My gross commission was $5000 and it was not a lot of work.  Think outside the box always and work for free or cheap so you can learn!

All 5 of these tips will help you build confidence, learn the real estate process and find clients.  This feeds into determination and determination is the key to getting you from a new, licensed real estate agent to your first sale!