Real estate agents play important roles in the buying and selling of properties, assisting clients in navigating the complex world of real estate transactions. One common question that arises is: How much does a real estate agent make per hour?
While there is no fixed hourly wage for real estate agents, it is possible to estimate their earnings per hour based on their annual income and the number of hours they typically work.
In this article, we consider the factors that affect a real estate agent’s earnings and look into the computation of how much money an agent makes in an hour.
How Much Money Does a Real Estate Agent Make an Hour?
Real estate agents typically earn their income through commissions rather than an hourly wage.
To compute how much money agents make per hour based on commissions, we need to consider their annual income.
For example, if we assume the median annual income of a real estate agent is $49,980, we can estimate their hourly earnings by dividing this figure by the average number of hours worked in a year.
Let’s consider that a typical full-time real estate agent works approximately 2,080 hours per year (40 hours per week for 52 weeks).
By dividing the median annual income of $49,980 by 2,080 hours, we can estimate that the median hourly earnings for an agent would be around $24.02 per hour.
The average hourly pay that agents make may vary depending on several factors, including the agent’s experience, location, market conditions, and level of dedication and commitment to their work.
Note: While you might earn a substantial income, it is essential to note that you may earn less, especially if you’re just starting out in your real estate career.
Factors Influencing Real Estate Agent Salary
When it comes to determining the salary of a real estate agent, several factors come into play. Here are some key factors that can influence an agent’s salary:
- Experience: The national average salary of real estate agents is around $86,356 per year. Agents who have been in the industry for a longer time and have built a strong network of clients and contacts often have higher earnings compared to those who are just starting out
- Location: Real estate markets in high-demand areas or major cities tend to offer more opportunities for sales and higher property values, resulting in potentially higher commissions for agents working in those areas
- Market Conditions: During periods of high demand and low inventory, agents may experience more transactions and higher prices, leading to increased earnings. During a slow market or economic downturn, there may be fewer sales and reduced earning potential for agents
- Specialization: Most real estate agents who specialize in specific property types or niche markets can earn higher fees and commissions. For example, agents who focus on luxury properties or commercial real estate may earn more due to the higher prices and larger commissions associated with such properties
- Work Hours: Real estate agents working long hours, even during evenings, weekends, and holidays, tend to get better deals and earn higher commissions
These factors may interact with one another, and each circumstance may vary. Successful agents often combine a mix of these factors to maximize their earning potential in a highly competitive real estate industry.
The commission structure is the percentage-based model, where the commission is a percentage (usually 5% to 6%) of the final sale price of a property.
For example, let’s say the agreed commission rate is 6% of the final sale price. If the property sells for $300,000, the total commission is $18,000. The seller’s real estate agent (listing agent) and the buyer’s real estate agent would each receive $9,000.
In a real estate business, agents typically work under a licensed real estate broker who oversees their activities and provides support and guidance.
If the agreed split between the agent and their broker is 50/50. The seller’s agent would then pay 50% of their $9,000 to their broker, while keeping the remaining $4,500 as their own earnings.
Commission structures for every transaction are different, and there may be additional factors and fees involved, such as marketing fees. The percentages mentioned in this example may not reflect the specific commission rates in every real estate transaction.
For more information, check out our How Much Commission Does a Real Estate Agent Make article.
Along with their salary, real estate agents also have various variable expenses that they need to consider. These expenses can impact their net income and should be accounted for when calculating their overall earnings. Here are some common variable expenses that real estate agents may incur:
- Licensing Fees: To maintain their licenses and stay updated on industry trends and regulations, real estate agents often participate in continuing education courses. These courses may have associated fees and expenses for enrollment, materials, and certification
- Marketing Expenses: Real estate agents pay for online advertising, print materials, signage, photography, virtual tours, staging, and hosting open houses. These costs can vary depending on the agent’s marketing strategy and the scope of their promotional efforts
- Association Fees: Many real estate agents pay membership fees when they join associations, such as the National Association of Realtors (NAR), multiple listing services (MLS), and other industry organizations
- Office Expenses: Office supplies cost money, even if agents work independently or remotely. These include stationery, postage, business cards, and customer relationship management (CRM) software, and other technology tools
It’s important for agents to track their expenses diligently, as these costs can directly impact their earnings. By understanding and managing your variable expenses, you can ensure that your earnings accurately reflect your net income.
How to Become a Real Estate Agent
Becoming a real estate agent involves a combination of education, training, licensing, and practical experience. Here are the general steps of the licensing process:
- Complete pre-licensing education. Most states require aspiring agents to complete pre-licensing education. This typically involves enrolling in a real estate pre-licensing course approved by the regulatory authority. These courses cover fundamental real estate principles, laws, ethics, and practices.
- Pass the licensing exam. After completing the pre-licensing education, you’ll need to pass a licensing exam. The exam assesses your knowledge of real estate laws, regulations, contracts, and practices.
- Undergo a background check and submit fingerprints. Some states may require fingerprinting as part of the background check process. You will need to include your background check results in your license application.
- Submit your license application. Once you’ve successfully passed the licensing exam, you’ll need to submit an application to the regulatory authority. This application often includes personal information, proof of pre-licensing education completion, exam results, and a background check.
- Choose a brokerage. Real estate agents must work under the supervision of a licensed real estate brokerage. Consider factors such as training programs, mentorship opportunities, commission structures, and the brokerage’s reputation in the local market.
- Complete post-licensing requirements. Some states require the completion of post-licensing education courses. These courses must be completed within a specified period once the license is issued.
Obtaining a real estate license is important for earning commissions as it grants you legal permission to engage in real estate transactions in your state and receive compensation for your services rendered.
For real estate pre-licensing education classes, StateRequirement recommends:
Alternatively, we recommend you check out our state-specific Real Estate Agent Licensing page.
How Much Does a Real Estate Agent Make an Hour FAQ
How much does a real estate agent make per sale?
The amount a real estate sales agent makes per sale depends on several factors such as the property’s sale price, commission percentage, and the agent’s agreement with their brokerage. Commissions are a percentage of the sale price, ranging from 5% to 6% or more.
For more information, go to our How Much Does a Real Estate Agent Make Per Sale article.
How much does a real estate agent make per year?
Commissions, which are a percentage of the property’s sale price, contribute to an agent’s income. The computation for annual income via commissions is the total commission earned from all transactions in a year. Learn more with our How Much Does a Real Estate Agent Make Per Year article.
How much do real estate agents make a month?
The computation for monthly income is the total commission earned in a given month. This is determined by multiplying the commission percentage by the total sale price of properties sold, then accounting for any commission splits with other agents and the broker.
How much does a real estate agent make a week?
To compute weekly income, divide the agent’s annual income by 52 weeks. This is calculated by summing up the commissions earned over the course of a year and dividing it by 52. For an overview of an agent’s weekly earnings, visit our How Much Does a Real Estate Agent Make a Week article.
Do real estate agents get paid if they don’t sell?
Real estate agents get paid through commissions. If they don’t make any sales, they do not receive payment unless they have other arrangements, such as retainer fees, hourly wages or fixed monthly income agreements with their brokerage. For more information on an agent’s potential earnings, see our Real Estate Agent Salary guide.