Pursuing a real estate career in California involves setting realistic financial goals and expectations. A real estate agent’s income can fluctuate and depend on many variables.
This How Much Does a Real Estate Agent Make in California article covers the earnings potential of a California real estate agent and the key factors that can influence their income like location, experience, and market trends.
Knowing more about these key factors can help you create a strategy for success in one of the country’s biggest and most dynamic real estate markets.
Recommended: Interested in getting started? We recommend The CE Shop’s online study packages, which come with a money-back-guarantee and flexible pricing.
Real Estate Agent Salary California
The salary of a California real estate agent, as with any job, is subject to a variety of factors. Here are a few that could potentially impact the income of real estate agents working within the state:
- Experience: More experienced agents earn an average salary of $93,212 per year while new real estate agents at the entry level can make $73,979 per year
- Location: In California, certain areas are more profitable than others. For example, many real estate agents in cities like San Francisco, San Diego or Los Angeles, where property prices are higher, often earn more than those in other areas
- Market Potential: Market conditions significantly affect real estate agent salaries. A strong housing market usually has more transactions and higher prices, which typically means more commissions for California agents
- Transaction Volume: The more properties an agent successfully helps their clients buy or sell, the more money they can make. The number of completed transactions can depend on the agent’s skills, their network, and the state of the market
- Working Hours: Many real estate agents who’re willing and able to work outside of traditional hours (including evenings and weekends) can close more deals and earn a higher income
Note: While a high income can be a rewarding part of the job, a successful real estate agent often has a passion for the work itself and for helping clients make important property decisions.
Interested in becoming a real estate agent? Check out our How to Get Your California Real Estate License guide.
The commission structure for California real estate agents, as in most states, is based on a percentage of a property’s sale price.
While the exact percentage can vary, real estate agents make an average of 5% to 6% of the sale price. The buyer’s agent and the seller’s agent often split this commission between themselves meaning each receives about 2.5% to 3%.
Let’s say you’re selling a house in California for $500,000, for example, and you agree to a commission rate of 6% with your listing agent. Upon the sale of the house, the total commission would be $30,000. The buyer’s and seller’s agents would typically split this $30,000 equally so each would receive $15,000.
Remember that the listing agent also may be associated with a brokerage firm, in which case a portion of the commission might go to the brokerage firm as per their agreement.
It’s important to note that the seller usually pays the commission out of the proceeds from the sale of their property. Commission rates also are negotiable and may vary based on market conditions, the property’s value, and the agent’s experience.
Working as a real estate agent involves incurring several additional expenses in order to maintain and grow the business. Here are some common expenses real estate agents often encounter:
- Licensing and Renewal Fees: Real estate agents must obtain a license from the state in which they operate. This involves costs for pre-licensing courses, the licensing exam, and periodic license renewals
- Marketing and Advertising Costs: This can include costs for professional photography, home staging, listing advertisements, website maintenance, promotional materials, and hosting open houses
- Association Dues: Many real estate agents choose to join local, state, or national real estate associations like the National Association of Realtors (NAR). Membership in these organizations often requires paying annual dues
- Office Expenses: While some real estate agents may have space in a brokerage firm’s office, others work from home or rent an office space. This can involve costs for rent, utilities, office supplies, and equipment
- Technology Costs: Agents need up-to-date technology, including a reliable computer, a smartphone, software for managing contacts and listings, and possibly other specialized real estate applications
All of these expenses can vary widely based on an agent’s location, experience, and specific business model as well as the local market conditions. Many of these expenses are tax-deductible.
How to Become a Real Estate Agent in California
The process for becoming a real estate agent in California involves several steps. You’ll need to take these five steps to obtain a real estate license:
- Complete pre-licensing education. California requires potential agents to complete 135 hours of pre-licensing courses. These courses must be approved by the California Department of Real Estate (DRE) and typically cover real estate principles, real estate practice, and other approved topics from a select list.
- Complete a fingerprint-based background check. As part of your license application, you’ll need to submit fingerprints for a criminal background check.
- Pass the state licensing exam. After completing the pre-licensing courses, you need to apply to take the state licensing exam. You can find the application form on the DRE website. Once the DRE approves your application, you must take and pass the California real estate salesperson exam.
- Submit your license application. After passing the state exam, you’ll submit a license application. As part of the application process, you must provide details about your completed pre-licensing education and your passing score on the state exam.
- Secure sponsorship from a broker. To activate your license, you must work under the sponsorship of a licensed California real estate broker. This is necessary for you to start working as a real estate salesperson.
Getting your California real estate license is a fundamental requirement for working in one of the nation’s most active and dynamic real estate markets. It not only facilitates your work and increases your earning potential, but also ensures you meet the state’s standards of knowledge and professionalism.
For California real estate pre-licensing education classes, StateRequirement recommends:
How Much Does a Real Estate Agent Make in California FAQ
How much can a new real estate agent expect to make in their first year in California?
In their first year, real estate agents are still building their client base. A first-year agent in California might expect to earn somewhere around $87,243. However, this depends on factors like the number of transactions they complete, their commission rate, and market conditions. For more information, read our How Much Does a Real Estate Agent Make guide.
Is becoming a real estate agent worth it in California?
California has some of the highest property prices in the country, which can lead to higher commissions for agents compared to other states. Real estate agents in California enjoy the state’s large, active, and diverse real estate market because it offers opportunities for work in a variety of property types and market segments.
Is it difficult to be a real estate agent in California?
Working as a real estate agent can prove challenging anywhere — and California is no exception. As one of the most highly competitive real estate markets, California attracts a lot of agents. Standing out and building a successful practice is a challenge in itself. Despite these challenges, most real estate agents find the profession rewarding and worth the effort.
How much do real estate agents make in California?
The average salary for a real estate agent in California is approximately $103,337 per year or $50 per hour. Note that real estate income in California varies significantly based on an agent’s experience and location as well as the current market conditions. Top real estate agents in high-value markets can earn more.
How do I become a real estate agent in California?
To become a real estate agent in California, you must be 18 years old, complete 135 hours of pre-licensing courses, pass a background check, apply to take and pass the state licensing exam, submit your license application, and find a sponsoring broker. Keep in mind, you’ll also need to meet ongoing continuing education requirements.