If you’re wondering about the average real estate agent salary in Alabama, you’re not alone. Understanding the earning potential is important for anyone considering a career in the real estate industry. The salary of an agent can vary significantly based on a multitude of factors.

This How Much Does a Real Estate Agent Make in Alabama article will provide an insightful look into what an agent earns in Alabama, factoring in elements like experience level, market conditions, commission rates, and more.

Real Estate Agent Salary in Alabama

Real estate agent salaries depend on several factors. Below are some that might specifically apply in Alabama (although many can impact agents in other states as well).

• Experience: The amount of experience an agent has can significantly affect their salary. The average salary in Alabama for agents is $75,444. First-year agents make around $72,080 per year
• Education and Qualifications: Agents with additional certifications or education may earn more due to the additional knowledge and skills they can bring to their role. This could include specific certifications, a degree in business or a related field, or other relevant qualifications
• Location: Even within the state of Alabama, where an agent works can affect their salary. For example, agents in urban areas or high-cost neighborhoods might earn more due to higher home prices and more frequent transactions
• Sales Performance: Real estate agents largely work on commission, meaning the amount of property they sell directly influences their salary. The more houses an agent sells or the higher the value of the houses sold, the higher their income
• Market Demand: Market conditions also can influence an agent’s salary. In a strong market, for example, an agent will have more opportunities to sell houses and thus earn a commission

Real estate agents often earn commission on sales so their average salary may fluctuate from year to year. It’s also worth noting that Alabama has a lower cost of living than many other states so salaries may be proportionally lower than in high-cost areas.

Understanding Commissions

Typically, a real estate sales agent works on commission. This means they get paid a percentage of a property’s sale price once the deal closes. This commission-based system incentivizes agents to sell properties at the highest possible price and to close deals as quickly as possible. The typical commission rate is between 5% and 6% of a property’s sale price.

The agent who lists the property for sale — the listing agent — usually gets around half of the total commission. The buyer’s agent typically gets the other half. Because agents often work under a broker, they must give a portion of their commission to them.

Usually, new agents have a 50-50 split with their broker. More experienced agents often can negotiate a better split, such as 70-30 or even 90-10 in the agent’s favor.

For example, suppose an agent sells a house for $400,000 and the total commission rate is 6%. Of that $24,000 in commission, half ($12,000) will go to the listing agent while the other half goes to the buyer’s agent. If either agent has a 70/30 split with their broker, they’d keep $8,400 of the $12,000 and give $3,600 to their broker.

In some markets — and for some types of properties in Alabama — commission rates can be negotiable. In addition, some agents or brokerage companies may offer lower rates, flat fees, or other alternative pricing structures. Real estate agents also can charge additional fees for services like professional photography, staging, or advertising.

Variable Expenses

Typically, real estate agents are considered independent contractors — even if they work for a brokerage firm. This means they’re usually responsible for their own business expenses.

Here are some common business expenses related to this type of work:

• Licensing and Education: To start, you must pass a real estate licensing exam and potentially also complete pre-licensing courses — both of which cost money. An agent also must fulfill continuing education requirements to maintain their real estate license
• Marketing and Advertising: This can include costs related to maintaining a personal website, posting advertising listings online or in print, conducting direct mail and email marketing campaigns, and funding social media promotional efforts. It also may include costs for professional photography or videography for property listings as well as staging costs
• Office Supplies: These expenses include rent for office space, office supplies, utilities, technology tools like customer relationship management (CRM) software, and hardware like laptops, tablets, or smartphones
• Transaction-related Costs: This job can involve many other costs, including title searches, home inspection costs, property surveys, and closing costs
• Association Dues: Agents often become members of local, state, and national real estate agent associations — all of which charge membership dues

These costs can add up, and they vary based on factors like an agent’s location, how much business they do, their marketing strategy, and their brokerage arrangement. It’s important for a real estate sales agent to track these costs carefully for tax purposes because they can deduct many of them as business expenses.

How to Become a Real Estate Agent in Alabama

To become a real estate agent in Alabama, you need to follow specific steps and meet certain requirements. To meet the basic requirements, you must be at least 19 years old and have a high school diploma or equivalent.

Here’s a general, step-by-step guide to obtaining a real estate license in Alabama:

1. Complete a pre-licensing course. You must complete a 60-hour, pre-licensing course approved by the Alabama Real Estate Commission (AREC).
2. Pass the licensing exam. After completing the pre-licensing course, you need to pass the state licensing exam. A third-party vendor contracted by AREC administers this exam. You can find more information about the exam, including study resources, on the AREC website.
3. Get a fingerprint-based background check. The state of Alabama requires all applicants to submit their fingerprints as part of their background check.
4. Complete your license application. Once you pass the licensing exam, you must submit a license application to AREC. The application includes a background check, fingerprinting, and payment of the necessary fees.
5. Find a sponsoring broker. Before you can practice as an agent, you must work under a licensed real estate broker. Find a sponsoring broker who’ll provide supervision and guidance as you begin your career. You can search for brokers online, attend networking events, or get recommendations from other agents.

Getting a real estate license demonstrates your qualifications and can make you more marketable to potential employers or clients.