Knowing your income potential as a real estate agent in Colorado can help you set clear financial goals as you pursue a thriving real estate career in the state.

From commission structures and market trends to geographic considerations and experience levels, numerous factors can determine an agent’s income in the Colorado real estate market.

In this How Much Does a Real Estate Agent Make in Colorado guide, we provide a detailed overview of the average real estate agent salary in Colorado along with the factors that contribute to income potential like commission rates and additional business expenses.

Real Estate Agent Salary Colorado

Several factors can affect the salary of a real estate agent in Colorado, including:

• Experience: More experienced real estate agents tend to earn more money. The average annual pay for real estate agents in Colorado is $79,689 while entry-level agents earn up to $72,671 per year
• Location: This can have a significant impact on a real estate agent’s income. Agents working in areas with higher property values and more real estate activity generally have the potential to earn more. This doesn’t mean you’ll automatically earn more in high-cost areas like Boulder or Aspen compared to smaller markets, but the potential for higher earnings exists
• Sales Performance: The more transactions an agent closes, the more they earn. Measured by the number and value of transactions they complete, this reflects an agent’s ability to successfully match buyers and sellers, negotiate deals, and navigate the real estate market
• Market Conditions: The state of the real estate market can greatly influence an agent’s income. In a “hot” seller’s market, for example, homes may sell quickly and for above asking price thus leading to higher commissions. Conversely, in a slower buyer’s market, agents may have to work harder and longer to sell properties
• Work Ethic: Real estate is a competitive business. Those willing to put in the time and effort to network, market their services, and find and serve clients likely will make more than those who don’t

Note: Real estate income is commission-based, meaning agents earn a percentage of the sale price of each property they help their clients sell or buy. This means their income can be unpredictable and fluctuate from year to year.

Understanding Commissions

The pay structure of real estate agents can vary widely by location, by brokerage firm, and by the specific details of each transaction. However, a common commission structure in Colorado — as well as in many parts of the United States — is 5% to 6% of the home’s selling price. The buyer’s agent and the seller’s agent usually split the commission between themselves.

For example, let’s say a home in Colorado sells for $500,000 with a commission rate of 6%. The total commission for the transaction would be $30,000 that, if split equally between the buyer’s and seller’s agents, would earn each of them $15,000. However, an agent doesn’t usually keep this entire amount.

Each agent likely works for a brokerage firm and has an agreed commission split with them. This split can vary, but, for our example, let’s assume it’s a 70-30 split where the agent keeps 70% and the brokerage firm gets 30%. Therefore, from the $15,000 commission, the agent would keep $10,500 while the brokerage firm would receive the remaining $4,500.

These numbers may vary, depending on a range of factors, and agents can sometimes negotiate their broker’s commission split to a lower amount in their favor. Agents might also incur additional expenses, such as marketing fees, office expenses, licensing costs, and more.

Variable Expenses

For a real estate agent, these costs will change based on their level of business activity. Here are some of the most common variable expenses:

• Licenses and Dues: Agents need to renew their real estate license periodically, and they may need to pay membership dues to local, state, and national real estate associations. These costs can vary based on the specific requirements in Colorado
• Marketing Fees: This includes costs related to promoting listings or the agent’s services. It could encompass digital marketing, print advertising, direct mail campaigns, open house costs, professional photography, virtual tours, staging, and more. The exact amount will depend on how much marketing an agent chooses to do and the methods they use
• Office Expenses: If an agent opts to maintain a dedicated office space, they may need to pay for rent, utilities, office supplies, and equipment. Even if they work from home or use their brokerage firm’s office, they may have some related expenses
• Technology Costs: Agents may need to pay for real estate software, customer relationship management (CRM) systems, website hosting and maintenance, and other technology tools. The total cost will depend on the specific tools an agent uses

Many of these costs are tax-deductible so agents should keep track of their expenses for tax purposes. These expenses also can vary based on an agent’s business model, the local market, and other factors. It’s important to note that some brokerages may cover some of these costs while others won’t.

How to Become a Real Estate Agent in Colorado

Colorado is one of the few states that only requires a real estate broker license (instead of salesperson license).

Below are the common steps you must take to get your real estate license:

1. Complete pre-licensing education. Colorado requires prospective real estate agents to complete 168 hours of a state-approved, pre-licensing education course.
2. Pass the real estate exam. After completing your coursework, you can apply to take the Colorado real estate exam. You’ll need to submit your course completion certificates along with your application. The exam includes a national portion and a state-specific portion. You must pass both parts of the exam to qualify for a license.
3. Undergo a background check. Colorado requires all prospective real estate agents to undergo a fingerprint-based, criminal history check.
4. Obtain errors and omissions insurance. The Colorado Division of Real Estate requires all candidates for an affiliate broker license to obtain an errors and omissions (E&O) insurance policy before applying for a license.
5. Find a sponsoring broker. Before you can activate your license, you must first find a licensed Colorado real estate broker to sponsor you. As a new agent, you’ll work under the broker’s supervision.
6. Apply for your license. After passing the exam, completing the background check, and finding a sponsoring broker, you can apply for your Colorado real estate license.
7. Complete post-licensing education. Newly licensed Colorado real estate agents must complete a mandatory post-licensing course within their first two years.

Obtaining a real estate license in Colorado allows you to represent buyers and sellers in property transactions across the state. It also ensures you have the necessary education and understanding of Colorado real estate laws, which can help foster trust with your clients.