Today\u2019s housing market is anything but normal. Inflation has impacted everything from construction materials to labor costs, driving up home prices. At the same time, the influx of buyers, including first-time homebuyers, has led to unsurpassed demand, while limited inventory means that sellers have the advantage and have been able to ask for higher and higher prices. <\/p>\n\n\n\n
With property prices rising, real estate agents stand to earn more via commission for each sale. And, as long as the market stays hot, real estate agents could make frequent sales, particularly as buyers forgo traditional requirements like home inspections and contingencies. <\/p>\n\n\n\n
But the hot market has a secondary effect on commission fees: With limited properties available, real estate agents are increasingly competing with each other to secure those clients. Sellers have realized that they can ask real estate agents to lower their commission fees<\/a>, and many agents are doing so in order to get a seller to agree to let them represent a house. Suddenly, a real estate agent\u2019s income depends not only on how many homes they sell per year but also on how well they\u2019ve negotiated their contingency fees. <\/p>\n\n\n\n How many homes does the average realtor sell a year? On average, realtors sell just 12 homes<\/a> a year. While that number might be surprisingly small, it\u2019s important to consider how a home sale contributes to a real estate agent\u2019s income, as well as why that average number of sales may apply to some realtors, but not others. <\/p>\n\n\n\n The cost of a home will directly affect the real estate agent\u2019s commission, and that\u2019s related to the realtor\u2019s location.<\/a> If a real estate agent is located in an area where home sales average just $200,000, that real estate agent will need to sell more homes to earn the same amount of commission they would earn in an area where home sales average $1 million. <\/p>\n\n\n\n Consider the commission earned on a $300,000 home sale. An industry standard commission rate of 6% would be $18,000, which is divided between the agent\u2019s broker, buyer’s agent, and buyer\u2019s agent\u2019s broker. That $18,000 is split between the sales agent and the buyer\u2019s agent. Then, the sales agent\u2019s broker typically takes 40% of the remaining $9,000, leaving the sales agent with $5,400. <\/p>\n\n\n\n A real estate agent whose home sales average $300,000 would stand to make $64,800 in commission each year. In contrast, a real estate agent whose home sales average $1 million would make $216,000 in commission if they sold all 12 houses. <\/p>\n\n\n\n Keep in mind that real estate agent home sales can vary significantly, too. A real estate agent living in a highly populated area with a thriving real estate market could naturally sell more houses, whereas an agent in a more rural area with a more limited market might struggle to sell just six houses in a year. <\/p>\n\n\n\n To sell 12 or more homes per year, realtors must leverage their networks to close more sales. <\/p>\n\n\n\n >> Learn More: <\/em><\/strong>Guidance Home Services Network<\/em><\/strong><\/a><\/em><\/strong> <\/p>\n\n\n\n Real estate market trends<\/a> also affect the average number of homes a real estate agent sells per year. In a hot housing market, like the one we\u2019ve experienced for the past two years, real estate agents have many opportunities to earn commissions. In hot markets, houses sell rapidly<\/a>, and some buyers may even waive contingencies and offer cash purchases for a faster sale. Real estate agents spend less time marketing and showing houses, allowing them to take on and sell additional homes. Plus, home prices have climbed dramatically, meaning agents stand to make higher commissions on the homes they sell. <\/p>\n\n\n\n In a hot real estate market, competition against other real estate agents is often the biggest factor that can restrict an agent\u2019s ability to sell homes. Today\u2019s hot market was partially driven by limited inventory, meaning real estate agents compete more for the available homes that are going up for sale. In this type of market, an agent who has plenty of experience and who has built a strong reputation in their market will often thrive. <\/p>\n\n\n\n But in slower markets, home sales can take longer, making it more difficult for realtors to earn commissions. A real estate agent might spend months marketing and showing a listing, and they might not reach that 12-home average. Home prices also tend to drop in these slow markets, so the commissions that real estate agents do earn will be smaller than what they could earn in a hot market. <\/p>\n\n\n\n Realtors often work hard for a single sale, and their work can start weeks or months before they actually sign an agreement to sell a home. <\/p>\n\n\n\n Real estate agents are continuously working to find new clients, including buyers and sellers. They may rely on their personal networks for leads, but may also use several other lead-generation strategies, such as approaching homeowners in neighborhoods where homes are selling well or reaching out to homeowners who are entering foreclosure. Some agents use direct mail to reach out to a broad audience of homeowners who might want to sell their homes. <\/p>\n\n\n\n In addition to performing this outreach, real estate agents then need to follow up with leads. They might answer many phone calls or respond to email inquiries, providing each lead with personalized information. A few of these leads may turn into clients. <\/p>\n\n\n\n A large amount of a real estate agent\u2019s time is spent on administrative tasks. These tasks include creating budgets, developing marketing materials for listings, organizing and scheduling appointments and showings, completing real estate documents and contracts, creating flyers and promotional materials for homes, and more. <\/p>\n\n\n\n Experienced agents with thriving businesses may handle an assistant to help with some or all of these responsibilities, leaving them with more time to interact with clients, conduct showings, and more. <\/p>\n\n\n\n A real estate agent will also spend significant time interacting with clients, whether that\u2019s over the phone, through email, or in person. That time might be spent viewing a home, photographing a property, hosting an open house, and meeting with a buyer or seller during closings. While much of this work takes place during normal business hours, it\u2019s also common for an agent to work in the evenings and on weekends, especially when leading up to a closing. <\/p>\n\n\n\n >> Related Read:<\/em><\/strong> <\/em>How to Get More Real Estate Referrals: A Guide<\/em><\/a> <\/em> <\/p>\n\n\n\n Realtors earn their income through commissions on the homes that they buy and sell. Industry-standard commission rates<\/a> used to be 6%, but today\u2019s commission rates<\/a> actually range from 4.45 to 6.34%. Such rates are averages, so it\u2019s possible for rates to be higher or lower than those figures. <\/p>\n\n\n\n Average commission rates can also vary by state<\/a>. For example, as of June 2022, the average listing agent commission in Ohio was 3.19%, but in the District of Columbia, it was 2.47%. This variation in rates reflects the varying real estate markets that you will find in different states<\/a>. <\/p>\n\n\n\n Remember, too, that real estate agents often split these fees with their broker, as well as with the buyer\u2019s agent. A broker may take 40 to 50% of the commission fee. <\/p>\n\n\n\n The real estate market also impacts commission rates. In hot markets, commission rates often drop as more agents compete for fewer in-demand home sale listings. However, home sale prices also climb in these markets, which often makes up for the difference in commission rates. <\/p>\n\n\n\n A real estate agent\u2019s experience will also affect their average home sales. An agent who is new to the market will be building their networks from the ground up, and they won\u2019t have a large portfolio of successful sales and referrals to help them secure new clients. They may also face steep competition since the United States is home to more than 3 million active real estate licensees<\/a> and 1.6 million members of the National Association of Realtors. <\/p>\n\n\n\n However, an agent who has spent years building their career and who has proven their skills in selling homes is more likely to be able to bring on new clients and potentially sell more homes. That experience is compelling to homeowners since it indicates that an agent will be more likely to quickly sell their home for a good price. <\/p>\n\n\n\n >> Related Read:<\/em><\/strong> <\/em>Understanding the Lender-Realtor Relationship<\/em><\/a> <\/p>\n\n\n\nSo How Many Houses Does a Realtor Really<\/em> Sell Each Year? <\/h2>\n\n\n\n
Average Days on Market <\/h3>\n\n\n\n
How Much Work Does a Realtor Have to Do to Make a Living? <\/h2>\n\n\n\n
Marketing and Lead Generation <\/strong><\/h3>\n\n\n\n
Administrative Responsibilities <\/strong><\/h3>\n\n\n\n
Working with Clients <\/h3>\n\n\n\n
What Is the Commission for Realtors? <\/h2>\n\n\n\n
How a Realtor\u2019s Experience Adds Up <\/h2>\n\n\n\n
How to Deal with First-Year Realtor Roadblocks\u00a0<\/h3>\n\n\n\n