REAL ESTATE RESOURCES
What Is the Salary of a Real Estate Agent?
Kaplan Real Estate Education
Are you interested in becoming a real estate agent? Before beginning any new career, there’s one major question that most people have: “How much money can I make?” In real estate, that’s not a simple question to answer. Real estate agents receive performance-based commissions as independent contractors rather than a base salary, which can lead to a wide range of income including opportunities with high earning potential. The process to calculate real estate commissions can be confusing and is based on a variety of factors. In this guide, we show you the U.S. Bureau of Labor Statistics average real estate salaries for each state and explain the real estate commission process so you can see how much earning potential you could have as a real estate agent.
What Does a Real Estate Agent Do?
It’s important to understand what a real estate agent does to earn their income. Real estate agents are licensed professionals who are hired by clients to buy or sell properties. Real estate agents work for brokers (who have additional training and a broker’s license) or brokerage firms. Regardless of whether you're acting as a listing agent or a buyer’s agent, all real estate agents earn commissions and their income is based on their ability to close real estate deals.
2023 NAR Real Estate Commission Lawsuit
On October 31, 2023, a jury in Kansas City, Missouri, ruled that the National Association of Realtors (NAR) and several real estate brokerages conspired to inflate commission costs for residential home sales, violating antitrust laws, and awarded the plaintiffs $1.8 billion in damages.
The plaintiffs argued that the NAR forces sellers to pay an artificially inflated commission, which is split between their agent and the buyer’s agent. This commission sharing was a condition for access to the Multiple Listing Service (MLS), which the plaintiffs claimed was unfair and kept commissions high.
The NAR had argued that the commission structure was necessary to keep agents in business and the MLS functioning. However, the jury found that the practice was illegal and awarded the plaintiffs damages. This is the largest award ever in a case involving real estate brokerages. NAR indicated that it will appeal the verdict.
What does the NAR lawsuit ruling mean for the real estate industry?
The outcome of this case could have far-reaching implications for the real estate market in the U.S., as it could lead to changes in the way commission fees are structured. If the ruling is upheld, the NAR and other brokerages could be forced to adjust their commission fees and the MLS could also be affected. There could also be longer-term implications regarding splitting commissions between the seller's and buyer's agents. The NAR is planning to appeal the verdict, and the issue likely won’t be resolved for some time.
How Much Does a Real Estate Agent Make?
In 2022, the national average real estate agent’s salary was $65,850, according to the U.S. Bureau of Labor Statistics. Some real estate agents make much lower salaries and others earn much higher salaries. The average real estate agent’s salary fluctuates from year to year because their pay is based on commission. This means that the amount of money you make per year is based on how many properties you sell and how much share of commission you receive on each sale.
Here’s how it works: When a property sale is complete, a real estate agent earns a commission on the sale that is a percentage of the sale price. This commission is then split between the buyer’s real estate company and the seller’s real estate company and then between the agent and the broker. Your final income may also vary depending on how many hours you put in, your level of licensing and training, and in which part of the country you work.
Average Real Estate Agent Salary by State
In the table below, we list the average annual real estate agent salary by state as of May 2022.
| STATE | AVERAGE SALARY |
| Alabama | $58,840 |
| Alaska | $72,290 |
| Arizona | $61,330 |
| Arkansas | $66,750 |
| California | $77,430 |
| Colorado | $79,610 |
| Connecticut | $71,830 |
| Delaware | $53,690 |
| District of Columbia | $96,070 |
| Florida | $56,580 |
| Georgia | $55,130 |
| Hawaii | $57,310 |
| Idaho | $49,830 |
| Illinois | $44,510 |
| Indiana | $64,610 |
| Iowa | $69,210 |
| Kansas | $52,970 |
| Kentucky | $55,050 |
| Louisiana | $46,690 |
| Maine | $62,380 |
| Maryland | $69,810 |
| Massachusetts | $79,060 |
| Michigan | $62,990 |
| Minnesota | $57,280 |
| Mississippi | $72,900 |
| Missouri | $47,670 |
| Montana | $58,120 |
| Nebraska | $53,090 |
| Nevada | $73,990 |
| New Hampshire | $94,810 |
| New Jersey | $82,090 |
| New Mexico | $50,920 |
| New York | $93,950 |
| North Carolina | $55,370 |
| North Dakota | $63,620 |
| Ohio | $45,570 |
| Oklahoma | Data not available |
| Oregon | $58,680 |
| Pennsylvania | $56,760 |
| Rhode Island | $71,490 |
| South Carolina | $65,160 |
| South Dakota | Data not available |
| Tennessee | Data not available |
| Texas | $77,320 |
| Utah | $60,830 |
| Vermont | Data not available |
| Virginia | $69,510 |
| Washington | $72,080 |
| West Virginia | $55,230 |
| Wisconsin | $57,930 |
| Wyoming | $74,820 |
Highest-Paying States for Real Estate Agents
Salaries for real estate agents vary widely based on a number of factors, including location. In 2022, these were the top-paying states for real estate agents:
- District of Columbia
- New Hampshire
- New York
- New Jersey
- Colorado
Highest-Paying Cities for Real Estate Agents
In 2022, the top-paying cities for real estate agents included:
- Oxnard - Thousand Oaks - Ventura, CA
- Greeley, CO
- Boulder, CO
- Midland, TX
- New York - Newark - Jersey City, NY-NJ-PA
How Much Is the Average Real Estate Commission?
Currently, the average real estate commission across the U.S. is 5% to 6% of a home’s sale price.
How are real estate commission split?
In general, real estate commissions are split evenly (50/50) between the broker and the real estate agent. However, it depends on a number of factors, including a real estate agent’s experience and the size of the firm. In some situations, a real estate agent might get a larger percentage of the commission. Regardless of the commission percentage agreed upon by the real estate agent and broker, the buyer’s real estate company and the seller’s real estate company typically split the total commission evenly.
Who pays the real estate commission?
In most cases, the seller will pay the real estate commission. However, the seller will factor this when settling on the price of the home. So, technically, the buyer’s payment toward the home may pay the real estate commission at the real estate closing.
How Do Real Estate Agents Get Paid?
See how real estate agents typically get paid through commission.
| Home Sale Price | 6% Real Estate Commission | 50% to Listing Agent Brokerage & 50% to Buyer’s Agent Brokerage | 70% to Listing Agent and Buyer’s Agent |
| $1,000,000 | $60,000 | $30,000 to each | $21,000 to each |
| $500,000 | $30,000 | $15,000 to each | $10,500 to each |
| $400,000 | $24,000 | $12,000 to each | $8,400 to each |
| $300,000 | $18,000 | $9,000 to each | $6,300 to each |
| $100,000 | $6,000 | $3,000 to each | $2,100 to each |
Keep in mind that this does not take into account additional expenses spent toward the real estate sale, such as marketing expenses, signage costs, commission reductions, and so on. If expenses are not managed properly, you could potentially lose money on a sale.
Below, we’ll walk you through how to calculate the commission for common home sale prices.
How to calculate the real estate commission for a $400,000 home sale
See an example of commission you would earn on a $400,000 home sale.
- You close a $400,000 sale that has a 6% commission rate, which would be $24,000.
- This $24,000 is split between the buyer’s broker and seller’s broker, according to an agreed upon amount, usually a 50/50 split.
- This means $12,000 goes to the buyer’s broker and $12,000 goes to the seller’s broker (your managing broker).
- Next, the $12,000 is split between you and your managing broker’s agreed upon amount, let’s say 70% to you and 30% to your broker.
- This leaves you with a commission of $8,400 for selling a $400,000 home.
How to calculate the real estate commission for a $300,000 home sale
See an example of commission you would earn on a $300,000 home sale.
- You close a $300,000 sale that has a 6% commission rate, which would be $18,000.
- This $18,000 is split between the buyer’s broker and seller’s broker, according to an agreed upon amount, usually a 50/50 split.
- This means $9,000 goes to the buyer’s broker and $9,000 goes to the seller’s broker (your managing broker).
- Next, the $9,000 is split between you and your managing broker’s agreed upon amount, let’s say 70% to you and 30% to your broker.
- This leaves you with a commission of $6,300 for selling a $300,000 home.
How to calculate the real estate commission for a $100,000 home sale
See an example of commission you would earn on a $100,000 home sale.
- You close a $100,000 sale that has a 6% commission rate, which would be $6,000.
- This $6,000 is split between the buyer’s broker and seller’s broker, according to an agreed upon amount, usually a 50/50 split.
- This means $3,000 goes to the buyer’s broker and $3,000 goes to the seller’s broker (your managing broker).
- Next, the $3,000 is split between you and your managing broker’s agreed upon amount, let’s say 70% to you and 30% to your broker.
- This leaves you with a commission of $2,100 for selling a $100,000 home.
Do real estate agents get a base salary?
Typically, real estate agents do not get a base salary. Their income is based on commission from their sales. However, this ultimately depends on their brokerage firm, as some brokers will pay their agents a modest base salary in addition to their commissions.
Now that you know more about how a real estate agent’s salary is calculated, find out how to become a real estate agent.
Salary Data: Source: U.S. Department of Labor, Bureau of Labor Statistics, Occupational Outlook Handbook, <<Real Estate Sales Agents>>, <<https://www.bls.gov/oes/current/oes419022.htm>>. Salary will vary based on geographic region, your level of licensing/training, and whether you work part-time or full-time.
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