How much do realtors actually make? The truth about 2022’s hottest career path

Following an uptick in homebuyer demand which resulted in less inventory, the real estate industry has been booming and listing prices have reached record levels. Between the draw of being your own boss and the lure of earning sizable commissions, people from all walks of life are trying their hand at selling houses.

There are 1,547,699 licensed real estate agents in the country, according to The National Association of Realtors. In the last two years, there has been a high influx of new real estate licensees, with over 156,000 people becoming realtors, which is a 60% surge as compared to 2018 and 2019, The New York Times reports.

With the industry becoming more crowded, what is the actual earning potential for a realtor?

How much do real estate agents make?

In 2021, the top five agents based on sales volume in Los Angeles did more than $1 billion worth of real estate transactions each, according to the LA Business Journal. But while some realtors earn six and even seven figure commissions, across the industry salaries vary widely. As of April 2022, the average real estate agent in the United States makes $95,076 per year in the United States, according to employment website Indeed

“The top of the range for our active agents in 2021 was $90,998 and the bottom was $21,750,” Chris Zhou, the principal broker for Mont Sky Real Estate, an agency based in New York, told Fortune.

The average salary for a Mont Sky Real Estate agent was $48,132 according to Zhou. Arjun Patel, an early career real estate agent based in Hoboken, New Jersey reported making $14,000 during his first year in the industry, whereas Michael Bhagwandin, a real estate agent based in New York estimated that he earned $75,000 his first year selling homes. 

Zhou speculated that a new agent could come into the real estate market and use sweat equity to make a living almost immediately, depending on their individual work ethic. 

“It really varies based on the agent, how engaged and motivated they are,” Zhou told Fortune. “Someone who doesn’t really try will probably make zero in their first year. The sky’s the limit for someone who works hard.”

How much does it cost to get your real estate license?

Real estate education is an investment ranging from minimal to significant, with the associated costs varying from state to state. In Florida, a real estate license could be bought for  $350 to $700, per the Van Education Center. The cost breakdown includes real estate school which ranges from $200 to $500. Additional expenses include the Florida real estate exam application fee which is $89, the Florida real estate exam, which is $36.75 per attempt, and a fingerprinting fee of about $50.

California is a highly competitive state for real estate, with cities like San Francisco, San Diego, Los Angeles and Sacramento making Bankrate’s 5 hottest housing markets list as of February. Prospective California real estate agents can expect to pay a minimum of $515 to get licensed, though fees and associated costs can be up to $1000. California requires the completion of three college-level real estate courses to qualify for a real estate salesperson examination, and approved 135-hour pre-licensing courses can be anywhere from $125 to $700. The examination fee and license fee are $305, per the California Department of Real Estate and fingerprinting fees are approximately $49.

How many realtors stay in the industry?

The attrition rate in the real estate industry is notoriously high, and the median tenure at a brokerage is five years, according to the National Association of Realtors. But while some real estate agents leave their current positions to transition to other real estate firms, others say goodbye to the industry for good.  

Most realtors leave the real estate industry before they even earn their first commission, according to The College Investor. In fact, at least 80% of realtors fail within their first year. One of the leading reasons for new real estate agents quitting within their first year is a fear of both failure and rejection, referencing California Realty Training. Also, in the United States, 20% to 30% of all real estate licensees exit the business before the three-year mark, citing Washington Realtors.

“Retention rates always fall during a market downturn, and pick up again in an up market,” Zhou told Fortune. “In general, there’s always one out of three that’s got their foot out of the door. It really is more of a transient industry that many people try their hands at.”

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