Real Estate is really a limitless industry. The harder you work the more you can potentially make. But getting started in the real estate game is a whole different ballgame. Establishing and maintaining a steady income can take some time, or you can partner with other experts or another brokerage to earn more of your comission.
The average first-year real estate agent salary is typically less than $15,000. It goes up 100% to 150% between the years one and three depending on how hard they’re really working. However, the very best can earn upwards of $500,000 or more. You might think that selling one home with a $10,000 commission is great but do then only three or four times a year, and you’re at the poverty line.
More than 60% of real estate agents do this as a second business or side hustle and actually make the majority of their income with another full-time day job. For those that really want to get involved in the real estate industry, pushing hard, powering through, and doing the work necessary to build a book of business and referrals to sustain them for that $500,000 income.
So is not all it takes to earn a lucrative real estate agent salary? Hard work? Not necessarily.
1. Increase the sources.
2019, the annual real estate agent salary is just $45,000. The range is typically between $40,000 and $52,000. (Were not going to talk about 2020 as it was a very unusual and non-typical real estate market) being a real estate agent means you’re technically your own boss and that means you’re responsible for paying any out-of-pocket costs such as advertising, website management, transportation, healthcare, and marketing.
This can add up quickly and before you know it, you’ve got just as much going out as you have coming in; not really making a lot of money at this point, are you? This is why a lot of real estate agents supplement their income with other income sources but that still could mean in the way of real estate such as appraisals, home inspections, writing contracts, property management, market valuations, or managing a brokerage. However, we’re talking about a real estate salary, not figuring out ways to make up the difference in the meantime.
2. Don’t limit your niche.
Some agents work solely with homeowners and sellers while some work solely on the buyers agent side. While others probably aside that you prefer, limiting it to one side or the other could be limiting your income by half. While dual agency (representing both the buyer and the seller on the same property) is a sticky subject and actually not legal in a lot of states, representing the same client for both buying and selling a property is ideal. That client only needs to go to one agent to sell their property and by another.
Of course, this really only works when you are buying and selling within the same area. If you’re buying out-of-state or selling out-of-state, that agent may not be licensed in another area and is usually not convenient to travel across state lines to buy or sell real estate regardless of the commission.
While just about every agent has some sort of niche be it short sales, foreclosures, REO’s, probate, or like we mentioned before, buyer and seller’s agent, limiting yourself to one niche can really limit your income. While it can be difficult to advertise for everything, there are ways to promote yourself regardless of the type of transaction you want to facilitate.
Of course, not every agent is proficient in probate and short sales, which are a different animal altogether. Experience really is the key to these types of transactions. But, broadening your horizons to both buyers and sellers will open up the market to more potential leads, especially in a seller’s market when there are very few sellers and a lot of buyers and vice versa.
3. Invest in real estate yourself.
A great way to increase your Realtor® salary is to get into the real estate game yourself. Actually investing in real estate yourself is a great way to increase your income as an agent. You are in the perfect position to be a successful investor. You probably know listings that can hit the market faster than anyone and you have a good understanding of the local market, can access these properties before they become popular, and snatch it up before anyone else. However, this can be an expensive route.
This is where partnering with another real estate professional might work best. You can build funds faster together than you would be able to alone and benefit from another’s market knowledge and different perspectives. This might be an attorney, contractor, banker, or financial advisor.
This also gives you the preparation and experience needed to serve others as investors. Investors can be a horse of a different color altogether but with their personal experience in their field of interest, you can help to understand and serve them better without necessarily having the experience that they have.
4. Consider becoming your own broker.
When you become a real estate agent you hang your license with a qualified broker. You technically sign all real estate contracts as the broker such as Windemere, Coldwell Banker, Keller Williams, eXp Realty etc. But, that doesn’t mean that you have to carry the burden of a brokerage all on your own. However, you do have the experience and authority that a broker brings to the table which is at least 2+ years of experience over a licensed agent and more education. Brokers can also earn more by recruiting additional agents under them.
Related: What to know as an eXp Real Estate Agent
5. Hard Work
Yep, there it is… Hard work. Starting off in the real estate business can be difficult. You first start with your sphere of influence or direct business associates from friends and family. However, as soon as the word gets out and people realize that you are all in 150%, a lot of your business will actually come from referrals. This could mean from new homebuilders, other Realtors®, lenders, and of course, friends and family. Past clients are definitely one of the best way to get referrals but of course, you have to have clients first to have past clients.
Staying on top of everyone’s short go to list is always key. Never let them forget you. This doesn’t mean pummeling their inbox every day with reminders that you are the “go to real estate agent”, but it also means not letting a year go by before they hear from you. Make sure to stay in touch with them and ask how their new home is working out for them. Genuinely seem interested and of course the more relationships you build, the more referrals you will build as well. From there, you can expand your referral base and build your network.
Also, partnering with others in the industry is a great way to gain referrals. Find a lender that you love and try to partner with them, possibly connect and share marketing dollars. Get your name out to local builders, inspectors, and appraisers. And of course, Connecting across the country and even the world with global real estate agents can be a great way to gain referrals.
6. Keep track of every dollar.
Remember, you are on your own when it comes to your income. There is no one taking taxes out, no one running the numbers for you unless you pay them. You’ll want to get every tax deduction possible and as a real estate agent, that’s fairly easy.
Just about everything you do as long as it has something to do with the business can be tax-deductible. This might mean deducting a home office, meals and entertainment for clients at 50% tax deductions, depreciation for a vehicle, and of course all your marketing dollars. Any penny you spend on your business can be deducted so don’t miss out on any of those extra dollars.
Increasing a Realtor® salary or even if you’re not a member of the NAR, increasing a real estate agent’s salary can be done but it does take a little bit of knowledge, motivation, and education. Starting off right or starting again after years of stagnant business can definitely be beneficial.
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