Confused about how real estate agents get paid, or how much?
Since most real estate agents don’t get paid a base salary, commission is a huge topic of discussion — especially for new real estate agents.
You might have questions like:
- What is the average real estate agent income in California?
- How much does a real estate agent make per month?
- How much do real estate agents make per sale?
- How much do new real estate agents make?
These are all great questions, and their answers are important to understand so you can decide if a career in real estate is right for you.
California Commission and Average Income At a Glance
First, your commission rate depends on whether you’re a buyer’s agent or a listing agent. Many California listing agents make around 6% commission on each sale, while California buyer’s agents’ commission tends to land in the range of about 1-6%.
While those numbers sound small, note that the average real estate agent income in California is $80k per year. That’s because even with a standard commission rate, California home values are higher than most of the country. So when it comes to how much realtors make per sale, California real estate agents tend to make a bit more than other agents in other states.
With that in mind, it’s also important to understand that the average real estate agent income is based on many factors. That means, just because the average real estate agent income in California is around $80k per year doesn’t mean you can’t make more or less.
How Much Does a Real Estate Agent Make Per Month?
Again, there is no one answer to this question since real estate success is so dependent on individual effort.
Some things that influence how much you’ll make per month as a real estate agent are:
- What city you’re working in
- How many hours you work per week
- The size of your social network or sphere of influence
- Whether you help clients buy homes or sell homes
Among other factors.
If you work in major California cities like Los Angeles, San Francisco, San Diego, or even Napa, you’ll likely make more per month than other areas.
Even then, these major cities have their own differences in commission rates.
For instance, the average commission rate in Los Angeles and San Diego hover around 4.92%, while San Francisco’s average commission rate is 5%. Napa clocks in at the highest average commission rate at 5.8%.
That said, the average full-time real estate agent income per month in California is roughly $5k-$6k.
Compared to other states, this is on the high end.
Understanding Commission Splits
Another important factor when it comes to commission?
Since real estate agents in California must be sponsored, they pay part of their commission to their broker or brokerage. This pays for the broker or brokerage’s overhead for providing things like the physical office the real estate agent works in, their training, their networking, and even some marketing.
That means when all is said and done, real estate agents end up with more like 1.5 to 2% of the sale.
However, when you consider that the average home in California is around $700,000, 1-2% still lands you $14,000 in commission. If you sell just six or seven homes in this price range per year (roughly one every two months), and you’re earning more than most real estate agents around the country.
Negotiating Your Commission Rate
By law, a real estate agent’s commission rate is negotiable with their clients. And, part of becoming a successful real estate agent is learning how to confidently ask for what you feel you deserve, and having the skills to back that price up.
Ultimately, clients are looking for market expertise. So if you continue to invest in your continuing education (especially with something like Allied’s CE Plus package, which includes hundreds of extra resources and coaching), you’ll likely have an easier time asking for — and receiving — the commission you deserve.