Most people know that if you are going to be working in real estate, especially as a real estate agent, you are going to make money off of commissions. That being said, not everyone knows what a commission might look like or how you will receive them. It’s important to have that knowledge before starting your career in real estate so you can have a good understanding of how you will be paid and what kind of a salary you can expect.

Commission Rates

The most important thing you need to know is what percentage your commission rate is likely to be and how much you will be paid based on that rate depending on the cost of a home. Most real estate commissions tend to be around 3% for each real estate agent involved in a sale. This results in a total of 6% in commission that sellers pay to real estate agents. If you sell a home for $300,000 your commission would be around $9,000. Depending on how much time and effort you spend on that sale, it can vary as to how much you are paid based on your time.

Commission Splits

When you are new to the world of real estate, you will also be part of a brokerage. That means that you will be splitting your commission with the brokerage you work for. It’s important to choose a good brokerage so you know how much of your commission will be taken away. Some brokerages take 60-70% of the agent’s commission, while others simply charge monthly fees and allow the agent to keep 100% of the commission they earn. As discussed before, the commission is also split between the buyer’s agent and the seller’s agent, but that is something you should plan on no matter where you work.

The Basics

When you understand how real estate commissions work, you can decide if that is a pay structure that will work for you. As you gain a reputation and following, you can start making more consistent sales which will increase the amount of money you make over time. It’s important to get a strong understanding of the basics before starting your career.

Working in real estate can be incredibly rewarding and it can be profitable as well. If you can make commissions work for you, you will be set for life in your real estate career. And from there you can focus on finding clients and selling properties.

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