2 min read · March 23, 2023
There are approximately 176,000 real estate agents working in the US. According to the Bureau of Labor Statistics, the average mean wage is a little over $61,000 per year.
Granted, that number can vary a lot depending on what area of real estate you work in, but $61,000 works as a basic starting point. Of course, that number is also largely based on agents splitting their commission with brokers.
That begs the question of how much more you could earn with a 100 percent commission. Keep reading for what you need to know.
The average real estate agent works under a broker. The agent shows properties and serves as the point of contact for customers. It’s the broker, however, who ultimately handles the paperwork and has responsibility for the overall business.
In exchange for things like maintaining the offices, paying for software, dealing with taxes, and working under the broker’s license, brokers take a part of the agent commission as part of each real estate transaction.
Different brokers take different percentages, but it’s fairly common for brokers to get 40 percent of the agent’s commission.
In recent years, though, a different model has taken root in the real estate business. Instead of forking over 40 percent of their commission to a broker, agents can keep 100 percent commission.
The catch is that the broker offers reduced services and operates under a broker-as-a-service model. Under this model, the agents still work under the broker’s license, but they aren’t employees in the same way as agents working directly for a broker.
Instead, the broker provides support with things like software and finalizing paperwork. What they do not do is maintain an office, handle most administrative work, or deal with things like taxes.
The agent works almost completely independently as a kind of entrepreneur.
Unfortunately, the question of how much more can you make under this model is an open question. You will get more for each real estate transaction that you close. Whatever percentage you would have paid to the broker goes into your pocket. If you want your specific situation mapped out, check out this commission savings calculator that can really help you see the difference.
You will owe the broker something, usually a subscription fee for the use of their software and other services.
The catch is that you’re also responsible for paying for things like marketing and maintaining your own office. These things will typically eat into that extra money. Assuming you can make regular sales and keep your overhead costs under control, though, you will make more money.
One of the main limiting factors on your income as an agent when you work in real estate is the percentage you pay to your broker. That commission split can drain away 40 percent or more of your commission.
The 100 percent commission model can put more money into your pocket, but the exact amount depends a lot on you. If you run a financially efficient business, you can make a lot more.
Pinnacle Realty Advisors offers a 100 percent commission model. If you’re interested in exploring this option, contact Pinnacle Realty today.