A career in real estate can be a very lucrative, but to be one of the highest earners takes a lot of hard work and commitment. That statement sounds like something a mother would tell her children no matter what profession they were considering. However, it’s certainly true when it comes to real estate and having a high real estate agent salary.
A growing number of Americans are employed in the real estate industry. There are currently roughly 2.5 million real estate agents and brokers in the United States. Close to half of that group, approximately 1.2 million, are members of National Association of Realtors (NAR). As of the 2012, there were 86,004 real estate brokerage firms in operation across the U.S.
According to NAR, in 2015 the median gross income of REALTORS was $39,200, which is a decrease from $45,800 in 2014. Neither of these numbers sound like a lot, but there are quite a few part time REALTORS and they are included in these totals. Full-time REALTORS likely make more money.
In order to beat the median and achieve a top real estate agent salary, here are some strategies to consider:
1. Join a Team
There are many hats real estate agents wear. It is difficult to do everything by yourself and there are only so many hours in the day. Staying on top of showings, contracts and prospecting for new clients keep agents very busy. A presence on social media is also important and that can be time consuming. It’s nice to have to have partners. Team members can also split up tasks according to their strengths.
When you are part of a real estate team, you have help. You do split your commissions, but many real estate agents find they can accomplish more and ultimately earn a higher real estate agent salary if they are a part of a team.
If you are just beginning your real estate career, being part of a team is a great way to learn from experienced agents. Another benefit of working on team is, when it’s time for a vacation, you have someone you trust to cover for you.
2. Focus on More Expensive Homes to Increase Your Real Estate Agent Salary
The transaction process is the same for a $250,000 home and a $1,000,000 home. The difference is the size of the commission. You have to sell four $250,000 houses, and do a lot more work, to get the same commission you will receive from selling one $1,000,000 house. For this reason, it makes sense to focus on selling higher end homes. However, not all real estate agents are comfortable doing so.
Many agents gravitate to places where they feel most at home. They may feel more comfortable working with people who are selling and buying houses in the $250,000 range. There is certainly nothing wrong with $250,000 homes. If that price range if your focus, you will just need to complete more transactions to financially keep pace with colleagues who are selling more expensive properties, and have a higher real estate agent salary.
3. Build Your Brand as a Luxury Agent
If you want to attract clients who can afford higher end homes, it’s important to build your real estate brand with that goal in mind. Here are some suggestions for building a strong real estate brand.
One way to market yourself to affluent clients is to attend and even sponsor events that will attract their attention. Other ways to network include being actively involved at your child’s school, at church or volunteering. Ideally these are activities you enjoy and the potential real estate relationships that follow are an added benefit.
4. Work in a Flourishing Market
The real estate adage “location, location, location” can certainly be applied to agents and where they work as well. All things being equal, agents who work in strong markets will have more opportunities and a better real estate agent salary.
According to Forbes magazine, the hottest real estate markets for investors in 2016 were Dallas, Portland, Denver, Miami, Tampa, Seattle, Nashville, Atlanta, Houston and Austin. The volume of transactions completed in these cities was no doubt higher than in places with less active markets. Real estate agents in these cities benefited from the market conditions.
5. Own Rental Property
Many real estate agents are also landlords. Having regular rental income from tenants is a great way to supplement commission-only income that can be unpredictable.
Purchasing rental property can be a natural fit for many brokers and agents. They are already highly familiar with the transaction process and are more comfortable with it than they average homeowner, who only purchases a house once every 30 years.
Real estate agents are also much more tapped into their local market, know a good deal when they see it and can often act more quickly then investors who aren’t in the real estate business. Some rental properties are bought out of foreclosure or are short sales. It can take significant time to research these types of deals and agents have a leg-up on the average investor.
Another benefit is they are familiar with the mortgage approval process and probably know a number of mortgage brokers. They can also save on transaction costs, like commissions, since they can represent themselves.
Many homeowners struggle to come-up with a down payment. Real estate agents are paid chunks of money with their commissions. These can be used as down payments on rental properties with proper planning.
Does it Make Sense to Work Part-Time?
One of the benefits of working in real estate is the hours can be more flexibility. It is possible to work part-time and still have a good real estate agent salary. If you have another job and are trying to break-in the real estate market, your only option may be to work part-time.
A lot of real estate business is conducted on weekends and evenings. It is conceivable to hold another job that has more regular hours during the week and still work in real estate. However, it can be difficult to manage two jobs. Real estate agents frequently interact with title and mortgage companies. These businesses are often open 9 am to 5 pm on weekdays, so communication may be a challenge if you are not readily available during the week.
Many parents choose careers in real estate so they can have a more flexible schedule for their kids. If you can work during the day when your children are at school, and some nights and weekends, a career in real estate may be a good fit.
A part-time career in real estate may also be ideal for people looking for supplemental income and retired people who want to stay active.
It is certainly possible to make a part-time real estate career work and many people do. However, there can be limitations and challenges that you should consider in advance. It is important to find a broker that is understanding and supportive of your situation.