If you're interested in a career in the real estate industry, one of your primary concerns is how you’ll make money and how much you can make in your first year.
While real estate as a career in real estate can be both exciting and challenging, it's essential to know what you're getting into before taking the plunge.
If you’ve watched reality TV like Love It Or List It, Selling Sunset, Property Brothers, and other hits, you imagine that real estate can be highly lucrative. However, those shows don’t portray that it's not uncommon for new agents to struggle in their first year.
And for starting agents, many factors can affect your earnings, from the market conditions to experience and skills.
One of the biggest questions for new realtors is how much commission they can expect to make.
While there's no one-size-fits-all answer, there are some general guidelines and factors to consider.
When it comes to quickly growing your income as a new real estate agent, experience certainly plays a significant role.
However, the key to success during your first year in business is to properly manage your business's four main financial aspects: affordable marketing opportunities, effective networking, smart earning strategies, and industry education.
To get an even stronger growth rate throughout that year, there are 10 key ways to leverage these mobile resources.
For example, you can use social media sites to let everyone know about your newfound career acquaintances around where you live, business associates, and friends on or offline. I recommend a strategy that is proven to work time and again.
That strategy involves sending 10 video text messages to your sphere daily. These video text messages are short and personalized about the person you’re sending them to, not about your business and career.
You can also focus on higher-priced property markets to get more significant commissions for each sale. For instance, selling a $400k house at a 5% commission will earn you nearly double what selling a $200k condo would bring in the same circumstances.
Networking with experienced agents can also give you many great insights into how they approach their real estate deals and help develop more solid list-building techniques.
Finally, investing in industry education courses is essential to grow your short-term and long-term earnings.
If you button down on these things, here's a breakdown of what you can expect:
First-year Commission Rates
There isn’t a set commission rate for real estate agents in the first year of their careers since it can vary based on the brokerage or agency they work with.
However, it's typical for new realtors to be offered a split between 50% and 70% of the commission earned on a sale.
For example, if the commission on a home sale is 6%, the brokerage might take 3% for overhead costs and split the remaining 3% with the realtor. If the realtor's split is 60%, they'll earn 1.8% of the sale price.
Income Potential
While predicting how much a first-year realtor will earn in commission is challenging, some factors can influence their income potential. These factors may include:
- Location: Real estate markets vary significantly across different cities and states. It's common for realtors in larger metropolitan areas to earn higher commissions than those in smaller markets.
- Clientele: Building a solid network of clients and referrals is vital to success in the real estate industry. Realtors who can establish themselves as experts in a particular niche or geographical location have a greater chance of earning higher commissions.
- Marketing Efforts: Realtors must market themselves aggressively to attract clients consistently. Those who invest in marketing and advertising build their client base and generate more leads.
- Work Ethic: A realtor's success is directly linked to their work ethic. Those who are willing to work long hours, meet clients' demands, and go the extra mile to close a sale tend to earn higher commissions.
Regardless of these factors, first-year real estate agents have a wide range of income potential in their first year, and it can take time to gauge what an average salary should be.
There’s not a lot of data that shows exactly how much you could earn as a new agent, but this does not mean that a new realtor cannot make money in their first year.
The success rate can also depend on the resources each agent has access to when first entering the field, such as proper training and quality networking opportunities.
Of course, hard work and dedication are needed for any success, so those serious about pursuing real estate as a career should consider putting ample time and effort into learning everything they can about it before starting off.
How To Make More Money In The First Year
As a real estate agent, there are many strategies for making money in your first year, such as asking for referrals from family and friends, networking with other real estate professionals, and utilizing online resources like social media.
In addition to developing professional relationships that will lead to sales proposals, it is essential to build a client base through word-of-mouth recommendations.
The National Association of Realtors found in a survey that 84 percent of home buyers and sellers said they would recommend and use their real estate agent again if needed. This highlights how crucial regular customer service and satisfaction are for gaining loyal customers who will ultimately refer others to you.
Other tactics that successful agents use include attending local events where people may be interested in buying or selling property, offering discounts on real estate services through coupons or local discounts websites, making themselves available 24/7 with a reliable internet connection and phone line, taking advantage of new technology like virtual showings and constantly communicating with previous clients or referrals.
One tactic I used and recommended to my coaching clients is the “Win The Listing Before You Arrive” strategy. This strategy is quite simple and only requires a little market understanding. Here’s how it works:
Look at potential problems that your client may have. For example, if you are targeting sellers, a problem they may have is that they are concerned about where they may move next.
What you do is create a video that helps answer a concern like this providing details and solutions before you send it to prospects. For example, you can discuss how to sell on a contingency basis and explain rent backs or other creative solutions in your area.
New real estate agents should remember that building trust takes time; however, when it has been built up properly, it can result in lucrative recurring business.
Get Organized With Real Estate Coaching
To grow your income potential as a real estate agent, having outside help to assist with systems and organizations designed to accelerate your business is crucial.
Some people may choose a mentorship with a more experienced agent in the office, but a real estate coach would do wonders to accelerate your business.
Real Estate Coaching is not only for newbies, but it can also be highly effective for experienced agents.
Since real estate is a highly dynamic industry, staying organized is vital to achieving success, keeping track of potential clients, and maintaining accurate records of property transactions. An organized approach can make a substantial difference in how you operate your business effectively.
Another benefit that will skyrocket your earning potential with implementing the systems from real estate coaching is that you’ll refine their organizational skills and streamline their processes.
