Becoming a real estate broker can be a fulfilling and lucrative career move. As a licensed real estate broker, you get to be your own boss, you get more ownership and control over your career, and you increase your earning potential. But exactly how much you earn depends on a lot of factors, including your experience, your area, your team, the type of properties you represent, and the market.
To help you get an idea of what to expect when embarking on this career path, we’ve broken down how real estate brokers get paid, the average real estate broker salary in each state, and other important factors to keep in mind.
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How are real estate brokers paid?
A broker typically earns their income through a base salary and commissions. Their total pay is a combination of the two.
A base salary is just what it sounds like: a fixed base salary that the broker is paid every year by their business.
Commission is paid out as a percentage of the sale price of each property. Commissions work a few different ways. When a broker acts as a client’s agent, they earn all of their commission from that transaction. Brokers also earn commission through a percentage of their agents’ commissions. The better their real estate agents perform, the more money a broker can make.
How does a real estate broker salary compare to an agent salary?
Real estate agents are typically paid through commission. A typical commission structure is 3% of the sale price for the listing agent and 3% for the buyer’s agent. Dual agents who represent both parties would get the full 6% commission.
Real estate agents are required to work for a sponsoring broker and part of their commission goes to the broker when they complete a sale. Exactly how much commission a broker gets will depend on the pay structure they have established with that agent. Commonly, brokers will do a 75/25 split, but may also do a 90/10 split or an 80/20 split, depending on the contract.
While brokers can do all of the things agents can, brokers also go through more training, gaining in-depth knowledge about real estate taxes, laws, and finance. They also often recruit, hire, and supervise agents, run an office, make sure their team is following local laws, pay for marketing expenses for their team, take on liabilities, and incur many other costs. This is why agents pay them a commission split.
The average real estate broker salary
Glassdoor estimates the total average yearly pay for a real estate broker in the US at $167,465, with an average base salary of $102,723 and additional pay of $64,742. Additional pay may consist of bonuses, commission, tips, and profit sharing.
Average real estate broker salary by state
Here’s a breakdown of the average salary for real estate brokers by state, according to Glassdoor. Again, additional pay may include bonuses, commission, tips, and profit sharing.
|State||Average Yearly Base Salary||Average Yearly Additional Pay|
The highest-paying states for real estate brokers
According to Glassdoor’s data, the top five highest-paying states for real estate brokers are Montana, Missouri, Massachusetts, California, and South Carolina. Note that commissions can still vary considerably, based on city, market, type of properties, volume of sales, and experience levels.
When deciding where to build your career, it’s of course also important to consider the cost of living. For example, while California might be a top-earning state for real estate brokers, it also has one of the highest costs of living in the United States. Talking to other real estate brokers in your target area and understanding the cost of living can help you make more informed decisions. You may also want to consider the different licensing requirements across states.
Grow your business as an agent or broker
The decision to become a real estate broker is a big one—and there are a lot of factors to weigh in addition to your earning potential. Whether you’re an agent or a broker, if you’re looking to grow your business, Luxury Presence offers a full platform of design and marketing solutions that can help you build your brand and attract more clients. To learn more, schedule a free demo with our team.