Most people don’t change jobs without knowing how much they will make in the new position. So, if you are considering a career pivot to real estate, you probably want to know how much real estate agents make per sale. While this information won’t give you a complete understanding of the average salary of a real estate agent, it will help you understand how many property transactions (at what price points) you need to oversee to meet your income goals.
Here’s a quick guide on real estate agent commissions per sale. Our discussion includes the average commission rate in the U.S. and how commission splits typically work.
Understanding Real Estate Agent Commissions
Most real estate agents work entirely on commission. There are exceptions to this rule, as some online real estate companies pay agents a salary. Additionally, there are roles licensed real estate agents can pursue that allow them to get paid a set rate. However, for the most part, people are drawn to real estate because they like the idea of earning unlimited commissions based on the transactions they close.
Related Article: 10 Careers in Real Estate: Choosing the Right Real Estate Career for You
How do real estate commissions work? How much can you make on the average transaction in your state? Here’s what you need to know.
1. Average Commission Rates in the U.S.
The average real estate commission rate in the U.S. has hovered around 6% for decades. However, real estate commissions have always been negotiable. According to data collected by FastExpert, the average 2024 commission rate in the U.S. is 5.57%.
Before you enroll in real estate pre-licensing courses, it’s important to note that you won’t take home 5.57% of every transaction you oversee. Here is some essential information about what you can earn as a real estate agent.
2. Commission split between agents
First, it’s important that you understand that the seller often pays real estate commissions, and they are typically split between the seller’s agent and the buyer’s agent. There’s speculation that this compensation model may change as a result of the recent National Association of REALTORS® settlement, but this remains to be seen.
Learn More: NAR Settlement Resources
Whether the buyer or seller pays the real estate professionals’ commission, expect a 3% commission (or less) for your part of the process.
3. Commission splits with your brokerage
Real estate agents in every state must work under the supervision of a broker (or managing broker). A broker is an experienced agent who has earned a higher-level license in your state.
When you sign on to work at a brokerage, you will negotiate a commission split percentage as a part of your contract. For example, you may agree to share half of your commission amounts with the brokerage in exchange for their oversight, mentorship, training, and marketing resources.
Related Article: Finding the Right Real Estate Brokerage
4. Taxes, retirement, and insurance
Finally, you must share part of your commissions with Uncle Sam. Most real estate agents are also responsible for their own insurance and retirement planning, so it’s critical you account for these expenses when you start earning your first commission checks.
Related: Understanding Real Estate Commissions
How Much Commission do Agents Make Per Sale?
Now that you understand that your 3% commission will be shared with your brokerage and that part of that income must go to taxes, retirement, and insurance, let’s examine how much you can expect to earn on an average transaction in the ten states with the highest home values.
Sellers Agent Commission by State (Top 10 States)
Don’t base your knowledge of real estate commissions on “reality” TV shows, which often focus on the sale of luxury homes in top markets. Here’s what you can expect for the average transaction in these ten states.
Related: How Much Can You Make as a Real Estate Agent?
Real Estate Commission by State
| State | Average Home Value | Average Commission Per Sale (Based on 6%) | Average Seller’s Agent Commission | Average Buyer’s Agent Commission |
|---|---|---|---|---|
| California | $786,730 | $47,204 | $23,602 | $23,602 |
| Massachusetts | $634,690 | $38,081 | $19,040 | $19,040 |
| Washington | $601,851 | $36,111 | $18,056 | $18,056 |
| New Jersey | $534,939 | $32,096 | $16,048 | $16,048 |
| New York | $478,973 | $28,738 | $14,369 | $14,369 |
| Florida | $398,077 | $23,885 | $11,943 | $11,943 |
| Virginia | $396,331 | $23,780 | $11,890 | $11,890 |
| North Carolina | $335,521 | $20,131 | $10,066 | $10,066 |
| Texas | $308,121 | $18,487 | $9,244 | $9,244 |
| Pennsylvania | $272,477 | $16,349 | $8,175 | $8,175 |
Real Estate Agent Commission by Home Value
What is the average home value in your city? It may be closer to the $200,000 range than the $800,000 range. Here’s another view of what you can expect to earn as a real estate agent based on the property values near you. Remember – real estate agents must share a portion of their commissions with their brokerages!
Real Estate Agent Commission by Home Value
| Home Value | Average Commission | Buyer’s agent commission | Seller’s agent commission |
|---|---|---|---|
| 100,000 | 6,000 | 3,000 | 3,000 |
| 200,000 | 12,000 | 6,000 | 6,000 |
| 300,000 | 18,000 | 9,000 | 9,000 |
| 400,000 | 24,000 | 12,000 | 12,000 |
| 500,000 | 30,000 | 15,000 | 15,000 |
| 600,000 | 36,000 | 18,000 | 18,000 |
| 700,000 | 42,000 | 21,000 | 21,000 |
| 800,000 | 48,000 | 24,000 | 24,000 |
| 900,000 | 54,000 | 27,000 | 27,000 |
| 1,000,000 | 60,000 | 30,000 | 30,000 |
Another factor influencing income is the skill set of the real estate agent. How can you increase your earning potential in this extremely competitive industry? One way is to partner with a top-notch real estate education provider for your pre-licensing and continuing education courses. Colibri Real Estate School (formerly Real Estate Express) has been one of the top online education providers for decades. Known for offering the “Pass or Don’t Pay Guarantee,” Colibri Real Estate will teach you everything you need to know to succeed.
Key Takeaways
- The average real estate commission rate in the U.S. is about 5.57% in 2024. However, real estate agents typically split this commission with other agents and their brokerage, meaning they take home a smaller percentage of the total commission.
- Real estate commissions are generally divided between the seller’s agent and the buyer’s agent, each receiving around 3% of the sale price. Additionally, agents share a portion of their commission with their brokerage, which provides oversight, training, and resources.
- The commission an agent earns per sale varies significantly by state and home value. For example, in California, where the average home value is $786,730, the average seller’s agent commission is $23,602. In contrast, in Pennsylvania, with an average home value of $272,477, the commission is $8,175.
- Real estate agents must account for taxes, retirement planning, and insurance expenses, which further reduce their net earnings from commissions. It’s crucial for agents to manage these financial responsibilities effectively to maximize their income.
