Do Real Estate Agents Get Paid Hourly? How Much Do They Make Per Hour?

Real estate agents are professionals who help buyers and sellers of properties to complete their transactions.

An image of a real estate agent
Real estate agent [photo courtesy of PInterest]
They typically work on commission, which means they earn a percentage of the sale price of the property they help to sell or buy.

But do real estate agents get paid hourly as well?

How much do they make per hour? And what factors affect their income?

In this article, we will answer these questions and more.

How Do Real Estate Agents Earn Money?

Real estate agents earn money mainly from commissions, which are usually split between the listing agent (who represents the seller) and the buyer’s agent (who represents the buyer).

The commission rate varies depending on the market, the type of property, and the agreement between the agents and their clients.

However, a common commission rate is 6% of the sale price, which means that each agent gets 3%.

For example, if a property sells for $300,000, the total commission is $18,000, and each agent gets $9,000.

However, this does not mean that the agent gets to keep all of that money.

They also have to pay for expenses such as marketing, advertising, licensing fees, office rent, insurance, taxes, and more.

Additionally, they have to share a portion of their commission with their broker, who is the person or company that provides them with support and resources to run their business.

The broker’s cut can range from 10% to 50% or more.

Therefore, the net income of a real estate agent depends on how much they sell, how much they spend, and how much they share with their broker.

According to Indeed.com, the average salary for a real estate agent in the United States is $95,072 per year as of October 23, 2023.

Do Real Estate Agents Get Paid Hourly?

Real estate agents do not get paid hourly in the traditional sense.

They do not have a fixed salary or wage that they receive every week or month.

They only get paid when they close a deal, which means that their income can be unpredictable and inconsistent.

Some months they may make a lot of money, while other months they may make nothing at all.

However, some real estate agents may choose to calculate their hourly rate based on how much time they spend working on their business.

This can help them to track their productivity and profitability, as well as to set goals and budgets.

To calculate their hourly rate, they can divide their net income by the number of hours they work in a year.

For example, if an agent makes $60,000 in net income in a year and works 40 hours per week for 50 weeks (taking two weeks off for vacation), their hourly rate is:

$60,000 / (40 x 50) = $30 per hour

Of course, this is just an estimate and does not account for the variability of income and expenses that real estate agents face.

It also does not include the value of benefits such as health insurance, retirement plans, or paid time off that some salaried employees may receive.

What Factors Affect the Income of Real Estate Agents?

The income of real estate agents depends on many factors, such as:

The market conditions

The demand and supply of properties in a given area can affect the prices and the number of transactions that occur.

A hot market can mean more opportunities and higher commissions for agents, while a slow market can mean fewer opportunities and lower commissions.

The location

The average sale price and commission rate of properties can vary significantly by location.

For example, according to PayScale.com, the average salary for a real estate agent in Los Angeles is $110,187 per year, while in Annapolis it is $89,424 per year.

The experience

The level of experience and expertise of an agent can affect their reputation and credibility among clients and peers. Experienced agents may have more referrals, repeat customers, and positive reviews than new agents. They may also have more skills and knowledge to negotiate better deals and handle complex situations.

The specialization

Some agents may choose to specialize in a certain type of property or clientele, such as luxury homes, commercial properties, or first-time buyers.

This can help them to differentiate themselves from other agents and attract more customers who are looking for their specific services.

The network

The size and quality of an agent’s network can affect their exposure and access to potential clients and properties.

Agents who have strong relationships with other agents, brokers, lenders, inspectors, appraisers, contractors, and other professionals in the industry can benefit from referrals and collaborations.

They can also use social media platforms such as Facebook, Instagram, LinkedIn, Twitter, YouTube, etc., to promote themselves and their listings to a wider audience.

The marketing

The effectiveness of an agent’s marketing strategy can affect their visibility and attractiveness to potential clients.

Agents who invest in professional photography, videography, staging, signage, flyers, brochures, websites, etc., can create a positive impression and generate more leads and inquiries.

They can also use online platforms such as Zillow, Trulia, Realtor.com, etc., to showcase their listings and reviews to millions of users.

The customer service

The quality of an agent’s customer service can affect their satisfaction and loyalty among clients.

Agents who are responsive, attentive, honest, friendly, and helpful can create a positive experience and build trust and rapport with their clients.

They can also encourage referrals and repeat business by staying in touch with their past clients and providing them with valuable information and advice.

Conclusion

Real estate agents are not paid hourly, but rather by commission based on the sale price of the properties they help to sell or buy.

Their income can vary depending on many factors, such as the market conditions, the location, the experience, the specialization, the network, the marketing, and the customer service.

Real estate agents can estimate their hourly rate by dividing their net income by the number of hours they work in a year.

However, this is just an approximation and does not reflect the true value of their work.

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