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Do Brokers Make More Than Real Estate Agents?

Are you looking for ways of expanding your real estate business, especially if you’ve been in the industry for some time? Most property owners at this level think of making a kill out of their venture by serving the clients without involving any external parties. You can focus on embracing more scalable real estate industry skills and practices by training as a real estate broker. Alternatively, you might be selling your property and wondering whether to go through a real estate broker or agent. This article from The Pro Team offers you insights into brokers and real estate agents.

So, do brokers make more money than real estate agents? Yes, the general earnings for brokers are higher than those of real estate agents. A 2018 Bureau of Labor Statistics estimated that a real estate agent earns an average of $61,720 while brokers make $78,940 annually.

It’s important to note that brokers and agents don’t earn salaries. Their remuneration constitutes commissions from the sale of properties. The following is a breakdown of how agents and brokers get paid.

The Real Estate Agent—How Do They Earn?

As noted above, the average annual earnings for a real estate agent is $61,720. The bulky money comes from the commissions earned through representing customers to sell or buy properties. There is no fixed commission, although the standard residential commission ranges between 5% and 6%. The commission is split equally if two or more real estate agents are involved in the sale. Part of the commission also goes to settling other expenses, including the broker’s fee. A majority of brokers charge a specific amount of commissions as agreed. The annual earnings for real estate agents vary widely depending on several factors.

The Real Estate Broker Earnings 

Brokers mostly earn from the commissions that their real estate agents make. For this reason, brokers are more interested in agents that close more business deals regularly to increase their earnings. Brokers also spend money on more training to boost the closure of business deals. Broker income sources include;

Agent Commissions: Real estate agents need to work under a broker to do business. A broker and a real estate agent can decide on a percentage commission or a flat fee from each business deal they close. For instance, a broker hires an agent with a 70/30 split and a $20k cap. This information can be interpreted as follows. The broker earns 30% of the commission that the agent gets up to $20k for the whole year. The broker will no longer split the commissions that the agent makes once he has earned $20k. The potential income can considerably be high if the broker is working with more agents.

Desk Fees: Some brokers earn more money by charging their agents a desk fee. The desk fee is the membership fee that an agent has to pay every month, whether they closed transactions or not. Most brokers use these funds to pay for recurrent expenses.

Individual Transactions: Brokers are also licensed agents, and they can also make transactions and close business deals. They have more advantages when they close business deals because they don’t have to split the commissions in brokerage fees with anyone.

Secondary Sources: Brokers own stakes or complementary shares in various real estate industry service providers, creating avenues to earn more income. For example, brokers can build from scratch or purchase title companies. Most states require the participation of title companies when closing a real estate business transaction. Brokers use this avenue to generate more revenues.

A broker has more avenues of earning extra income than an agent. The earnings of agents come primarily from the commissions that they make from closing business deals. Besides, they need to split the commission with their broker besides meeting other expenses such as desk fees where applicable. On the other hand, a broker has several sources, making them earn more than real estate agents.

What Qualities Should A Successful Broker Possess?

You’re a new real estate agent looking for a suitable broker. What qualities should you look for in a great broker? Here are traits;

  • A good broker should be an influential mentor to guide you and nurture your career progress.
  • A real estate brokerage is an elaborate venture making it crucial to have a keener broker.
  • Settle for a broker who is an ambitious goal-setter to challenge you to your innermost capabilities.

Brokers and agents play a pivotal role in the real estate industry. An essential element is setting goals to propel each profession to its long-term objectives.

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