According to Salary.com and Indeed.com, the average real estate broker salary in the United States is $68,256. In addition to a base salary, managing real estate brokers in the U.S. earn an average of $42,000 in commission income, making their total average compensation reach $110,256.
California brokers lead the nation, earning a median income of $127,556, inclusive of both salary and commissions. Here’s how earnings for brokers and agents break down in the rest of the country, state by state.
Average Real Estate Broker Salary—State-by-State Guide
How Are Real Estate Brokers Paid?
We know that real estate brokers earn their income from two primary sources: a base salary and commissions. Let’s dive into exactly where the money in these categories comes from.
First, the income from a real estate broker’s salary is made up of the incoming revenue of the real estate brokerage—money that comes primarily from a portion of each of the commissions the agents within the office earn. This is commonly referred to as a “split.” A common split in the U.S. is 75 / 25, meaning that for every commission earned, the agent keeps 75% and the brokerage gets 25%.
Brokers and brokerages also earn money from charging monthly “desk fees” to their agents; this is a flat fee that is billed whether agents close sales or not. Though technically an income opportunity for brokers, most offices that charge a desk fee usually wind up using close to 100% of those fees for recurring costs like rent, utilities, technology tools, and so on.
Also, don’t forget that as a real estate broker, you still have the option to assist your own clients in the buying and selling process. So, if you are closing deals for your clients, as a broker you would get paid a commission for those transactions as well.
Reasons a Real Estate Broker’s Earnings Are So High (or Low)
After examining the table above and learning all about the median real estate broker salary in your state, and then getting a better understanding of how a real estate broker makes their money, you might be asking yourself, “Why is there such a variance from state to state?
Here are a few reasons.
Median sale price of homes: Since a lot of a real estate broker’s total compensation is based on commissions, it follows that states with higher average sale prices would yield brokers with higher average incomes.
The demand-to-broker ratio: Real estate markets where there is high demand vs the number of brokers in the area are going to yield higher average salaries. Take, for example, Green Bay, Wisconsin. In 2018, the median real estate broker salary was $110,820. The median real estate broker salary for New York City in 2018 was $115,950. The average sold price for a home in Green Bay was just over $175,000 in 2018, compared to an average sold price for a NYC home of close to $950,000.
Why did Green Bay brokers have nearly the same median as New York City brokers? Competition. In Green Bay, there were 30 real estate brokers operating, compared to 1,760 in New York City.
Some brokers buy and sell, some don’t: A real estate broker is able to represent their own clients in the purchase or sale of real estate, but they aren’t required to. Some brokers choose not to so they can focus on running their business and managing their team. However, other brokers choose to continue to represent clients, and these brokers tend to earn more money in direct commissions.
Real Estate Broker vs Agent Salary
Who makes more: real estate brokers or real estate agents? The answer depends on a number of factors. Brokers with a large brokerage and lots of agents often earn a very good living, especially if they’re representing their own clients as well. On the other hand, brokers who have a small shop and don’t do much direct client work are likely toward the bottom of the scale.
Real estate agent salaries are determined entirely by the number of transactions they close every year, so they can make as little or as much as the market will bear.
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