How much do realtors make? A clear guide to getting started in real estate

Quick answer: how do you get started in real estate, and what agents typically earn

The short answer to how do you get started in real estate is: you complete state pre-licensing requirements, pass the licensing exam, and affiliate with a broker, then start building listings and clients. For a quick sense of earnings, industry reports and government wage data place typical annual pay for many agents in the mid-five-figure range, though results vary a lot by experience and local market NAR member profile

Most agents work on commission, so income depends on transaction count, local home prices, and how commissions are split with the cooperating agent and broker. Government wage statistics from the Occupational Outlook Handbook provide median wage context that helps explain the wide spread in reported incomes BLS real estate occupational guide

How do you get started in real estate: the basic steps to begin (overview)

Becoming a real estate agent usually follows a few common steps that vary by state: research your state’s licensing board, complete pre-license coursework, pass the state licensing exam, and choose a sponsoring brokerage. Treat these as examples, not a single required path, and verify exact rules with your state real estate commission.

Typical early costs include course fees, exam and license fees, membership dues for local MLS or association, basic marketing, and errors and omissions insurance. Plan conditionally for these upfront and monthly items while you build transactions.

Before enrolling in courses, check the state website for updated requirements and any continuing education rules. This verification step can prevent surprises about background checks, education hours, or exam scheduling.

Real estate pay models: commissions, splits, and what affects take-home pay

Most residential transactions use a commission system where total commissions commonly cluster around mid-single-digit percentages of the sale price, and those fees are split between listing and buyer-side agents and their brokerages, which affects take-home pay HomeLight agent income report and in commission rate surveys Average Real Estate Agent Commission Rates

How that percentage converts to dollars depends on sale price and the split you receive after broker fees and transaction charges. For example, a 5% total commission on a 300,000 sale is 15,000 in gross commissions before splits and brokerage fees. Brokerage arrangements and transaction fees can materially reduce the agent’s net.

Broker models vary: common structures include percentage splits with desk or transaction fees, flat-fee models, and capped splits where the agent keeps a larger share after a cap. Each model trades predictable costs for support such as leads, training, or technology.

Typical earnings and national benchmarks

National association surveys report typical REALTOR annual income in the mid-five-figure range, giving many readers a helpful benchmark for comparison with local data NAR member profile and the NAR agent income summary NAR Agent Income

Government wage statistics make similar points but use different methods; BLS data show median annual wages for brokers and sales agents generally fall between about 40,000 and 60,000 depending on sample and year, which aligns with the idea that many agents earn in the broad tens of thousands BLS real estate occupational guide

Understanding the difference between median and average is important: averages can be pulled up by high earners, while medians show the middle of the distribution. Use both when assessing what ‘typical’ means in your local market.

How location and market price change earnings

Agents working in higher-priced housing markets tend to report higher incomes, because the same commission percentage on a larger sale price yields larger commission dollars, though competition and costs may also be higher Indeed state salary data and state comparisons in salary analyses vaned real estate agent salary

To compare your area, look for state or metro salary reports and local MLS data on median sale prices, or browse homes for sale under 100k to get a sense of lower-price markets. Local demand, transaction volume, and competition determine whether higher prices translate to consistent income.

Remember that high-price markets can have higher marketing expectations and longer sales cycles, which changes runway needs and the time between commissions.

Experience, specialization, and other levers that move income

Earnings rise substantially with experience; REALTORS with many years in the business report median incomes notably above newer agents, reflecting larger networks, referral pipelines, and repeat clients NAR member profile

Progress typically takes time; many agents see meaningful increases in years rather than months, so realistic expectations and steady activity are important.

A simple framework to estimate your potential income

Use a straightforward formula to estimate possible income: transactions x average sale price x commission rate x agent split = estimated gross commission. Subtract broker fees and expenses for a net estimate. This framework helps you compare scenarios without promising outcomes.

Step by step, pick conservative inputs and optimistic inputs for each element, then calculate both to see a range. For example, try low transaction and low sale price for conservative, higher values for optimistic, and note the difference.

One conservative example: 12 transactions a year, average sale price 200,000, total commission 5%, agent split 50% yields roughly 12 * 200000 * 0.05 * 0.5 = 60,000 gross before expenses. Adjusting splits or fees changes the net take-home substantially HomeLight agent income report

An optimistic example: 20 transactions, average sale price 400,000, total commission 5%, agent split 60% yields roughly 20 * 400000 * 0.05 * 0.6 = 240,000 gross before expenses. Use local inputs for more realistic projections.

Decision checklist: is a career in real estate a good fit for you?

Use these quick prompts to assess fit: Are you comfortable with income variability? Do you have time for self-marketing and client follow-up? Do you have runway to cover 6-12 months of business expenses? Answering yes to these increases the chance that a switch could work for you.

Also consider local demand and competition, your tolerance for irregular pay, and your willingness to build systems for lead generation and client service. If direct sales are not a fit, look at referral or support roles that participate in the industry without sales responsibility, such as real estate side hustles.

Common mistakes new agents make and how to avoid them

New agents often underestimate startup expenses and runway. Mitigation: build a 6-12 month runway that covers marketing, dues, and personal expenses before counting on commissions.

Another frequent error is relying only on organic or passive leads. Diversify lead sources using a mix of referrals, paid marketing, open houses, and networking. Also compare broker models carefully and avoid signing a split agreement you did not negotiate.

Practical examples: three realistic income scenarios by market type

Lower-price, high-volume market example: 30 transactions at 150,000 average, 5% total commission, agent split 50% yields 30 * 150000 * 0.05 * 0.5 = 112,500 gross before expenses. Volume can offset lower prices in some markets HomeLight agent income report

High-price, lower-volume market example: 10 transactions at 700,000 average, 5% total commission, agent split 50% yields 10 * 700000 * 0.05 * 0.5 = 175,000 gross before expenses. Higher sale prices can create larger commissions with fewer transactions Indeed state salary data

Specialist example: niche or luxury agent focusing on referrals and high-value listings may do fewer transactions but with higher average sale prices and referral volume; results vary widely and depend on local demand and reputation Zillow research guide

Taxes, expenses, and budgeting for commission-based pay

Common expense categories include brokerage fees, MLS and association dues, marketing, insurance, vehicle and travel, and continuing education. These reduce take-home pay and should be part of your planning.

Budgeting tactics for irregular income include smoothing receipts into a monthly budget, building an emergency fund equal to several months of expenses, and making quarterly tax estimates to avoid surprises. For tax specifics, consult a tax professional and consider the right business bank accounts for your needs.

How to compare broker models, fee splits, and support services

Ask prospective brokerages about split percentage, caps, desk or transaction fees, technology and lead programs, and available training and mentorship. These items affect both costs and your growth potential.

Low-fee models can be attractive on paper but may provide little support; higher-fee brokerages often offer training, leads, or administrative help that can be valuable early on. Match the model to your experience, budget, and growth plan Realtor.com commission guide

Next steps and resources: where to learn more and how to verify local details

Check your state real estate commission and official licensing site for exact licensing requirements and updated rules. Official state resources are the authoritative source for steps, fees, and education hours.

Primary industry references that informed this article include the NAR member profile, BLS occupational guide, HomeLight and Zillow industry analyses, Realtor.com commission explanations, and state-level salary data from Indeed. Use these reports to benchmark your local estimates and planning NAR member profile

Next-step checklist: research local market and licensing, estimate potential income with the framework above, speak with two to three local brokers about models and support, and plan 6-12 months of runway before relying on commissions.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.