Determining the salary of a real estate broker can be as elusive as capturing lightning in a bottle. It is often more challenging than ascertaining the average salary of an agent. However, if you are contemplating a career as a broker and are interested in potential earnings, we offer valuable resources and insights to clarify this matter. Our research provides estimates of real estate broker salarys across all states, and you may find the figures to be quite surprising.
What Is a Real Estate Broker?
Prior to discussing salary specifics, it is important to clarify the distinction between a real estate agent and a broker. Real estate agents are licensed individuals who assist clients in the buying, selling, or leasing of properties, but they operate under the supervision of a broker. Conversely, brokers possess greater experience and education, enabling them to work autonomously, establish their own firms, and oversee other agents. Additionally, brokers are equipped to manage more intricate transactions and assume further responsibilities, which influences their potential earnings.
What Is a Real Estate Broker Salary?
If you are inquiring about the earnings of a real estate broker, the response is that it varies. A broker is defined as an individual who holds a license at a level above that of a real estate salesperson, although in certain states, salespersons may be informally referred to as brokers. It is also important to note that receiving a salary is uncommon in the real estate sector. The majority of real estate professionals operate as independent contractors, so when we mention “salary,” we are actually discussing the potential earnings brokers can generate through commissions, splits, brokerage revenue, and various fees.
Typically, real estate brokers derive their income from the revenue generated by the brokerage, primarily through a share of the commissions earned by the agents within the office. This share is often termed a “split.” A common split arrangement is 75-25, indicating that for each property transaction, the agent retains 75% of the commission while the brokerage receives 25%.
Additionally, brokers and brokerages may generate income by imposing monthly desk fees on agents, which are fixed charges that agents must pay regardless of their sales performance. Although this represents a potential income stream for brokers, most offices allocate these fees to cover ongoing expenses such as rent, utilities, and technological resources.
Ultimately, as a real estate broker, you have the opportunity to guide clients through the buying and selling processes, allowing you to earn the full commission from those transactions. Continue reading to gain further insights into the salary of a real estate broker.
Factors That Affect Real Estate Broker Salary
Experience: Greater experience in the real estate market typically correlates with higher earning potential. Brokers with several years in the industry not only gain credibility but also develop a strong network of clients and agents, which translates to higher earnings.
Location: Real estate brokers in cities with booming property markets—like New York, San Francisco, or Miami—typically earn more due to the higher property values and demand for real estate transactions in these areas.
Business Model: Brokers who own their firm and supervise multiple agents can see their earnings significantly increase, as they collect a portion of the commission from each agent’s sale. For example, a broker with several successful agents can earn much more than a broker working solo.
Market Conditions: The real estate market fluctuates based on economic conditions. During periods of a thriving market, brokers often experience a significant rise in their earnings. However, in slower markets, it’s essential for brokers to diversify their income streams and manage expenses efficiently.
How much does real estate brokers make by state?
An analysis of the average earnings of real estate brokers across various states is presented here, based on data from Glassdoor. It is important to note that total compensation may also encompass bonuses, commissions, tips, and profit-sharing arrangements.
| State | Average Yearly Base Salary | Average Yearly Additional Pay |
|---|---|---|
| Alabama | $83,725 | $65,454 |
| Alaska | $91,966 | $65,434 |
| Arizona | $101,837 | $78,679 |
| Arkansas | $83,123 | $58,7871 |
| California | $107,243 | $73,106 |
| Colorado | $93,242 | $66,741 |
| Connecticut | $90,446 | $58,773 |
| Delaware | $89,455 | $65,489 |
| Florida | $87,127 | $67,033 |
| Georgia | $87,257 | $70,814 |
| Hawaii | $94,341 | $71,298 |
| Idaho | $91,686 | $64,225 |
| Illinois | $92,992 | $68,280 |
| Indiana | $86,171 | $63,450 |
| Iowa | $98,230 | $69,207 |
| Kansas | $85,710 | $62,587 |
| Kentucky | $91,801 | $52,970 |
| Louisiana | $82,636 | $58,391 |
| Maine | $87,762 | $59,429 |
| Maryland | $92,221 | $63,280 |
| Massachusetts | $95,151 | $69,325 |
| Michigan | $84,898 | $60,451 |
| Minnesota | $92,228 | $63,414 |
| Mississippi | $81,967 | $59,064 |
| Missouri | $87,813 | $63,957 |
| Montana | $88,908 | $66,190 |
| Nebraska | $88,734 | $61,283 |
| Nevada | $101,838 | $75,092 |
| New Hampshire | $90,942 | $66,417 |
| New Jersey | $98,421 | $63,998 |
| New Mexico | $84,936 | $70,995 |
| New York | $102,723 | $68,842 |
| North Carolina | $88,425 | $70,943 |
| North Dakota | $89,364 | $61,744 |
| Ohio | $88,397 | $64,249 |
| Oklahoma | $82,437 | $57,597 |
| Oregon | $94,100 | $71,311 |
| Pennsylvania | $88,654 | $60,673 |
| Rhode Island | $91,285 | $63,528 |
| South Carolina | $88,817 | $68,010 |
| South Dakota | $88,327 | $57,886 |
| Tennessee | $87,412 | $68,538 |
| Texas | $88,028 | $61,650 |
| Utah | $92,108 | $72,538 |
| Vermont | $89,106 | $61,730 |
| Virginia | $93,325 | $70,028 |
| Washington | $104,054 | $60,245 |
| West Virginia | $83,697 | $62,888 |
| Wisconsin | $89,218 | $55,424 |
| Wyoming | $83,958 | $56,477 |
How much does real estate brokers make on average?
According to GlassDoor, the typical annual earnings for real estate broker-owners in the United States amount to $220,507. This figure includes a base salary of $106,730 along with commissions and bonuses totaling $113,776. For real estate agents aspiring to advance their careers, this could represent the opportunity they have been searching for.
The highest-paying states for real estate brokers
As reported by GlassDoor, the five states that provide the highest salaries for real estate brokers are New York, California, Nevada, Iowa, and Arizona. The commissions earned can differ significantly depending on factors such as the city, market conditions, type of property, sales volume, and the broker’s level of experience.
It is important to note that while these states offer the most lucrative average salaries for real estate brokers, they also tend to have a high cost of living. For example, California, despite its attractive earnings, is known for its steep living expenses. If you are contemplating relocating to one of these states, it is advisable to engage with brokers in your desired area to gain insights into the cost of living, enabling you to make well-informed choices. Additionally, be mindful of the varying licensing requirements that exist across different states.
The lowest-paying states for real estate brokers
In terms of the states exhibiting the lowest real estate broker salaries according to GlassDoor, Mississippi ranks at the bottom, with Oklahoma and Arkansas following closely behind. These states are characterized by their reduced housing prices, which have a direct effect on the commission-based earnings of real estate brokers.
Do brokers make money from agents?
Indeed, brokers derive a portion of their income from agents.
Generally, a broker’s earnings are sourced from three main areas: their fixed salary, the commissions obtained from directly assisting buyers and sellers, and a share of the commissions generated by the agents under their supervision. The share of income that a broker receives from the commissions of their agents can vary significantly, largely influenced by the specific terms outlined in the agent’s contract with the brokerage.
It is also crucial to distinguish between a real estate broker and a real estate broker-owner. A broker-owner possesses the brokerage firm, which entitles them to the full amount of the agent’s commission. Conversely, a broker who does not own the firm must divide that commission with the broker-owner.
Lastly, it is essential to recognize that the income derived from agents typically does not directly benefit the broker; rather, it constitutes the revenue necessary for the operation of the business. The revenue generated by agents is a primary factor in covering expenses such as rent, utilities, technology fees, and other operational costs.
How much do real estate brokers make compared to agents?
Real estate brokers generally earn more than the agents affiliated with their brokerage, although this is not always the case. It is important to note that brokers receive a base salary for overseeing the brokerage operations, in addition to a percentage of the commissions generated by the agents within the firm.
The percentage of commissions earned by agents is typically limited, often ranging from $15,000 to $30,000 annually across different markets. As a result, in a brokerage with an annual commission limit of $20,000, a broker may earn up to $20,000 per year from each agent, contingent upon the agents producing enough business to meet that limit. For example, in a brokerage employing 10 agents, the highest possible revenue could total $200,000.
In contrast, agents do not face any earnings cap; they are compensated for every contract they successfully close. Therefore, although it is relatively rare, there are instances in various brokerages where agents may surpass their brokers in earnings.
