AgentEarnings

"How much do real estate agents make?" It's a question every aspiring and active agent considers. While headlines often tout six-figure incomes, the reality is more complex. Your true take-home pay depends entirely on your commission structure, brokerage fees, and business expenses. Understanding this math is the first step to maximizing your profitability.

The Anatomy of a Commission

A real estate agent's income is typically 100% commission-based. Let's break down a sample transaction:

• Home Sale Price: $500,000
• Total Commission (e.g., 6%): $30,000
• This total commission is split between the buyer's agent brokerage and the seller's agent brokerage (typically 50/50), so $15,000 per brokerage.

That $15,000 is the Gross Commission Income (GCI) that flows to the brokerage. It is not what the agent takes home.

Where Does the Money Go? The Brokerage Split & Fees

From the GCI, the brokerage takes its cut. This is where the models diverge dramatically:

• Traditional Franchise Model: A 70/30 split is common. On $15,000 GCI, the brokerage takes $4,500, leaving you with $10,500. From that, you still have to pay franchise fees (5-8%), desk fees, and transaction fees.
• Cloud-Based Model: An 80/20 split is a common starting point, often with a low annual cap. On $16,000 GCI, the brokerage takes $4,000, leaving you with $11,000. Once you hit your cap for the year, you could move to 100% commission.

The Path to True Profitability

Maximizing your income isn't just about selling more homes; it's about keeping more of the commission from each sale. As an independent contractor, you are a business owner. The most successful real estate agents understand that minimizing overhead is as crucial as maximizing revenue. By choosing a brokerage with a modern, agent-centric financial model, you can significantly increase your net income without selling a single extra home.