A career in real estate can be quite exciting and rewarding financially. However, things don’t start out as exciting as most people imagine. When you are just starting out, there are lots of things you need to figure out, including how to make money. So, how much does a new real estate agent make, and why is it that they don’t start out earning as much as the top real estate agent? Also, what can one do to become a top professional real estate agent, earning lots of money? Here are some of the things you may want to know as you are starting out.
How Much Does a New Real Estate Agent Make?
It’s true that real estate is one of the most lucrative career paths. According to Indeed, most new real estate agents can earn average salaries of $83,000 in their first year. However, this rate can vary greatly. According to 2021 reports, the majority of new real estate agents start out earning lower salaries in their first year, but as soon as they get that first year out of their way, they actually double their income. In other words, with more experience and hard work, there will be significant increases in the incomes of active, full-time real estate agents.
The process of earning money for new real estate agents is a bit different from other industries. This is because the real estate agent career is generally not a salaried position. Instead, most real estate agents make their own pay. While some companies do provide a paid stipend as part of their contracts, most only give real estate agents some commission that is generally a fraction of the sale price of the property. In general, commissions are split four ways. The listing agent will get a commission, then the broker gets a piece as well, together with the buying agent and their broker.
Why Do New Real Estate Agents Earn Less Than Established Ones?
After answering the question, “How much does a new real estate agent make?” this is another valid question. After all, they are in the same profession, right? Well, there are several reasons why new real estate agents don’t earn as much as veterans. One of the most important things in the real estate industry is experience. A real estate agent with 16 years of experience will easily earn more than someone who is just starting out. In this industry, more experience usually translates to more money. The reasons are simple. More experienced agents have spent more time developing their skills and networking with a lot of people.
Years in the real estate agent space can yield a larger sphere of influence. Having worked with thousands of people, an experienced real estate agent will get lots of referrals, repeat clients, and more leads. You will also find that more experienced agents tend to also stand in as brokers for their own firms. This means they will get a larger share of each deal. Apart from that, someone who has been in the industry for a while will have more exposure, which means a well-known reputation. This is why house buyers generally love working with agents who have more experience. In their eyes, a more experienced agent would have demonstrated their expertise in the local market.
Another reason why experienced agents generally make more money is that they are likely to have secondary specialties like property management. While you may not be able to get all these things in a day as a new real estate agent, there is one thing that you have control over, and that’s how committed you are. Success in the real estate industry depends on your drive, hard work, and persistence. Let’s look into how you can fast-track your growth as a new real estate agent so you can start earning more.
How Can a New Real Estate Agent Better Establish Themselves?
If you are a new real estate agent and you are looking for ways to better establish yourself, there are things you need to focus on. The first thing you need to understand is that experience plays a huge role when it comes to the earnings of a real estate agent. However, this doesn’t mean that you will only start earning serious money when you have ten years under your belt. There are things you can do to fast-track your growth.
As a new real estate agent, you need to learn how to properly manage the four financial aspects of your business. This includes finding affordable marketing opportunities, networking with a lot of professionals in your industry and in other industries, finding smart earning strategies, and getting a lot of industry education. Once you start leveraging these four aspects of your industry, you will start noticing super-sized growth. Here’s an in-depth look into how to use these four strategies.
Get the Word Out
You still want to know more about how much does a new real estate agent make? Well, they make as much as the number of people who know they are a real estate agent. The first thing you need to do when you become a real estate agent is to tell everyone you know that you are now a qualified real estate agent. This includes your neighbors, business associates, friends, family members, and even your contacts on social media. There’s nothing wrong with playing up your educational achievements too. Your social media profile should be filled with information about your Broker’s success rate.
Focus on Higher-Priced Markets
Since we already mentioned that the real estate game is all about commission, the best way to get more money is to get more paying deals. The average commission of a real estate agent is about 5-6%. If you want to jumpstart your earnings, you will need to focus on higher-priced properties. For instance, if you manage to sell a house for a $200,000 house at a 5% commission, you will only get about $2,500 since your share will be 25%. On the other hand, if you focus on selling higher-priced homes in the range of $350,000 upwards, your commission will be somewhere around $4,375 or more each time you sell a property.
Improve Your Customer Service
Don’t just focus on selling homes as fast as you can. Invest some time in getting to know the cares of your customers, their dreams, and their concerns. This will enable you to match them with the best available offers. If you practice this with every client, it can pay off significantly with time. Recommendations are big when it comes to the real estate industry. According to a Nielson survey, about 84% of people admitted that they trust their family and friends for real estate agent recommendations. This makes word of mouth one of your biggest marketing tools, especially when you are still starting out. Anyone you help buy or sell a home should become your brand ambassador.
Never Stop Learning
This cannot be emphasized enough. Learning about the industry is crucial if you want to grow at lightning-fast speeds. The real estate industry is always evolving. There are lots of things you need to learn as you start your career. For example, understanding industry designations can help you stay ahead of your competition. Similarly, gathering a lot of certifications can be highly beneficial as well. Some of the most popular certifications for real estate agents include becoming a Certified Residential Specialist. This can help you to start earning three times your income. If there is someone close that you can learn from, it’s also a good idea to shadow a mentor. This is one of the quickest ways to gain experience-based industry insights.
Be Creative With Your Approaches
It’s important to find ways to be unique as a professional. This will enable you to stand out from the rest, and that’s how clients notice you. For instance, instead of distributing flyers, you can create a customized video for each client so you can market their property. You can even throw in their favorite music in the video to add a personal touch. The idea is to keep clients happy and excited to work with you. Also, you should find ways to take advantage of free publicity. Never skip a chance to leave your business card whenever you can.
Attend Gatherings and Events in Your Area
Remember we talked about how you should let everyone know that you are now a real estate agent. This is why you need to ensure that you attend every event in your location. This includes festivals, garden shows, farmers’ markets, and any other event. This will allow you to learn more about your area and connect with lots of people who may need a real estate agent at some point. You should consider getting a space for a booth at these events so you can market yourself and your business.
There are several professionals that should be part of your network when you are a real estate agent. For instance, you need roofing contractors, a house painter, a real estate lawyer, and a broker. Attending events and networking can help you meet some of these people. All these people will play various roles when you are buying or selling a home.
Mistakes to Avoid as a New Real Estate Agent
There are several mistakes that are made by lots of new real estate agents. Making these mistakes can affect your income and prevent you from making as much money as you want.
While the real estate industry is full of opportunities, you should also keep in mind that there are some agents that fail to make it. The real estate industry records some of the highest failure rates. NAR reported a while back that 87% of real estate agents fail within five years of starting their careers.
A lot of real estate agents don’t understand that becoming an agent is the same as starting a business by yourself. Anyone who has started a business before can tell you that there are too many mistakes that can be made, and some of them can even cost you your career. Here are some mistakes to avoid if you want to grow quickly as a real estate agent.
Bad Communication With Clients
One of the biggest mistakes made by real estate agents is failing to communicate properly with clients. This will lead to clients who are not happy with the services provided. Remember that we once mentioned that in the real estate industry, referrals are a powerful tool that you should use to grow your business. If your clients are not happy with the services you are providing, then they will certainly not recommend anyone to work with you. In fact, they can actually warn others against becoming your client.
It’s in your best interests to ensure that you communicate properly with clients. Even when you don’t have a lot to report, you should still communicate with your clients frequently. If things are not moving as fast as you thought they would, take time to send an email or a text explaining what’s slowing things down and what the client should expect. Clients don’t like being kept in the dark, and it can be quite frustrating for them to have an agent who doesn’t communicate.
Another important area of communication with your clients is educating them on how the process of buying a house or selling a property works. It’s important that your clients know what to expect, including the time estimates. You should also keep in mind that good communication involves listening to your clients. This will allow you to respond to their needs. When you do things well, your clients will end up being your friends, and they will also refer their friends and family to you.
Poor Financial Planning
Starting a career in real estate is different from all other industries because there are no signing bonuses and immediate salaries. In fact, you can even go without income for as long as two months. This is why you need to invest a lot in financial planning when you are just starting out. Ideally, you should have money to cover your business and living costs for at least 90 days when you are getting into the industry. Even then, the money you will be earning may not even be enough to pay your bills. As such, when you get the money, you need to allocate it properly. That way, you won’t fail before you even start. To better manage your finances, you may need to find a commercial accountant. Accountants can provide valuable financial advice, and they can help with things like taxes.
A career in real estate is unlike any other. As mentioned before, getting into real estate is more or less like starting to work for yourself. When you are self-employed, it can be easy to get distracted, especially if you are working from home. You can end up spending a lot of time on social media, and that will cause you to become unproductive. This means you won’t grow. It’s important to set goals for yourself if you want to start making lots of money as a real estate agent. You should also plan your days and ensure that you are not doing things haphazardly.
There are lots of things to do, and you will never have free time. For instance, if there is no house to sell, you can spend that time improving yourself and gathering knowledge. You can also take some time to communicate with your past clients. This will help them remember you, and that increases their chances of them recommending you to someone they know. So, how much does a new real estate agent make? It all depends on the effort and drive. Those who work hard earn more, and those who don’t will earn less.