If you’ve been wondering, “how much do real estate agents earn?” rest assured, a career in real estate can bring in a lucrative income, especially in booming times like we’re seeing in Australia at the moment.
The Real Estate Institute of Australia (REIA) predicts the property market in Australia will be the “main driver of economic growth and increased employment” in the next few years, so there’s no time like the present to invest in your own future by studying real estate management today!
The most successful agents are not only experts in their field but also in property law, marketing, social networking and even psychology, so it’s worth spending the time and money getting proper training in this ever-changing industry to give you a proper foundation as you move forward in your career.
Below we break down the need-to-know details of becoming a real estate agent and answer common questions like, “what commission do real estate agents make in Australia?” and “how much do real estate agents earn Australia-wide?”.
How Much Do Real Estate Agents Earn?
If you’re after a direct answer on, “how much do real estate agents make?” unfortunately, it really depends! There are several factors influencing your potential income as a real estate agent, including your experience, what firm you work for, what area you operate in, and whether you sell (or lease) residential or commercial properties. In some cases, commissions and bonuses can add an additional $80 thousand to an agents’ base salary in a year.
One of the benefits of working as a real estate agent is the flexibility it affords you, especially as you gain experience in the field. You can be equally successful working for yourself or for a real estate agency; both options have different pros and cons. While you’re training, it’s usual for all budding real estate agents to gain experience working for a real estate agency while learning the ropes. This way, they can get a grasp on the local market, learn how to deal with vendors and interested parties, and work with experienced agents that can act as mentors.
More than half of all agents in Australia choose to work for real estate agencies, especially those that are starting out in the field. Working for an agency means that the agency will cover the costs associated with starting a business, such as a work phone, car allowance and marketing budget. You are also eligible for standard employment benefits such as holiday pay, sick pay, and a regular base salary. Large firms will often also offer their most successful agents additional incentives like company cars or higher commissions on their sales. However, working for a real estate agency means that you must share a portion of your commission as they cover the up-front costs involved in selling the property in question.
If you choose to work for yourself, there are a number of up-front costs to consider that might affect the answer to the question of “how much do real estate agents earn?”. These overheads include licensing, insurance, supplies, and possibly rent if you choose to have an office. It is possible to operate out of your home instead of taking on the additional costs associated with an office space. There are different tax implications and deductions associated with either choice. For instance, there are deductions available for miles travelled and marketing expenses if you’re self-employed.
What Commission Do Real Estate Agents Make?
An import question if you’re considering a career as a real estate agent is, “what commission do real estate agents make in Australia?”. This question is crucial as, ultimately, this is how real estate agents earn and increase their income. Commission rates are not set and vary from suburb to suburbs, state to state and region to region. Typically, in metropolitan areas, the commission will be lower as there are far more properties on the market in major cities and competition between agents is far lower in regional areas.
Hobart has the highest commission rate in Australia at 2.70%, compared to 1.86% in Sydney, the lowest in Australia. But that doesn’t mean you’ll necessarily earn more as a real estate agent in Hobart. To put those figures in perspective, the population of Hobart is just under 250 000 people, whereas Sydney’s population is 5 million people. House prices are also higher in Sydney, so for example, 1.86% of a million-dollar sale in Sydney is still more than 2.70% of a $500 thousand sale in Hobart. In 2021, the median house price in Australia reached an all-time high of almost $1 million dollars, and in Sydney, the average is just shy of $1.5 million.
Another point to consider when thinking about, “what commission do real estate agents make?” is the fact that commission rates are actually negotiable. It’s not unusual for agents to negotiate their fee structure, and this can be done in two ways. Either the vendor and the agent agree on a fixed fee, no matter what the property sells for, or they agree on a tiered percentage rate. For example, this could be an agreement of 2% commission if the property sells for $500 000 or less, and an additional percentage if it sells for more. So, if the property sells for $520 000, you’ll be paid 2.2% of the first $500 000 and then, for example, 10% on the additional $20 000.
Risk vs. Reward
Being a real estate agent requires a lot of hard work. The risk is that when starting out, you could struggle to maintain a healthy work/life balance as you have to put a lot of time into preparing, showing and negotiating the final sale of a property. This applied whether the property is for sale or is scheduled for auction, both can be equally taxing for the agent. Often an agent’s work has to happen after hours, especially on the weekends and after 5 pm, when people have more time to view properties. Sometimes, in competitive markets like Sydney and Melbourne, real estate agents will have to offer lower commission rates to attract business, affecting compensation. Since December 2014, agents have been allowed to set their commission fees, and this rate is largely dependant on local competition and the current supply and demand in the market.
So, what are the rewards? As previously discussed, the commission an agent earns depends on the agreement they’ve made with the vendor, and this could be a fixed rate or a tiered percentage of the final sale price. So, what you can earn is largely dependant on how well you’ve negotiated with the vendor. Having said that, the potential rewards for a real estate agent have never been better.
In May 2021, for the first time in history, the Australian residential property market reached a value of $8.1 trillion. CoreLogic, a property data company, estimated the value of the residential property market to be about “four times the size of Australian GDP, and around $1 trillion more than the combined value of the ASX, superannuation and commercial real estate stock combined.” The Australian Bureau of Statistics released figures in May 2021 showing that lending is at an all-time high, which is excellent news for real estate. New loan commitments rose 4.9% for housing, 1.9% for owner-occupiers, and 13.3% for investors.
So, how much do real estate agents earn? At the end of the day, the answer is that it depends on the market they’re operating in, the market’s current state, and how well they’ve negotiated the terms of sale with the vendor. Being a real estate agent does mean that you’ll always be busy, but the potential rewards are sky high!
How to Become a Real Estate Agent?
If you’re not put off by hard work, now is a fantastic time to get into the real estate game. There’s high potential for a professionally and financially rewarding career, and Entry Education are industry leaders providing up-to-date training for the next generation of real estate agents across Australia. We’ll give your career the jumpstart it needs with our custom-created courses designed to provide you with all the knowledge and skills you need to enter your new career confidently.
In Australia, the pathway to becoming a fully licensed real estate agent varies from state to state, so check out our posts on how to become a real estate agent in NSW, QLD, ACT, VIC, SA, and WA for more specific information.
Regardless of where you’re located, your career trajectory is assured when you choose to complete qualifications with Entry Education. When you’ve finished one of our courses, you’ll be ready to take your place alongside high performing agents across the country and can confidently answer when people ask, “how much do real estate agents earn?”.
Contact us today via our website or call the friendly Entry Education team on 1300 799 447.
Find out more about how to become a real estate agent in Australia here.