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How to Earn Money as a Real Estate Agent

If you are considering starting a career as a real estate agent, it is important to know how to earn money as a real estate agent.

Real estate agents are paid when a deal closes. Their payment is usually in the form of a commission. Commission is a sum of money paid upon completion of a task. Usually, it is a percentage of the sales price or total lease dollar value.

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If you are wondering how to earn money as a real estate agent, it most often comes down to: commission on property sales, commission on property leases, and real estate consulting fees.

Commission on Property Sales

The most common way to earn money as a real estate agent is through commissions on the sale of properties. Whether helping the buyer or the seller, the commission paid to the agent is based on the sales price.

Check out this article that goes into great detail about commissions when you want to learn more. To learn more about how to generate real estate leads consistently, follow this page for frequent updates and tips to help you succeed!

How to Earn Money as a Real Estate Agent Through Listing Commissions

Property sellers are the ones usually paying the real estate commission. That commission first goes to the listing agent’s broker. The listing agent’s broker then pays the buyer’s agent an agreed upon portion of the gross commission.

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As a listing agent, it is your responsibility to negotiate a fair and reasonable rate for your services. As a buyer’s agent, your broker receives payment from the listing broker.

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Your broker then cuts you a check based on your commission split you have negotiated with them. You must set aside the appropriate amount in order to make estimated quarterly tax payments.

Commission on Property Leases

How are real estate agents paid when helping clients find rental properties? Is payment upfront or after helping the client get into the property?

Earn Money Through Residential Rentals

A real estate agent negotiates terms of payment with their client. This can be a flat fee or percentage upon signing a lease. An agent that represents the landlord commonly negotiates payment of one month’s rent or a percentage of the total lease value.

This could be something like $150 or a percentage of one month’s rent. This will vary by market, so ask your broker and other local agents what to expect if you intend to focus on this niche.

Niches Get Riches

Most new agents will dabble in this if they are not busy, but will quickly learn that niches get riches. To be successful in rental real estate leasing, make it your specialty and be the best at it.

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Earn Money Through Commercial Leases

Want to know how to earn money as a real estate agent helping clients lease commercial properties?

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Landlord Representative Agents

Real estate agents that represent landlords leasing out properties sign a listing agreement upfront. Part of the listing agreement includes a commission agreement stating terms of payment including amount and when it is payable.

This is different in every state and can be different with every client. Typically the commission is a percentage of the gross amount of the total lease.

An agent could be paid 10% of gross rents on a 5 year lease.

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At $5000 per month for 5 years, that is 60 months total and $300,000 in gross rents. With our example of a 10% commission as an example, that equals $30,000 in commission to be paid to the listing broker.

The listing broker then signs an agreement with the tenant broker to pay them a portion of that amount.

Tenant Representative Agents

One of the most lucrative career paths within commercial real estate is tenant representation. This is a fantastic path for eager new agents to dive into if they are ready to pursue a career in commercial real estate.

Who Works As “Tenant Rep” Agents?

Some of the most knowledgeable agents in the business specialize in tenant representation, and are more than willing to share their expertise with new agents.

Tenant representative agents help their clients find the perfect space to lease for their businesses. It is their responsibility to fight for their commission and negotiate a fair amount with the listing broker.

How Do Tenant Representatives Get Paid?

The tenant’s agent is paid via the deposit and/or the first month’s rent paid to the landlord. The payment terms are negotiable, but there are several common variations of payment structure:

  • Payment upon lease execution. Either a fixed fee (one month’s rent, set fee) or gross percentage of the total lease amount.
  • Payment split between lease execution and start date of lease. Half of the payment made upfront is for securing an executed lease, and the other half is paid when tenants move in.
  • Payment upon tenant move-in. This is the most common structure in many markets.

Real Estate Consulting Fees

Real estate consulting fees are arguably the least common form of payment in the real estate industry.

Who Charges Consulting Fees?

This is more common for licensed agents who do not actively represent clients in transactions but instead provide professional real estate advice.

Some companies will retain former practicing agents or brokers to provide their executives with broad strategic real estate perspectives and input.

This can be very useful for companies that do not need actively selling agents, but need the professional advice of those with experience in the field.

Photo by Ruthson Zimmerman on Unsplash

Typically consulting fees are either in the form of an hourly fee or monthly retainer fee.

Licensees charging consulting fees can generate large amounts of revenue in exchange for their expertise. Because of this, it is much less likely that you will come across these licensees very frequently.

The professionals who can charge consulting fees are found in board rooms, executive meetings, and on consulting calls. If that is something you aspire to, refine your skills and hone your industry knowledge to the point where people will seek you out as the expert in your niche.

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Matt Moreland
Matt Morelandhttps://www.mattmorelandrealtor.com/
Matt is a real estate agent, investor, and entrepreneur in Texas, where he lives with his wife and three children. When he is not working on The Agent's Archive, he is helping his clients acquire investment properties, guiding new agents as they enter the industry, farming wine grapes, or working on something for his winery. In his free time he enjoys homesteading with his family, hunting, swimming, and backpacking.