Real estate is one of those careers where you can earn as much as you desire, more or less, which is what makes it so appealing to such a wide variety of people—but what exactly does that mean, and does it make a difference whether you are a real estate broker, or whether you’re a real estate agent? (What is the difference, anyway?)
Just like real estate agents, real estate brokers are licensed by the states where they practice real estate. Unlike with real estate agents, there are a few more barriers to entry to become a real estate broker. For example, you have to practice as an agent for a certain number of years (it varies from state to state) before you can apply to become a real estate broker.
This is because real estate brokers can supervise real estate agents, helping to ensure that their sales and negotiations are above-board and compliant according to state regulations. For the service they provide to agents, brokers can collect a fee, typically a portion or percentage of the agent’s commission on each sale.
We’re going to dig into how real estate brokers get paid, their earning potential, and more—so you can determine whether becoming a broker is a worthwhile next step for your career.
Check also: https://placester.com/real-estate-marketing-academy/real-estate-agent-salary
What Comprises a Real Estate Broker's Salary?
Real estate brokers make money just like real estate agents do: By earning commissions on home sales.
This means that brokers get paid when agents do—at the end of the sale, when money is changing hands from buyer to seller. Typically, the buyer’s agent and the listing agent will collect a percentage of the sales price as their commission and payment.
Real estate brokers can earn money on commission sales that they are managing, but they can also earn some additional money by supervising and overseeing less experienced agents and collecting some of their sales commission.
The percentage of commission that an agent hands over to the broker is known as a commission split and varies from brokerage to brokerage; some brokerages charge no commission (and agents have to pay fees to the brokerage, typically on a monthly or annual basis). For experienced agents, a commission split might look more like 70/30, with 70% of the commission going toward the agent and 30% toward the broker. Newer agents might see a 50/50 split.
Because brokers don’t need their transactions overseen or supervised by a manager, they might also be able to earn more money simply by renegotiating an existing commission split at a brokerage where they’re currently operating. Or, they could set off on their own and start claiming all of their commission that way.
Types of Real Estate Brokers
In some states (such as New York), any real estate sales representative is known as a broker, regardless of how long they’ve been practicing real estate. But in most states, a broker has been practicing real estate for the minimum number of years required by the state to “graduate” to broker status.
That said, there are few different subsets of real estate brokers.
Associate brokers are real estate agents with a few more qualifications and years of experience. They work at a brokerage firm (that they do not own or operate) and work with buyers and sellers to help them get the best possible deal on a house for sale or purchase.
Managing brokers help oversee the day-to-day operations of a real estate brokerage. They might be in charge of a different area of the brokerage, such as transaction management, or agent licensing. And they might also be the designated or principal broker.
A designated or principal broker is where the buck stops at a brokerage; it’s the owner of the brokerage, and sometimes also the operator (in other words, the managing broker).
Not every office will have an associate broker or managing broker, but every real estate brokerage will absolutely have to have a designated or principal broker to oversee the transactions and ensure everything is done according to state rules and regulations.
What’s the Average Real Estate Broker Salary?
It depends on who you ask! Different sources break down broker salaries in different ways and use different surveys (and survey respondents) to answer that question.
This encompasses a wide range of salaries. According to the BLS, the bottom 10th percentile of brokers make $30,470, while the top 90th percentile of brokers make $176,080—almost six times as much.
According to Glassdoor, the median real estate broker salary in the United States (as of December 2021) was $120,229 a year: $89,681 in base pay, and $30,547 in additional pay. A median is more representative than an average, which can skew very high or low depending on outlier earners on both ends of the spectrum. For the national survey, the low end of a broker’s salary range was $41,000, and the high end was $370,000.
How does that look on a state-by-state basis? As you can imagine, home prices and other variables influence how much a real estate broker can make in different locations. Here’s how real estate broker pay breaks down in each state. For the numbers below, “additional pay” includes cash bonuses, commissions, tips, and profit sharing.
Alabama
$106,465
$78,330 base pay + $28,135 additional pay
Alaska
$106,517
$76,139 base pay + $30,378 additional pay
Arizona
$117,403
$87,262 base pay + $30,141 additional pay
Arkansas
$116,371
$85,046 base pay + $31,325 additional pay
California
$125,699
$95,272 base pay + $30,427 additional pay
Colorado
$114,426
$85,058 base pay + $29,368 additional pay
Connecticut
$112,182
$84,410 base pay + $27,772 additional pay
Delaware
$117,666
$87,151 base pay + $30,515 additional pay
District of Columbia
$109,176
$79,899 base pay + $29,277 additional pay
Florida
$115,202
$85,053 base pay + $30,149 additional pay
Georgia
$104,880
$77,052 base pay + $27,828 additional pay
Hawaii
$121,782
$92,659 base pay + $29,123 additional pay
Idaho
$112,375
$81,576 base pay + $30,799 additional pay
Illinois
$114,906
$84,519 base pay + $30,386 additional pay
Indiana
$112,668
$84,357 base pay + $28,311 additional pay
Iowa
$120,036
$87,614 base pay + $32,422 additional pay
Kansas
$113,477
$82,631 base pay + $30,847 additional pay
Kentucky
$108,151
$78,113 base pay + $30,038 additional pay
Louisiana
$108,972
$76,084 base pay + $32,889 additional pay
Maine
$124,361
$94,164 base pay + $30,197 additional pay
Maryland
$115,987
$86,288 base pay + $29,699 additional pay
Massachusetts
$119,030
$88,862 base pay + $30,168 additional pay
Michigan
$105,834
$78,757 base pay + $27,077 additional pay
Minnesota
$105,966
$78,030 base pay + $27,936 additional pay
Mississippi
$112,742
$81,654 base pay + $31,089 additional pay
Missouri
$125,859
$93,682 base pay + $32,178 additional pay
Montana
$110,423
$78,616 base pay + $31,806 additional pay
Nebraska
$105,147
$76,960 base pay + $28,187 additional pay
Nevada
$105,746
$77,122 base pay + $28,624 additional pay
New Hampshire
$115,651
$84,427 base pay + $31,224 additional pay
New Jersey
$117,476
$87,524 base pay + $29,952 additional pay
New Mexico
$102,949
$73,652 base pay + $29,297 additional pay
New York
$137,250
$103,762 base pay + $33,488 additional pay
North Carolina
$110,272
$80,499 base pay + $29,773 additional pay
North Dakota
$110,858
$80,861 base pay + $29,997 additional pay
Ohio
$117,812
$88,372 base pay + $29,440 additional pay
Oklahoma
$114,612
$79,273 base pay + $32,339 additional pay
Oregon
$109,489
$89,944 base pay + $28,546 additional pay
Rhode Island
$112,390
$84,150 base pay + $28,240 additional pay
South Carolina
$117,368
$85,058 base pay + $29,368 additional pay
South Dakota
$116,213
$84,485 base pay + $31,728 additional pay
Tennessee
$117,1151
$85,645 base pay + $31,470 additional pay
Texas
$109,290
$77,987 base pay + $31,303 additional pay
Utah
$105,948
$77,079 base pay + $28,870 additional pay
Vermont
$123,490
$91,256 base pay + $32,234 additional pay
Virginia
$113,125
$82,979 base pay + $30,145 additional pay
Washington
$115,296
$84,614 base pay + $30,682 additional pay
West Virginia
$110,445
$80,045 base pay + $30,400 additional pay
Wisconsin
$110,974
$82,761 base pay + $28,212 additional pay
Wyoming
$112,608
$81,329 base pay + $31,279 additional pay
What Factors Affect Real Estate Broker Salaries?
You may be curious about how real estate brokers can earn more money than they currently do. Would going back to school for more education make a difference, for example?
Not exactly. An MBA from a prestigious university might give a broker an edge in the sense that presumably they learned something in business school that would take blood, sweat, and tears to figure out in an actual business setting, and they may know more about balancing budgets, creating strategies, and setting goals. But on the other hand, they might not!
More than education, one variable that affects a real estate broker’s salary is the number of years that the broker has been in business. Like most careers, the longer a broker stays in the industry, the higher their earning potential will climb. As they continue to form connections with buyers, sellers, and other agents and brokers, their sphere of influence will grow, and their ability to capture business will grow with it.
A broker’s title or level of responsibility will also affect their salary. Brokers who supervise agents have the opportunity to earn more than brokers who are only relying on their own income-generating ability.
There are other variables that affect a broker’s ability to earn an income, including:
- Niche or specialty. Brokers who specialize in luxury homes have higher earning potential than brokers who specialize in entry-level homes, for example.
- Location. As seen above, depending on the state where you live, the cost of housing (and of running a business) will influence how much money you can earn.
Real Estate Broker vs. Real Estate Agent Salary
So who makes more money: A real estate broker, or a real estate agent?
Generally speaking, real estate brokers are going to earn more than agents. This is because they are supervising agents and oftentimes also brokering their own deals with buyers and sellers, so they’re collecting commission on several levels. Glassdoor says brokers make about $20,000 per year more than agents do, on average; the median national agent salary was $106,570.
Of course, a managing broker or broker-owner who run entire brokerages (sometimes encompassing several offices) will have more earning potential than a broker who isn’t supervising any agents, and therefore not collecting any commission. Managing brokers and broker-owners will also have more expenses to juggle, as many agents expect their brokers to provide tools and services to help them market their listings.
If you’re not sure whether it’s the right time for you to take the leap from agent to broker, remember that pay is just one part of the equation. How much time will you need to spend turning your business into something that can support more than one agent (if any)? What are your marketing plans? Do you know what tools and technology you want to use? Making these decisions and discussing your options with an experienced broker can help ensure you’re starting this new leg of your career journey with both eyes wide open.
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