How much does a real estate agent make?
We’re often asked about what a real estate agent’s role is, how much money they make, and what goes into selling a house. And while it is a rewarding industry, there are several factors that agents must know to achieve real estate success.
If you’re interested in a career in real estate, then one of the main questions you’ll have is ‘how much does a real estate agent make?’. While that’s definitely a key question, it’s even more important to understand what can make this number bigger, or smaller, and the support you could receive in reaching your full potential.
In this article, we’ll explore the role a real estate agent plays, the key tasks and responsibilities a real estate agent has, as well as the salary expectations you could expect to see.
What does a real estate agent do?
Being a real estate agent is all about working with property owners to sell and manage their investments. This involves:
Advertising and marketing properties
To effectively market a property, a real estate agent will discuss which advertising options will work best with the vendor. The real estate agent is responsible for implementing a promotion strategy that attracts the right buyers so that the vendor achieves the best price possible. Typically, this is vendor paid advertising (VPA) and focuses on:
- Using the best marketing channels.
- Getting good quality photography and videography.
- Any professional staging or furnishing.
The way a property is marketed and the tactics used, will depend on the type of property it is, who the potential buyers are, and the budget the vendor has allocated to promotion.
Many real estate agencies have their own listing pages online and in-store, as well as listings in local newspapers, to help expand the awareness of a new property on the market. Real estate firms with a large email database, social media following, and high monthly website traffic can get more eyeballs onto a listing organically, which increases the chances of a house selling quickly.
Networking with buyers and sellers
A large part of the real estate market is based on connections between buyers, sellers, and agents. The agent's job is to network with both buyers and sellers so that when it comes to selling a house, they have a list of prospective candidates who are actively looking to buy and they need to find new listings to meet their requirements.
To be a successful real estate agent, you need to be proactive about finding new listings, meeting new buyers, and building lasting relationships with both. This can involve flyer drops letting people know what the area is achieving in sales, promoting homes coming onto the market, and getting testimonials and feedback from customers to help earn the trust of prospective vendors.
Conducting open homes
Open homes are an effective way to attract buyers and showcase the property. The real estate agent’s role is to organise, prepare, and host the open home in a way that attracts the right buyers and encourages them to make an offer. It’s also their job to follow up with prospective buyers, answer their questions, and manage the process of receiving offers.
The expense of open homes can include professional staging, cleaning, advertising, and in some cases, an auctioneer. These costs are mostly carried by the vendor but it helps, as a real estate agent, to add a memorable touch. After all, many people in the market will visit multiple open homes, so how will you make yours stand out?
Some potential buyers will also have a home to sell and the open home is a chance for a savvy real estate agent to showcase how they’ll bring something different if chosen to list a house.
Managing transactions and legal contracts
The real estate agent is responsible for coordinating the main transaction between the buyer and seller. That includes communication, processing documents, arranging appointments, and presenting contracts.
Real estate agents act as the link between the vendor and prospective buyers so that the overall process goes efficiently. This requires strong interpersonal skills and the ability to handle conflict effectively.
It may involve working around the vendors and/or the purchasers, which might mean evening appointments when people finish work. There are some unsociable hours involved, and out-of-hours calls from nervous parties, so this job definitely isn’t suited to someone looking for a standard 9-5!
Analysing the local property market
When it comes to selling real estate, you need to have a thorough knowledge of the local property market. By researching the average sale prices, high-demand areas, popular features, and the priorities of local buyers, you can know how to successfully market a property.
You should have your finger on the pulse of local trends, but also the wider economic environment to stay ahead. It also helps to be aware of what your rival agents are up to — is there anything they’re doing that you’re not which might be giving them an edge?
How much are real estate agents paid?
While a lot of work goes into selling a house, real estate is considered a potentially lucrative industry. Reality TV shows have heightened the appeal of seeking a career in real estate, but it’s not without its challenges. There are a few important factors to note about the income of a real estate agent that will influence whether you have a comfortable, reliable salary or have some uncertainty around your income.
Real estate agents are generally paid a commission for each house they sell, based on a percentage as negotiated with the vendor. Depending on the agent and type of property, the percentage is usually between 3.5 per cent and 4 per cent for the first $350,000 and any amount above that is slightly lower, at 2 to 2.5 per cent.
If an agent works for an agency, the agency will take a share of each commission received, usually an equal share, but this will often vary between agencies depending on the support and resources that the agency provides to the agent. In some agencies, as the agent makes more sales they become eligible for a greater share of the commission received.
Some real estate firms charge a flat fee, regardless of what a house is valued at. As the agent gets paid the same either way, this can drive them to prioritise one house over another and may result in less motivation to push the prices higher.
The annual income of a real estate agent depends on how many properties they sell, but the average in New Zealand is $84,500. In the Taranaki market, that roughly equates to between 5 and 15 sales per year. So, of course, many successful agents earn well above this. In real estate there is no limit to what an agent can earn, but likewise, there is no guarantee of any income at all. How much an individual agent earns is highly dependent on their reputation, the hours they put in, and the market they operate in.
How to become a real estate agent
If you are interested in becoming a real estate agent, there are several requirements you’ll need to meet. Besides personal characteristics, like having interpersonal and administrative skills, you need to:
- Have a Level 4 New Zealand Certificate in Real Estate (Salesperson).
- Apply for a Real Estate Authority Salesperson’s license.
- Have a valid driver’s license.
Key characteristics of a real estate agent
The role of an agent is to make the process as seamless and successful as possible for the vendor, using their expertise to attract buyers and get the best price for a property, depending on its market context.
To achieve this, a real estate agent needs to:
- Be proficient at networking.
- Enjoy researching and analysing information.
- Be naturally proficient at sales and marketing.
- Have a thorough knowledge of property law.
- Have budgeting skills and savings to fall back on.
- Be flexible with work hours, including weekends and evenings.
It’s also crucial to have the right industry connections to build a reliable network and receive practical guidance. A good agency will provide you with the security and ongoing mentoring you need to succeed.
Path to Success
At McDonald Real Estate, we strive to give our agents the best possible tools and training to succeed in the local market. So whether you’re experienced in sales or just starting out, we can put you on the right track to get results.
The real estate industry is constantly changing meaning agents need to keep up with the latest market trends, marketing strategies, sales techniques, and helpful tools. That’s why we provide frequent training opportunities for our agents through the Path to Success framework.
Enquire with us today to learn more about real estate and how you can take your career to the next level with our training opportunities.