Only five percent of Realtors responding to a survey in 2009 and 2010 reported earning a salary, according to information cited on the National Association of Realtor’s (NAR) website. While not all real estate agents are members of NAR, the association is the largest organization for real estate agents and brokers. Most real estate agents derive their income from commission as opposed to salary. In some instances a salaried agent also receives a commission.
Internal Revenue Service
The Internal Revenue Service (IRS) makes a distinction between a salaried employee and one who is self-employed. The salaried employee receives a regular payment, not subject to reduction based on his quality or quantity of performance. The salaried agent has an employer. The IRS defines a real estate agent as a statutory nonemployee when the agent earns a commission income and the agent’s broker does not treat the agent like an employee.
Annual Salary Income
Some salaried real estate agents work for other licensed agents as assistants. The possible first-year salary varies by region and local economic factors. A salaried agent in Arizona would make far less than one in New York City. A salaried agent in a depressed area might make as little as minimum wage.
Bureau of Labor Statistics
According to the Bureau of Labor Statistics, the median annual wages reported in May 2008 for real estate agents was $40,150, including commissions of salaried agents. Ten percent earned less than $21,120 a year, while the middle fifty percent earned between $27,390 and $64,820. The top 10 percent earned over $100,000 annually.
According to a report on the NAR website, real estate agents who were members of the association had a median income of $26,600 for 2009 and $28,400 for 2008. The reason for the lower median income compared to the bureau data may be the fact that the Realtor information eliminated brokers and associate brokers from the equation and may have focused on commissioned agents. The median for associate brokers and brokers in 2008, according the NAR data, was $49,300.
Realistically, the new real estate agent should not expect to earn more than the lower end of the income spectrum, as reported by the bureau. According a graph on annual home sales, reported on the NAR website, home sales for 2008 were comparable to 2010, limiting income growth for agents. A new agent tends to make less than an experienced agent. Of course, local economic factors, including the real estate market, ultimately dictate the income potential for many licensed agents.