How Much Do Broker’s Make?
The income earning potential of a profession plays a crucial role in making it attractive in the eyes of men and women. Real estate broker is a career that is very attractive in terms of income that an individual can make selling real estate for others. Brokers charge a fee for selling real estate for agents which is also referred to as their commission. Brokers can run their own brokerage firm or work for other realty companies and franchises. If they are working for others, they can get a salary of around $70,000- $75,000 per year. But when they choose to run their own brokerage firm, only the sky is the limit as far as income earning potential is concerned.
Based on the level of their experience a real estate broker can command a salary in the range of $56,000 to $84,000 per year. The average yearly salary of an experienced real estate broker around the country is $76,200. This amount also depends upon the geographical area or the housing market you are working in. New York happens to be the best place for real estate brokers in the country as these professionals are getting an average salary of around $137,000 per year there.
However, most real estate brokers work not based on a monthly or yearly salary but the basis of commission. They get a cut on every real estate transaction carried out by real estate agents working under their brokerage firm. The average income of a broker is much higher than that of a real estate agent because a broker has several agents working under him.
There is a considerable variation in the income levels of different real estate brokers depending upon the kind of broker they are and the functions they are performing. Some real estate brokers are managing brokers while others are associate brokers. There are also brokers who themselves sell real estate. As such, the amount of money earned by a broker can be high or low depending upon the kind of activities he is involved with.
Associate Real Estate Broker
A real estate broker who has got the license to work as a broker but chooses to work under the brokerage of any other broker is called an associate real estate broker. These individuals take this step as they find less risk in working under another brokerage firm and they also avoid many expenses that are involved with such a business. These brokers earn a median annual salary of around $55,000. This is much less than what an independent real estate broker earns, but it is certainly much more than what a real estate agent makes every year.
Designated Real Estate Broker
If a broker has his own brokerage firm, he is called a designated real estate broker. If such a professional hires and manages services of real estate agents, he also becomes a managing broker. Even in this category, there are two different types of real estate brokers. Those who hire associate brokers to manage real estate agents working for their brokerage firm are called a designated broker or the broker-owner. The associate brokers these real estate brokers hire to manage their real estate agents are referred to as managing brokers. All tasks of the real estate broker are performed in such a scenario by these managing brokers in the name of the broker who owns the brokerage firm. Managing brokers earn a high level of income, but they also bear lots of responsibilities. They not only look after their clients but also the agents working under their brokerage firm.
Many real estate agents become brokers to keep 100% of the commissions earned from their clients. There are also broker-owners who get a slice of income of other agents, but they also take over the responsibility of sponsoring these agents.
If you are a real estate agent, it is a good idea to get the license to work as a broker. You can get an edge over other real estate agents working in your area and also get an opportunity to hire them to work under your brokerage. You can continue to sell properties. While you get to keep all the commission earned by you as a real estate agent, you also start to get a percentage of the commissions earned by other real estate agents working in your brokerage. Of course, it can be very demanding, but if believe you can work hard and manage your brokerage as well as other agents, only the sky is the limit as far as your income earning potential is concerned.
If one takes a look at all the real estate brokers, he finds that only about a third of these professionals are broker owners. This means that one out of every three real estate brokers owns their own brokerage firm. There is also a small percent of brokers who run the franchise of another brokerage firm. More than half of the real estate brokers around the country work for others, including other brokerage firms and realty companies, in exchange for commissions or annual salaries.
Expenses From Being A Broker
Now that you are aware of the kind of income earned by real estate brokers, you should also have some knowledge about various expenses incurred by these professionals. Average expenditure of an associate broker around the country on marketing, transportation, and technology comes to around $9,600. The average spending of a broker-owner is much higher, close to $16,000 per year. This is because they have to bear expenses on office, furniture, equipment, utility bills, and so on.
Even though the average salary of a real estate broker is higher than that of a real estate agent, he also puts in a higher number of hours of work every week in comparison to an agent. If you are prepared to work hard, the career of a real estate broker can be very profitable for you.