How do real estate agents earn money?

The world of real estate can be complex and confusing, especially if you are new to the game. If you are considering becoming a real estate agent, one of the first questions that you are likely interested in is how estate agents earn money and how much they earn.

The short answer to the question is that real estate agents earn money through commissions, which they earn when a house is sold. But there are some complexities to the question. In this article, we explain the details of how real estate agents make money, when, and how to help you make an informed decision about whether this is the right career path for you.

When is the commission paid?

The first thing that you need to know is that commission is paid when a house sale is successful, and the ownership of the house is transferred. This means that the potential buyer needs to have confirmed finances and the deed registration needs to be completed. This process can take some time after finding a buyer - if your buyer first needs to sell their own property, or if there are bottlenecks at the deeds office then the process can take several months before registration is complete.

Who pays the commission?

The commission for a house sale is generally paid by the seller, which means that it gets subtracted from the money that they receive for the sale of the house. While the seller is responsible for the cost of the commission, the actual payment is usually handled by the transferring attorneys who will make the payment and then transfer remaining funds to the seller. The fact that the seller is responsible for paying commission means that you need to work to find potential houses or properties for sale and then find a buyer for the property in order to earn an income. A big part of your job, then, is to find people who want to sell their homes and convince them to let you work as the agent who will find a buyer for them.

How much commission does a real estate agent earn?

The average real estate commission for selling a home in South Africa is between 4% and 6%. As an agent, you get to set the commission that you would like to charge but, of course, charging higher commissions might mean that you do not get given many properties to sell. There are also a lot of costs that you need to cover as an agent, so setting your commission too low will mean that you make less money at the end of the day. It's best to evaluate how much effort you'd need to put in to sell the property and then set your commission based on that - if the property is most likely going to sell easily then you can set a lower commission but more difficult properties that require more expenses for you might mean that asking for a higher commission makes more sense.

How much do real estate agents earn?

According to PayScale, the average yearly salary for a real estate agent is South Africa is R103,068. That works out to a little over R8500 per month. At the upper end of the scale, real estate agents can make as much as R40 000 each month. Of course, there are a lot of factors that go into determining how much an estate agent can make but research shows that 20% of estate agents in the country make 80% of the income in the industry. That means you have stiff competition if you want to make a high salary from the job. The area and city that you work in, value of the houses in the area, your experience, and the agency you work for all have a big impact on your potential income.

Conclusion

Being a real estate agent can be a really great career if you're willing to do the work to be successful. The most important factors to consider when you think about the financial aspects of a career as an estate agent is that you don't get paid each month and there may be a long wait before a commission gets paid out. One of the skills you will need to make a successful career out of real estate, then, is being skilled at budgeting and planning and being able to know how much you should invest into the sale of a property.

Author: Pierre Rousseau Principal PropertyTime

https://pierrerousseau.co.za/how-do-real-estate-agents-earn-money/