There are plenty of reasons why someone would want to become a real estate agent. Whether it’s because they want more flexibility in their work schedule or just like the thought of an entirely new career path, more and more people are deciding to take the leap and get their real estate license.

Another reason people might be open to a real estate career is the unlimited income potential. Instead of your typical salary, agents receive a commission for every sale they make.

Plenty of factors play into how much a realtor can make, but if you're considering entering the industry yourself, you might want to know what a typical paycheck could look like for some peace of mind. In this article, we'll explore the ins and outs of real estate commissions and what a standard commission looks like for your average real estate agent.

Real Estate Agent vs. REALTOR®

Before diving into commissions, it's important to grasp the difference between a real estate agent and a REALTOR®. While both are licensed professionals involved in real estate transactions, a REALTOR® is a member of the National Association of Realtors (NAR) and must adhere to a strict code of ethics. This distinction signifies a higher level of professionalism and commitment to ethical conduct in the industry.

For the sake of this article, we’ll use the terms interchangeably, but just know that while all REALTORS® are real estate agents, not all real estate agents are REALTORS®.

Where Does Real Estate Commission Come From?

Commission serves as the primary form of compensation for real estate professionals, including both agents and Realtors. It is a percentage of the property's sale price that is paid to the agent or agents involved in the transaction upon its successful completion. Commission rates are not fixed and can vary depending on the specific agreement between the agent and the client.

Commission Splits and Agent Compensation

Real estate agents typically work under the guidance of a broker, and the commission earned from a transaction is often divided between the brokerage and the agent. The specific commission split can vary based on various factors, such as the agent's experience, the brokerage's policies, and the agent's contribution to the transaction. The commission split is usually determined through a contractual agreement between the agent and the broker.

What Is the Average Realtor Commission?

While there is no fixed standard for real estate commissions, understanding the national average can provide a helpful benchmark. According to industry data, the average commission rate in the United States was 5.37% in 2022. It's important to note that this is just an average, and actual commission rates can vary based on factors mentioned earlier.

What Commission Does a Realtor Make?

If you’re thinking of becoming a real estate agent, you’ve probably wondered, “What is a realtor’s commission in California?” or “What is the realtor commission in Florida?” depending on where you live. While we’ve mentioned how much the average real estate agent can make, the actual number will vary on where you’re located. Agents might make more in certain states than others, and those numbers can greatly fluctuate depending on what city they’re in and how much homes cost in that area.

The formula to calculate an agent’s commission is:

Home Price x Commission Rate/100 = Commission

Below is a table showing the average commission rate and home price in every state, and then an agent’s average commission taken from that formula.

State	Average Commission Rate	Average Home Price	Average Commission
Alabama	5.44%	$206,044	$11,209
Alaska	4.99%	$345,363	$17,234
Arizona	5.43%	$409,038	$22,211
Arkansas	5.44%	$178,744	$9,724
California	4.91%	$728,134	$35,751
Colorado	5.52%	$539,640	$29,788
Connecticut	5.12%	$358,906	$18,376
Delaware	5.44%	$358,686	$19,513
D.C.	4.96%	$627,158	$31,107
Florida	5.40%	$383,063	$20,685
Georgia	5.76%	$306,278	$17,642
Hawaii	4.99%	$834,583	$41,646
Idaho	5.36%	$435,374	$23,336
Illinois	5.24%	$236,049	$12,369
Indiana	5.67%	$222,592	$12,621
Iowa	5.67%	$200,038	$11,342
Kansas	5.67%	$210,742	$11,949
Kentucky	5.44%	$190,037	$10,338
Louisiana	5.44%	$182,959	$9,953
Maine	5.12%	$351,375	$17,990
Maryland	5.11%	$387,872	$19,820
Massachusetts	4.84%	$558,313	$27,022
Michigan	5.64%	$218,684	$12,334
Minnesota	5.41%	$315,122	$17,048
Mississippi	5.44%	$162,292	$8,829
Missouri	5.73%	$227,347	$13,027
Montana	5.36%	$427,886	$22,935
Nebraska	5.67%	$243,012	$13,779
Nevada	5.02%	$412,244	$20,695
New Hampshire	5.12%	$429,421	$21,986
New Jersey	5.13%	$451,559	$23,165
New Mexico	5.59%	$279,763	$15,639
New York	4.97%	$411,304	$20,442
North Carolina	5.60%	$309,861	$17,352
North Dakota	5.67%	$242,261	$13,736
Ohio	5.81%	$205,800	$11,957
Oklahoma	5.59%	$188,453	$10,535
Oregon	4.99%	$485,475	$24,225
Pennsylvania	5.53%	$243,859	$13,485
Rhode Island	5.12%	$413,948	$21,194
South Carolina	5.63%	$273,977	$15,425
South Dakota	5.67%	$284,308	$16,120
Tennessee	5.44%	$291,354	$15,850
Texas	5.59%	$294,336	$16,453
Utah	5.36%	$506,072	$27,125
Vermont	5.12%	$332,149	$17,006
Virginia	5.23%	$360,873	$18,874
Washington	5.29%	$562,936	$29,779
West Virginia	5.44%	$146,578	$7,974
Wisconsin	5.67%	$262,652	$14,892
Wyoming	5.36%	$325,091	$17,425

As we’ve already mentioned, there are many different factors that can affect how much an agent is paid. This table is merely an average amount an agent in that particular state might make. An agent who only works part-time, for instance, might make significantly less, while an agent who dedicates more time to their job might make more than the average person.

Before becoming a realtor, you’ll need to pass your real estate exam. Our online prep courses covers can help prepare you for the national portion of the exam and highlights important topics that you’ll need to know in order to ace your test. Head over to our website and sign up for VanEd’s online prep course today!

Written and Published by: VanEd