Real estate agents have been around for centuries, helping people to buy and sell properties. In recent years, the industry has seen a significant shift in how agents make money. As technology advances and new platforms become available, real estate agents are adapting their services to fit the changing market.
How Real Estate Agents Get Paid
Real estate agents get paid for their services in many different ways, whether they are working as a buyer’s agent or a seller’s agent.
The primary way that real estate agents make money is by taking a percentage of the sale price of the property. This commission is typically split between the listing and selling agents and is typically 6-7% of the purchase price.
Service and Fees
In addition to earning commissions from sales, real estate agents may also earn money through fees for additional services such as appraisals, home inspections, title searches and more.
These fees can vary depending on the size of the transaction and other factors but usually range between 1-2% of the purchase price.
Another way that real estate agents make money is by collecting referral fees from other professionals they refer clients to during the buying or selling process.
For example, if an agent refers a client to a mortgage lender, they may receive a referral fee from that lender for sending them business.
Similarly, if an agent refers clients to another real estate professional such as an attorney or title company, they may be eligible for referral fees as well.
Rental Income and Side Hustles
Real estate agents also have other income sources such as rental income if they own rental properties themselves or manage them for others; profits from holding open houses; and commissions from advertising listings in print media or online sources like Zillow and Trulia.
Be Discerning in Choosing a Realtor No Matter How they Get Paid
It’s important to keep in mind that not all real estate agents are created equal when it comes to how much money they make – some do better than others due to experience levels, local market conditions, and availability of listings among other factors—so it pays off to research your local market before deciding which kind of realtor you want to hire.
How do Real Estate Agents Make Money in 2023?
In 2023, real estate agents will be making money by helping people find the right property for their needs.
Leveraging Digital Tools like VR and AI to help Real Estate Clients
Agents will be able to leverage digital tools such as virtual reality (VR) tours of homes, drones to inspect properties from a distance, and artificial intelligence (AI) systems to help buyers make better decisions about their purchases.
This increased access to information will give buyers more confidence in their decisions and reduce the risk of making an incorrect purchase decision.
Embracing Agent-Oriented Data Analytics
Agents will also be utilizing data analytics platforms that allow them to track trends in local markets and quickly identify potential deals or opportunities for clients looking for investments or second homes.
Having this type of information at their fingertips allows agents to save time on research while still providing valuable insight into potential investments for clients.
Good Old Fashioned Networking Meets Social Media
Another way that real estate agents can make money in 2023 is through referral networks and partnerships with other professionals in related industries such as home inspectors, mortgage lenders, title companies, etc.
By forming these relationships with key partners in the industry, agents can refer clients who need additional services outside of their own capabilities and receive a commission when they do business with those partners.
This is an excellent way for agents to increase their income without having to invest any additional resources themselves in terms of time or money.
How Real Estate Agents Make Money Will Change
Utilizing digital tools along with forming strategic partnerships within the industry will help them stay ahead of the curve while still providing valuable service offerings and insights that benefit both buyers/sellers alike.
2023 Real Estate Federal Reserve Policy
Commercial real estate went up and down during and after the pandemic- largely moved by government intervention in the housing market.
To see how real estate agents lost business due to tighter Fed policy in 2022, and how it might happen again, check out this article: How the Fed Raising Interest Rates 4 times in 2022 Affected Commercial Real Estate.
-Kurt “Moonshine” Burton
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