How Much Do Real Estate Agents Earn in Texas

Thanks to the real estate market that has been booming in the U.S. since 2020, now is the best time to make the move if you're contemplating a career in real estate.

Recent data reveals that real estate agents nationwide earn on average $92,500 annually. New agents who are just starting can expect to earn around $83,500 per year. However, these numbers do not factor in the expenses associated with being an independent contractor.

According to the National Association of Realtors (NAR), the median gross income for agents in 2020 was $43,300. Though lower, this is a most realistic figure. Bearing in mind that only 30% of agents are active, the average annual commission a Texas real estate agent earns will vary. The remaining 70% who work full-time can have a rewarding career, especially those who have specialized in the profession.

In this guide, we will discuss the commissions a real estate agent can expect to earn in Texas. If you’re looking to work for a brokerage that puts its agents first, schedule an appointment today and learn more.

How Do Real Estate Agents Earn Money?

Real estate agents earn a commission on every real estate transaction they help facilitate. It is important to note that most real estate agents will not get paid if a sale doesn’t go through, in spite of the time or money spent.

In most cases, the listing brokerage (seller’s side) and the buyer’s real estate agent will receive a share of the proceeds of the sale. In Texas, the commission for a successful sale is roughly 6% of the total cost of a property. Furthermore, the commission plans can vary depending on the agreement between the agents and their clients—it can range between 50/50 and 80/20.

Is a Real Estate Agent Worth the Commission?

Whether you’re selling or buying a property, a real estate transaction can be a complex legal process. Although it can be tempting to forgo the added expense of acquiring the services and expertise of a real estate agent, the cost of having a seasoned professional by your side is negligible.

Having an experienced and educated partner in the transaction process will ensure that you are not making any mistakes that are likely to cost you later. For example, when selling, a realtor will offer you the added exposure you need to showcase your property in front of the maximum number of buyers. This is because realtors have the expertise to market a property to its fullest potential.

Additionally, when buying, a realtor can take advantage of their network to access the Multiple Listing Service (MLS) to find the perfect property for you as well as prepare any offer to sellers.

How is the Commission Calculated?

Let’s sell a house for $1 million with a commission of 6% of the sale price. That’s $60,000 in commission. In this example, the $60K will be split 50/50 between the listing and buying brokerages. That’s an even split of $30,000 each. Consequently, each brokerage and agent will get to share $15,000.

Ideally, a first-year agent would get a 60/40 cut. The will agent will get $18,000 in commission while the brokerage will keep the remaining $12,000. The commission will then be taxed further bringing down the final takeaway.

The average real estate agent sells approximately 5-6 homes a year. According to industry data, the top 20% of agents perform 80% of the business. Being in the top 20% comes with its benefits as it also becomes easier to find clients thus earning a larger commission. With time, a new agent will gain more trust in their area of specialization, and selling more expensive homes will have the potential to earn higher commissions.

Factors that Affect Annual Earnings

Besides commission splits, the annual take-home earnings for real estate agents will vary due to four factors: expenses, education, experience, and prospects.

Expenses

To properly conduct business and market their services and listings, independent contractors have to consider expenses that include:

• Overhead costs
• Legal fees
• Business expenses

To be a success in real estate, an agent must exploit any word-of-mouth advertising opportunities they can generate through networking. For real success, you will have to spend money out of pocket on self-promotion—Facebook Ads, business cards, signage, and print advertising costs are a few examples.

Real estate agents also have to bear part or the whole cost of marketing a property, and unless the listing sells, they will earn zero commission. These costs include expenses such as professional photography, ads, flyers, and custom postcard mail-outs. Beyond the promotional materials, real estate agents also have business expenses to consider, including phone bills, car maintenance, gas expenses, office supplies, as well as gifts for clients.

Agents often owe administrative fees to their brokerage, which may be charged annually or monthly, to cover Errors and Omissions Insurance, office or technology fees, and marketing fees. The fees charged and when they are due will vary from one broker to the next.

Education

Education can help a real estate agent scale higher heights through designations and titles that give them an advantage over the competition. Examples of areas in real estate where real estate agents can earn certifications include:

• Graduate, REALTOR® Institute (GRI)
• Accredited Buyer's Representative (ABR®)
• NAR's Green Designation (GREEN)
• Certified Residential Specialist (CRS)
• Seller Representative Specialist (SRS)

Experience

Experience can also give you the leg up on the competition. As an agent gains experience, their industry know-how will increase significantly giving them a rich contact list. The result is winning a higher listing rate and closing more sales.

Agents with a proven track record of success can often negotiate higher commission splits with their brokerage. Additionally, experience helps real estate agents predict how many home sales will be required to reach their financial goals for the year.

Prospects

Both location and the strength of an agent’s network will influence how many prospects they have to win a listing or work with buyers. It’s no surprise location is the secret to real estate success, and the same principle holds for real estate agents as well. Agents who work in the DFW Metroplex will most likely have more opportunities than agents who work in rural areas or areas that are economically depressed.

Agents can also earn higher commissions when selling homes in more expensive neighborhoods. However, such areas often come with a higher cost of living and business overheads. Additionally, real estate agents can generate more opportunities by having a strong network of past clients and business connections that they foster and regularly interact with.

How Much Does an Austin Real Estate Agent Earn?

Real estate agents in Austin take home commissions averaging $91,800 annually. With that in mind, the real estate market in Austin is arguably one of the most robust in the nation. With a population growth that is 373% higher than the national average, Austin has experienced rapid population growth in recent years. The allure of an attractive lifestyle and the influx of big tech companies also plays a major role in the booming real estate market.

How Much Does a San Antonio Real Estate Agent Earn?

San Antonio is located roughly 80 miles south of Austin. Despite the San Antonio real estate market growing at a steady pace, its upward growth is predicted to heat up as people move from overcrowded Austin. With a population of over 1.5 million people, San Antonia real estate agents can expect an increase in home sales in the not distant future. Austin real estate agents can look forward to taking home an average of $91,600 per year in commissions.

How Much Does a Houston Real Estate Agent Earn?

Are you looking to get your real estate license in a big metropolitan city? Moving to Houston would probably be a good idea. Home to approximately 2.3 million people, Houston is the largest city in the Lone Star state and the fourth-largest city in the country. Houston encompasses a vast area that stretches as far as the coast in Galveston as well as several suburbs scattered around. Real estate agents in this bustling city take home an average of $91,000 per year.

How Much Does a Dallas Real Estate Agent Earn?

You should consider moving to Dallas if you want to kick-start your career in a big city. The Big D features a variety of housing options that offer plenty of selling opportunities for agents. Dallas real estate agents can expect to make the equivalent of the national average which is roughly $87,300 per year.

Closing Thoughts

Although they are not accurate, the averages discussed above can help guide you in your decision-making. With that in mind, the building blocks to a successful real estate career are a good reputation and specialization. If you’re interested in pursuing a career as a Texas real estate, contact us today for more info.