Real estate is an attractive career. The potential for growth is huge, if you’ve got the time for it.
Many people start out in real estate part-time. But you may wonder if a part-time real estate agent salary will be enough for you.
A lot of first-time agents do make it work, but success depends a lot on your expectations and your game plan for reaching your goals.
While trying out a new career in real estate is exciting, it can also be daunting. Here’s how to know if a part-time real estate agent salary will be enough for you.
Why You Might Want to Work in Real Estate Part-Time
A part-time realtor salary isn’t as much as the full-time potential, but that’s not a dealbreaker for everyone. Many people work in real estate part-time as a stepping stone to a full-time career or as a full-time alternative, with factors such as lifestyle, interests and goals playing a key role in their decision.
Realtors enter into careers in real estate part-time for different reasons, including:
- As a first career. Realtor is a first career for about 5% of current agents, according to a recent NAR report. These agents tend to be young and many work less than full-time hours.
- As a career change. Real estate is often a second or even third career. It’s a popular choice as a part-time transition after a career in business management, finance, sales or retail.
- As a transition into retirement. Veteran realtors often find that a part-time real estate salary and hours is a good option as they transition into their retirement.
- As a retirement alternative. Both realtors and older workers from other fields sometimes choose to work in real estate part time as an alternative to taking full retirement.
- As a lifestyle choice. Part-time hours are also common when you’re raising a family or tending to other obligations. It’s an option that can provide supplemental income and workâlife balance.
What to Expect as You Start Out in Real Estate Part-Time
No matter what brings you to real estate, there’s a lot to consider before you dive in. A career in real estate is a big commitment, even if it’s for part-time hours. You’ll need to devote time and money to obtaining your real estate license and setting up a business if you aren’t already in the industry.
- Getting licensed: The courses, state exams and licensing process take between 2â6 months. The cost of getting your license, joining a brokerage, and taking care of other early startup expenses averages around $2,000. Having savings or second job to cover your early career living expenses is advised.
- Starting out: You will generally have little free time until you start getting some sales, build up industry connections and establish your business. Your state’s specific requirements will also impact how quickly you can establish yourself as an independent part-time agent.
- Joining a brokerage: You may need to join a brokerage under the guidance of an experienced broker, depending on the rules of your state. Start your search early as it may take time to find a brokerage willing to take on a new part-time agent. Generally it’s the smaller independent ones.
- Getting paid: Also remember that real estate is a sales commission industry and that fixed salaries are generally rare. You may work for several months before closing a sale or assisting with a referral that gets you paid, so having a second source of income is a smart idea.
Whether full or part-time, all new realtors will need to work hard to be successful. It’s important to think things through, including your salary requirements, time commitments, sales niche and strategy.
How to Calculate a Part-Time Real Estate Agent Salary
When you’re calculating a part-time real estate salary for yourself, there, unfortunately, isn’t an easy answer for how much you’ll make. While some brokerages do offer a base salary plus a commission on the home sales you close, this isn’t the norm. Instead, most realtors will be depending on the income they earn from sales commissions and referrals.
Calculating Commissions
While there’s some variation across the industry, most real estate sales commissions hover around 2.5% to 3% of the sale price of the home. According to Zillow, the typical home in the US is currently selling for around $298,933.
A single sale on a $300,000 home at 3% commission will result in gross earnings of $9,000. With a handful of sales like that per year, it’s possible to earn a nice part-time real estate agent income.
However, your results may vary. Keep in mind that homes in your market may sell for more or less than the national average and that it sometimes takes months of work to get a single sale to the closing table successfully.
On the other hand, The Close reports a typical agent is now closing 12 sales per year. While you likely won’t make that many sales part-time, especially starting out, it is likely to be an achievable goal as you gain experience in the industry.
Calculating Referral Commissions
Sales commissions are important, but they aren’t likely to be your own source of income as a part-time real estate agent. Since time may not allow you to help every lead that walks through your door, you can refer buyers and sellers to another agent and earn a slice of their commission â usually 25%.
That same typical $300,000 home sale with a 3% commission for the buyer or seller’s agent will result in gross earnings of $2,250 as compensation to you for the referral. That’s not bad considering it might have required nothing more than a couple phone calls.
Due to limited availability to manage multiple clients and deals, some part-time agents really focus on referrals. It’s a smart move if you can find an agent or team that wants to partner with you and you’re good at generating and qualifying real estate leads.
Calculating Your Part-Time Salary
To calculate a realistic part-time realtor salary for yourself, determine your goal for annual home sales and referrals and add up the results.
For example, say you expect to sell two average-priced homes and refer eight clients who go on to complete a transaction in a year. A 3% commission on two $300,000 homes will earn you $18,000, while eight 25% referrals on similar sales will earn you another $18,000, for total gross earnings of $36,000.
Realize that many factors impact your earnings as a part-time agent. If you are a veteran agent scaling back your hours or a seasoned business professional with great sales and marketing skills, you’ll do much better than if you’re fresh out of college.
According to NAR, 56% of new agents earn less than $10,000 their first year. But as you gain experience, industry data shows that you can expect to earn more. Agents with 1â3 years of experience can expect to earn an average of $38,141, while those with four to 10 years can earn $63,595, and those with more experience can earn over six figures.
Another important factor to keep in mind is that agents tend to make more money as time goes on. Since home values are currently increasing, the commissions and referrals are also going up. Agents also benefit from growing their book of business, with happy clients who purchased a few years ago coming back when it’s time for more houses.
How to Be Successful in Real Estate as a Part-Time Agent
Working in real estate part-time is great if you have the right outlook and set smart goals. It’s a great way to earn additional income, gain experience and build new connections. But it’s best to understand going in that you will have some upfront expenses as well as stiff competition that can put in more hours.
To be successful, it’s important to get organized. Get help from a trusted mentor, make a business plan, network with other agents and take advantage of professional time-saving tools to help you maximize your efforts.
A real estate transaction has lots of moving parts and with your limited time, you don’t want to be buried in emails and text messages as you try to chase down signatures and make appointments. That’s why taking advantage of the latest technology is a must.
Folio is an email add-on designed to help real estate professionals like you streamline your real estate transaction communications. You can easily keep on top of closing updates, inspections, deadlines, documents, signatures and more.
The secret is that Folio uses AI-powered algorithms to organize your Gmail and Outlook communications into workflows that make sense, saving you hours on email every single week.
By using a tool like Folio, you can get more done in less time, ultimately helping you earn more as a part-time real estate agent.
Try Folio today for free with up to three transactions and get more done in less time.
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