When considering a new career in real estate, there are many decision factors like flexibility, opportunity for advancement, and benefits. But the number one thing that most people think about when looking for a new job is: how much does it pay? Luckily, plenty of salary data is available for anyone considering becoming a real estate agent in Texas.
The average annual salary for a real estate agent in Texas is $77,320 according to a U.S. Bureau of Labor Statistics wage estimate report from May 2022. Indeed.com says the average is about $84,500 based on its own data. But this number is just one part of the whole story. It’s also important to understand how real estate agents get paid, the factors that affect income, and the salary difference between sales agents and brokers.
How Real Estate Agents Get Paid
Most real estate sales agents in Texas — and throughout the country — earn money through commissions. In this context, a commission is a percentage of the property’s sale price that’s typically paid by the seller. If you’ve never had a commission-based job before, here are some pros and cons to consider:
Pros:
- Higher earning potential — Commission-based jobs usually have no income cap. The more you sell, the more you earn!
- Flexibility — Unlike a typical salaried 9-5, you can often decide how many hours per week to dedicate to your role. As you gain experience, you can figure out a work schedule that works best for you.
Cons:
- Lack of income security — The money you make with commission-based jobs is entirely dependent on your performance. Since there’s no income guarantee, you could have a bad sales period with little to no income. But there are plenty of ways to make sure that doesn’t happen.
- Time Requirements — Depending on your personality type, you could see the lack of a structured 40-hour week as a con. As a new sales agent, you might need to work extra hours to ensure you meet your clients’ needs.
Currently, the average commission rate in Texas is about 6%. The state-wide median home sale price was $345,000 in Q2 2023. Before you get excited about making $20,000 on a sale like that, there are some important factors to know about.
First, commissions are usually split 50/50 between buyer and seller agents. It’s also common for sales agents to give their broker 30% to 50% of their commission depending on their experience and brokerage agreement.
Example #1:
Let’s say you’re an experienced sales agent who helped a client sell a home for $345,000. You’ve been doing well, so your broker agreed to a 70/30 commission split agreement. Your total income from this sale would be $7,245.
Here’s the breakdown:
- Total commission paid by the seller at 6%: $20,700
- Your commission after a 50/50 split with the buyer’s agent: $10,350
- The broker’s 30% cut: $3,105
- Your total: $7,245
Example #2:
You’re a newer sales agent trying to make a name for yourself. Because there are no laws in Texas regulating commission rates, you agree on 5% with your client. Then, you help your client buy a home in Corpus Christi, where the average home sells for $290,000. The commission split agreement with your broker is 60/40. Your income from this sale would be $4,350.
Here’s the breakdown:
- Total commission at 5%: $14,500
- Your commission after a 50/50 split with the seller’s agent: $7,250
- The broker’s 40% cut: $2,900
- Your total: $4,350
Factors That Impact an Agent’s Income in the State
We wish the above income examples were exactly what you can expect as a sales agent, but it’s not that simple. Your income potential depends on many factors, including:
Experience
As you saw in the second income example, being a newer sales agent might give you less negotiating power with clients or brokers. Until you gain more experience, expect to make less than average. On the other hand, established sales agents with many connections and local market knowledge will attract more customers. That demand is perfect leverage for higher commission rates and lower broker splits.
The Economy
This broad category encompasses factors such as housing demand, interest rates, and government policies. Most of these things are outside of your control — unless you move to an area with more demand — but they can also be opportunities to expand your skill set. If home sales are slow, you can expand your income potential by becoming a notary or a mortgage loan originator.
Expenses
If you work under the supervision of a broker that classifies you as an independent contractor and not an employee, that can increase your business expenses.
Transportation, work supplies, and brokerage fees are common, but advertising is a big expense to consider. Marketing your services and the homes you're selling can include professional photo shoots, social media ads, and open houses.
There’s also an expense that comes before you become a sales agent: pre-license education. To become a sales agent in Texas, you must complete 180 hours of pre-license education and pass an exam. To help keep initial expenses low, we offer one of the most affordable online Texas real estate pre-license education programs.
Texas Cities with the Highest Real Estate Salaries
Compared to the rest of the country, Texas is one of the best places to become a real estate sales agent. The U.S. Bureau of Labor Statistics lists Texas second highest in the nation for real estate agent employment level.
As for average annual salary, the top five metro areas are:
- Midland: $100,760
- Killeen-Temple: $95,290
- Austin-Round Rock: $82,170
- Houston-The Woodlands-Sugar Land: $80,830
- Dallas-Fort Worth-Arlington: $79,210
Do Sales Agents or Brokers Earn More Money?
Once you work as a real estate sales agent for at least four years, you can become a real estate broker to increase your income potential. Brokers are sales agents who complete extra training and pass an exam. They can do everything a sales agent can, but they’re allowed to work independently.
If you choose to pursue a real estate broker license, you can open your own brokerage and hire sales agents to work for you. Then, you can earn commissions from your own home sales while also collecting a percentage of your agent’s commissions.
Start Your Real Estate Sales Agent Journey
Becoming a real estate sales agent in Texas can be a challenging yet rewarding career choice. If you want to start the journey to getting your sales agent license, we can help! Our online pre-license courses and exam prep tools are state-approved, mobile friendly, and they can help you pass the Texas Real Estate Exam. Get started here!
Sources
Batey, N. (2022, August 16). Employee or Independent Contractor? What Real Estate Pros Need to Know. Retrieved from https://www.jmco.com/articles/human-resources/employee-independent-contractor-real-estate-pros-need-to-know/
Hunt, H. & Haddad, R. (2023, May 25). What’s the Average Texas Real Estate Commission Rate? Retrieved from https://www.homelight.com/blog/average-real-estate-commission-rate-texas/
Indeed. (2023, July 31). How Much Does a Typical Real Estate Agent Make? Retrieved from https://www.indeed.com/career-advice/pay-salary/how-much-do-real-estate-agents-make
Indeed. (2023, October 1). Real Estate Agent Salary in Texas. Retrieved from https://www.indeed.com/career/real-estate-agent/salaries/TX
Lewis, K. (2023, February 13). Commission Mythology 101. Retrieved from https://www.recenter.tamu.edu/articles/tierra-grande/Commission-Mythology-101-2373
Nguyen, J. (2023, June 12). 4 Key Factors That Drive the Real Estate Market. Retrieved from https://www.investopedia.com/articles/mortages-real-estate/11/factors-affecting-real-estate-market.asp
Texas REALTORS. (2023, June). Texas Quarterly Housing Report 2023 Q2 Edition. Retrieved from https://www.texasrealestate.com/wp-content/uploads/2023_Q2_QuarterlyHousingReport.pdf U.S. Bureau of Labor Statistics. (2023, April 25). Occupational Employment and Wages, May 2022 – 41-9022 Real Estate Sales Agents. Retrieved from https://www.bls.gov/oes/current/oes419022.htm#st
U.S. Bureau of Labor Statistics. (2023, September 6) Real Estate Brokers and Sales Agents. Retrieved from https://www.bls.gov/ooh/sales/real-estate-brokers-and-sales-agents.htm#tab-5
