Texas real estate agents have a wide range of earnings -- considering that 30% of active agents are only part-time, the average annual commission earned can greatly vary. But for the 70% who do work full-time, especially those who are well-regarded in their area, real estate can be a very lucrative profession. However, while this business is largely commission-based, agents are not the sole recipients of the cut. Most agents work for brokerages who provide the agents with marketing benefits, legal protection, and of course, name recognition. In return, the brokerages receive a significant portion of the commission. In addition to the listing brokerage (on the seller's side) receiving some of the cut, there is also often a second agent in the equation (the buyer’s real estate agent). The commission is then divided between the listing agent and the buyer’s agent according to the agreements between the agents and their clients.
Let’s break it down to understand where the money goes:
Let’s pretend a house is sold for $250,000. Commissions are negotiable between listing agents and their clients, but a typical commision is about 6-7% of the sales price. Let’s use 6% for the sake of sticking with even numbers in this example. That’s $15,000 in commission. That $15K paid by the seller is then divided between the listing and buying brokerages according to any cooperating broker agreement (let’s say half and half to keep it even). That’s $7,500 to each side. After this split, each brokerage and agent split their $7.5K. A first-year agent will typically get a 60-40 cut with their brokerage, giving them $4,500 in commission. Then, of course, that commission is taxed, further bringing down the final takeaway. However, the good news is this is just for a single home AND a first-year agent’s cut - things will only get better from there. As time goes on, you’ll gain more trust in the area you work in and will sell high-priced homes, taking away higher commission. Rockstar agents selling multi-million-dollar homes in Los Angeles are walking away with well over a million in commission annually.
The average agent sells about 5-6 homes a year, so if you want to be above average you could double that number. The old saying is the top 20% of real estate agents do 80% of the business -- if you work hard and become that top 20%, you will have no trouble finding clients and will make a substantial income. Successful agents can sell upwards of 50 homes a year. Depending on your share of the commission and the price of your homes, that’s a lot to look forward to.
So how much does a Texas agent make?
Texas is prospering when it comes to population growth. According to recent figures from the U.S. Census Bureau, Texas cities are growing faster than cities in all other states. It’s safe to say that now is the time to dive into the real estate market and get your Texas real estate license.
Let’s break it down by each city...
If you’re in Austin and considering getting your real estate license, you could potentially make an average of $88,996 per year. This is 13% above the national average. Austin saw extreme growth several years ago due to the booming tech scene and has been a thriving market ever since with a population that’s steadily making its way to one million. Austin agents can expect to sell single-family homes as well as downtown condos.
For those who are looking to get their real estate license in a big city, Houston is for you. With a population of 2.3 million, Houston is the largest city in Texas and the fourth-largest city in the U.S. The entire Houston area extends far and wide to include many suburbs and stretches all the way to the coast in Galveston. In this bustling city, Houston real estate agents make an average of $91,008 per year.
Boasting a population of 134,432 as of 2016, Waco is a much smaller Texas town than the others on this list. But that doesn't mean it isn’t a lucrative market for real estate -- Waco real estate agents make an average of $81,730 Waco is also home to Baylor University and the popular Magnolia Market featured in HGTV’s ‘Fixer Upper,’ so the town is sure to see an influx of visitors each year who may want to call Waco home in the near future.
As the fastest growing city in Texas currently, it would be a smart move to get your real estate license in San Antonio. Real estate agents here make an average of $91,668 per year. Real estate agents in the San Antonio area can expect to see an increase in home sales as the population is 1.5 million and seeing major growth.
If you want to get your real estate license in a big city with plenty of different areas and selling opportunities available, then consider Dallas. Real estate agents in Dallas make about $87,354 per year, which meets the national average.
The population of Lubbock was 252,506 as of 2016, making it smaller than major cities like Dallas and San Antonio, but larger than cities like Waco. Due to its location in the Texas panhandle and its successful agriculture industry, this city may be a good place to have your real estate license if you’re considering specializing in land or farm real estate. Real estate agents in Lubbock make an average of $95,313.
While these are the averages, remember that there is no limit to how much a real estate agent can make. Building a reputation in your area and becoming an expert in the field will render no limits to your annual income.
As you can see, there is good money to be made by a Texas real estate agent. It's yours for the taking!
And if you don’t pursue real estate for a full-time job, it’s a great part-time option, especially for mothers. It’s a flexible career, letting you make your own hours and can be a smaller time commitment if you are satisfied with a lower number of sales.
If you’re interested in Texas real estate as a career path, you have to start with your license. Visit our page to get started!