The New York State (NYS) real estate market is not slowing down anytime sooner! New York’s median price for a typical single-family home crossed $400,158 in 2022, with an incremental increase of 14.4% from the last year.
There has never been a better time to be a part of New York’s real estate scene. As a real estate agent in New York, not only do you enjoy great earning potential, but you also get flexible working hours and the choice to either work independently or as part of a group.
It also means you are at the upper end of the ladder for realtor commissions. NYS agents make a lot of money; there is a reason why there are 78,167 active salespersons and 52,272 active brokers in the state.
According to Indeed.com, the average salary for an agent with one to two years of experience in NYS is a whopping $100,000!
But do real estate agents earn this much in New York State? If they do, is the number the same for anyone who takes up a career as a real estate agent? What skills, education, or experience do you need to be a successful real estate agent?
Here’s a closer look at New York’s real estate industry that will help you decide whether a career as an agent makes sense!
2. How Are Real Estate Agents Paid?
Agents receive a commission against their services during the purchase or sale of a property. Very few real estate agents are salaried, and most work independently on a commission basis.
This commission is usually pre-negotiated between the real estate agent and the seller. While it is usually a percentage of the final home sale price, in some cases, it can also be a flat fee.
2.1 Unstable income but high potential
While commission may seem like an unstable source of income, it has unlimited potential.
You are not paid hourly or daily; your income depends on the number of properties you sell, your commission rate, and the property’s sales price.
2.2 How Much Is the Real Estate Commission, and How Is It Shared?
The commission on a real estate transaction ranges between 5-6% of the home sale price. It is negotiable and depends highly on the service you are offering the client.
Suppose the selling price of a home is $400,000; you can earn up to $24,000 in that deal! But mind it, you alone won’t receive the entire commission.
In a real estate transaction, the seller and buyer agents share the commission per the split mentioned in the listing agreement. Each usually gets half, which means you can earn up to $12,000 on a $400,000 home.
2.3 Agents Have to Split the Commission With Their Broker
A real estate agent doesn’t work independently or directly receive money from the buyer or seller. They must work under a brokerage or broker for guidance and business.
When a deal is closed, usually, the broker receives the final commission. He then takes a pre-decided portion and gives the remaining to the agent. If the broker and agent agree on a 50/50 commission split, the agent gets half of the agent’s commission, which is half of 3% or $6,000, as per the above example. This holds for both the buyer as well as the seller agent.
The image below shows the commission split when the percentage split is 60/40 in the agent’s favor, assuming a home price of $350,000 and a 6% commission.
3. How Much Do Agents Make in New York per Annum?
The average annual salary of a real estate agent in New York is around $102,200.
New York is among the five best-paying states nationwide regarding real estate agent salaries.
Below are the state-wise average annual salaries of real estate agents. You can see how NY shines in terms of payment for real estate agents.
|District of Columbia||$77,710|
3.1 Salaries Are Based on Seniority
It’s true. You will likely earn more money if you have more real estate experience.
Knowledge, expertise, and building a wide social network for years help realtors garner more business. There are other factors apart from longevity that influence an agent’s pay. It includes the number of hours worked a week, location, etc. However, it’s undeniable that agents who stay longer in the business earn more money.
Real estate agent’s earnings based on their seniority:
|Top-level real estate agent||$326,267|
|Senior-level real estate agent||$200,283|
|Mid-level real estate agent||$116,460|
|Junior-level real estate agent||$67,719|
|Starting-level real estate agent||$41,570|
3.2 Income Also Depends on How Many Deals an Agent Does in a Year
To earn around $72,000 a year as a full-time real estate agent, you must sell about 12 homes a year (assuming an average earning of $6,000 per deal).
Annual commission = Number of deals X Commission per deal = 12 X $6,000 = $72,000
However, if you deal in upscale properties that go up to $750,000, you can easily make$11,000 per home. So, by just selling 8 homes, you can make up to $88,000.
Annual commission = Number of deals X Commission per deal = 8 X $11,000 = $88,000
3.3 Commercial Vs. Residential Deals
Agents dealing in commercial property make more money than those dealing in residential homes. An average commercial real estate agent makes $198,103 in New York, whereas a residential real estate agent earns about $116,460 yearly.
4. How Much Do Real Estate Agents Make in NYS per Sale?
How much you make on a deal will depend on the home price, location, local rules & regulations, whether it is a typical single-family home or a premium property, whether it is residential or commercial, etc.
If the property is in a high-demand, high-value market, the returns will be higher for the agent. That said, the potential returns may be low if the property is in a dull market. Other factors like market conditions in your area, whether you reside in a metropolitan, suburban, or rural location, and the home’s proximity to amenities and schools all contribute to the home’s price.
For example, the average sales price of a home in New York is $400,158, and the average commission in the state is 5.10%. So the total real estate commission works out to,
Home price X Commission Percentage
= $400,158 X 5.10%
Total Commission = $20,408
In case the two agents and their brokers all split the commission equally, each would receive one-fourth of the commission, which amounts to,
Total commission ➗ 4
= $20,408 ➗ 4
The more valuable the home, the more you will earn per sale. An agent who pitches for $700,000 lakefront homes in his area may sell only a few homes, but his income would be higher than an agent who sells the same number of $300,000 homes.
The table below shows how much an agent can make per sale in different New York locations (assuming an equal split between agents and brokers)
|New York County||No. of Sales in 2021||Median Home Sales Price||Average real estate commission rate (5.10%)||Agent’s income per sale|
5. Highest Paying Cities in New York
There are high-paying cities for real estate agents across New York state. The real estate industry stands its ground despite recent disruptions and high unemployment.
Here are the top 10 high-paying cities for real estate agents in New York:
|City||Annual Salary||Monthly Salary|
|New York City||$83,758||$6,980|
7. How Much Money Can Real Estate Agents Make in One Year?
As of June 2022, the average annual salary for a first-year real estate agent in New York is around $93,559 per year, but this rate may vary.
Most agents start by earning a significantly lower salary of $65,531; however, good performers can earn up to $121,779, with top performers making up to $149,630 annually.
8. What Taxes Do You Pay as a New York Real Estate Agent?
Real estate agents are usually independent contractors; hence no taxes are withheld from their pay by their brokers.
Their taxes are not listed on any employment tax returns with the IRS. But the agents must pay estimated taxes to the IRS, which are paid four times a year to cover income and self-employment taxes. According to the IRS website, the self-employed tax rate is around 15.3%, with 12.4% of gross income going toward social security and 2.9% toward Medicare.
Real estate agents in New York also pay state income tax based on their annual earnings. Here are the tax brackets for agents:
|$0 – $8,450||4.00%|
|$8,450 – $11,650||4.50%|
|$11,650 – $13,850||5.25%|
|$13,850 – $21,300||5.90%|
|$21,300 – $80,150||6.45%|
|$80,150 – $214,000||6.65%|
|$214,000 – $1,070,350||6.85%|
Residents of New York City may end up paying additional income tax compared to other cities in the state. These cities have their local income tax and the existing state tax. That’s why New York city’s income tax rates are pegged at 3.078%, 3.762%, 3.819%, and 3.876%. These rates vary since New York’s income tax is a progressive tax schedule, meaning higher-income earners pay high taxes. Also, New York taxes you when you live here, while Yonker taxes you when you live or work in the city.
9. How Much Money Does a Part-Time Real Estate Agent Make?
Even part-time real estate agents earn decent money, given that they work at least 20 hours weekly. Agents who work fewer than 20 hours a week earn around $24,566 a year, while 20 to 40 hours per week earn about $46,458 on average.
10. In New York City, Agents Need to Stick To REBNY Rules
The Real Estate Board of New York (REBNY), the leading real estate trade association, provides membership to real estate firms in New York City (NYC). REBNY officially withdrew from the national-wide authority National Association of Realtors (NAR) in 1994 after years of wrangling over membership costs vs. the actual benefits associated with NAR. The term Realtors is used to describe members of NAR only.
REBNY offers certain benefits to associated real estate firms while at the same time requiring them to take on certain responsibilities.
Here are some of the REBNY rules.
10.1 Buyer Agent to Get Half the Commission
If REBNY arranges the agreement between two agents, it stipulates that the seller firm compulsorily has to offer at least half of the real estate commission to the buyer agent.
10.2 For FSBO
Some sellers take the FSBO (For Sale By Owner) route and list the home independently without a listing agent. In this situation, REBNY says that the buyer agent should be paid between 2-3% of the home price.
11. Grow Your Income as a New Agent by Doing This
While being a real estate agent is ranked one of the best jobs, first-year agents may struggle to make enough money to support themselves. Here are a few tips for new agents on how to boost their salary during the first crucial years while learning the business and building your brand.
11.1 Spread the Word
Tell everyone, including your neighbors, associates, friends, and social contacts, that you are a professional agent now and share your achievements, especially your first few transactions with them.
11.2 Sell expensive homes
You can sell expensive homes, as the average commission earned from these transactions is much higher. For example, if you sell a house for $200,000 at a 5% commission, you will earn $2,500, while you can earn nearly $4,375 if you sell a $350,000 property.
11.3 Provide Customer Service
Know more about your customers’ concerns and dreams so that you can help them with the best offers available. This itself can help spread the word and get you more customers.
11.4 Unique Offer
Offer something unique to your buyers to stand out from other real estate agents. For example, share a blog with topics to show your expertise in the field.
11.5 Attend different events
Meet people at various events like the farmer’s market, festivals, home and garden shows, and craft fairs. Find out more about them in your local area and connect with people who need an agent.
11.6 Start with a Broker
Your managing broker can help you enter the real estate industry by introducing you to their network and helping you set up your office space. The broker can give you support and marketing tools to grow your income.
11.7 Join the National Association of Realtors (NAR)
If you are based in NYC, REBNY members in New York are not called Realtors unless they are members of the NAR. So join NAR to unlock many benefits like marketing tools, industry discounts, and a network of 1.4 million members to increase your sales.
11.8 Make Real Estate your Plan B
You can pay your bills by working on a main job while increasing your real estate sales by working as a part-time real estate agent. Once you have good field exposure and build a great network of connections, you can opt for a full-time position.
12. How Long Does It Take To Sell a Home in New York?
The average time to sell a home in New York is 103 days.
Let us break it down for you:
It takes 68 days to get an offer and 35 days to close the deal. These are the annual averages, and the actual time taken for a sale may vary depending on the locality and time of the year.
Key factors that impact New York home sale timelines include local market conditions such as buyer demand, job market, time of the year, type of property, and its condition. It also depends on your listing strategies, such as pricing, marketing, networking, buyer’s financial condition, or how long it takes a buyer to secure loan approval.
|Average Time to Sell||Average Price|
|New York||103 days||$522,122|
13. Accreditation and License
One of the reasons people try their hands at the real estate business is that it does not require a college degree. Anyone can become a real estate agent if willing to put in the hard work.
To qualify for a real estate agent licensure, an applicant must complete 75 hours of a salesperson-qualifying education course approved by the Secretary of State. They also need to clear the examination administered by the Department of State. The 75-hour course is valid for eight years post the course completion date and should be used to obtain a license; otherwise, it will expire, and the exam must be retaken. Completing a school-administered proctored examination is also required in addition to the qualifying examination administered by the Department of State. Once a course has been applied towards the license, it will not expire and can be upgraded later.
The requirements could vary depending on the state, so make sure to find out the requirements in your state. For example, some states require you to join a broker before taking the exam, whereas others allow you to work with a broker after the exam.
14.1 Can I Get Healthcare and Paid Time off as a Real Estate Agent?
Most real estate agents are self-employed and are not considered an employee of a brokerage. Only a handful of brokerages provide health benefits. It is also important to note that firms that provide health benefits might either make full payment for the insurance premium or ask you to contribute a portion of the amount.
Typically, the premium could be deducted from your commission. If you need to add in a part of the amount, you should think twice about whether you should get separate coverage on your own or go with the company’s benefits.
According to NAR, only 4% of real estate firms offer health insurance, while 30% of real estate agents have coverage through their spouse’s employer. Also, 45% pay from their pocket for insurance and 21% do not enroll in health benefit plans. In addition, most brokerage firms do not offer paid time offs and sick days. Hence if real estate agents need to take any leaves, they must take them without pay.
14.2 How Many Hours per Week Does a Realtor Have to Work?
Only 22 percent of real estate agents work fewer than 30 hours a week, while nearly half (49%) of the agents work 40 hours or more, and over 53% work the same hours or longer than they did in their first year.
Many agents prefer to work 40 hours a week and, at times, are asked to work beyond 9-to-5. This is because many client meetings take place on weekday evenings or weekends. Typically, the working hours for real estate agents tend to be 8:30/9:00 AM to 6:30/7:00 PM, Monday to Friday.
According to NAR, agents worked 36 hours per week in 2019 and made a median gross income of about $49,700. These figures also account for real estate agents who pursue part-time jobs.
Expensive homes can take longer to close, but the long hours make up for the cost as the ticket size is large.
With home prices constantly rising, it is a good time to be an agent in the real estate market. The best thing about this career is that the upside potential to your earnings is huge.
You need to concentrate on high-value properties and close deals quickly to increase your income. Being an agent also gives you a flexible schedule, and you are your boss. It is a networking business, so it will be a huge advantage if you enjoy working with others.
You will need to be patient, learn how to deal with rejection (for prospecting perfect strangers), and be a problem solver and competitive. If you feel you are all this, take the plunge. This could be a life-changing career for you.