How much do real estate agents make in NYC? Are you dreaming of becoming a real estate in a vibrant and lively city like New York, but you are not sure how much money you can make? To help you understand the basics and how real estate agents make money in NY, I have gathered expert insight; so you can decide whether this career is best for you, or not. So step in and read this guide thoroughly because your future depends on this precious information!
Do you live in New York and think about starting a real estate career in the Big Apple? Probably the first thing you may be wondering is how much you can earn in this job. In fact, the work of a real estate agent in NYC is shrouded with so much mystery and legends that it looks like nobody can give you exact numbers and estimates.
It is mainly because real estate is a so-called commission-based job. It means that, unlike a standard salary-based job, where you will receive the same paycheck every month unless you get a raise or some sort of annual bonus, the income of a real estate agent depends entirely on the number of deals they manage to make every month. In other words, the more you sell, the more you make.
So, does it mean that you have to constantly put your nose to the grindstone in order to make a living as a real estate agent in New York? Not exactly.
How much do real estate agents make in NYC?
In this article, we shall explain the whole concept of commission-based salaries and the nature of real estate jobs in NYC to help you make an informed decision about whether you want to go further in this career field and how to make sure that your income as a real estate agent in New York fits your expectations perfectly.
The average salary of a real estate agent in New York
Real estate salaries can vary widely depending on factors such as the specific role, experience level, company size, location within New York (e.g., New York City versus other parts of the state), and the current state of the real estate market.
So, here comes the good news, real estate professionals in New York, especially in New York City, tend to earn higher salaries compared to many other locations due to the high cost of living and the competitiveness of the real estate market.
According to salary.com, as of June 2023, the average realtor salary in New York, NY, is $97,000. However, the salary range may fall between $84,000 and $114,000. Where does such a significant difference come from? There are lots of factors that will affect your paycheck as a real estate agent in NYC, including education, certifications, additional skills, and the number of years you have worked in your field.
At the same time, if you are expecting to earn the “minimum” of $84,000, which is approximately $40 per hour from your very first day as a real estate agent in New York, we may have to break it to you as it is not that simple.
A realtor’s job is a commission-based one – What does it mean?
Now let`s take a deeper dive into the whole concept of commission-based salaries to give you a general idea of how much you can expect to earn as an entry-level realtor in NYC and how to grow your income.
A commission-based salary, also known as a commission-based compensation structure, is a form of payment arrangement where an employee’s earnings are primarily or entirely based on the sales or business they generate. Instead of receiving a fixed salary, employees receive a percentage or a predetermined amount of money for each sale or transaction they complete.
It means that although we are talking about the “the more you sell, the more you make” system, it still does not mean that a realtor in NYC receives some fixed amount of money for every deal they make. Their compensation depends on the price of the sold or rented property as well as some other factors.
The principle of commissions in real estate
The splitting of real estate commissions in NYC, as well as the rest of the country, typically involves several parties: the real estate agent or broker who represents the seller, the agent or broker who represents the buyer, and their respective brokerage firms.
As a rule, the standard commission percentage is 6% nationwide. However, there can be exceptions. For example, if we are talking about a property sold for over $10 million, the commissions may be limited to 4%–5% of the sale price. Now let`s see how real estate commissions are usually split in New York.
Listing Agent’s Commission
When a property is listed for sale, the seller and the listing agent (representing the seller) agree on a commission percentage, which is typically a percentage of the final sale price. This commission is typically paid by the seller upon the successful sale of the property.
Buyer’s Agent’s Commission
To encourage other agents to bring potential buyers to the property, and therefore reduce the “legwork”, the listing agent typically offers a portion of the commission as a co-broker or buyer’s agent commission. This commission is typically shared evenly between the listing agent and the agent who represents the buyer.
New York is known as a “co-broke” real estate market. It means that commissions are usually split evenly between the listing agent and the buyer`s agent. In other words, each gets 3% of the sale price. However, you may also come across uneven splits, like 4/2%.
The commission earned by both the listing agent and the buyer’s agent is later split between the agent and their brokerage firm.
Splitting the commission can vary depending on factors such as the agent’s experience level, production, and the agreement between the agent and the brokerage. The agent and the brokerage firm agree on a predetermined percentage split, with the agent receiving a percentage of the commission and the brokerage receiving the remaining percentage.
Typically, the more deals you bring to your brokerage firm, the higher the commissions you will receive at the end of the day, as every business values hard-working bees and would normally do anything to make sure that they keep on bringing pollen to their hive.
A realtor in New York is an independent contractor – What does it mean?
In New York and the rest of the US, real estate agents are usually classified as independent contractors rather than employees. It means they are not employees of the real estate brokerage or agency they work with. A New York real estate agent operates as a self-employed individual with a contract with a brokerage firm.
On the bright side, as independent contractors, real estate agents in NYC typically have more flexibility and freedom in managing their work. For example, as a New York realtor, you can set your own schedule and determine how you conduct business.
At the same time, you become responsible for covering your own expenses, such as marketing costs and insurance (which we shall discuss later), as well as the tax burden, which is higher for independent contractors.
As of 2023, the self-employed tax rate in the USA is 15.3%. The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).
For comparison, the tax rate for a traditional employee is 7.65%. But there is more news for NYC real estate agents.
New York also imposes an additional state income tax on independent contractors. Depending on your annual income, it may range between 4% and 8.82%. And don`t forget the NYC city income tax, which lies between 2.9% and 3.8% of annual income.
But before you start getting overwhelmed with the severe tax burden that New York realtors have to deal with, and change your mind about pursuing a career in real estate, let us set your mind at ease.
First of all, real estate agents in NYC do earn pretty high commissions. Also, being self-employed gives you the opportunity to write off relevant business expenses. In other words, if you got an A-amount of money from the deal, but had to spend a B-amount on advertising, traveling, communication, etc., the taxes will only apply to the difference between A and B.
Expenses on gas, car insurance, marketing materials, annual National Association of Realtors (NAR) membership fees, professional development courses, and even stationery can be deducted, reducing the taxable part of your income.
What are the associated costs of being a real estate agent in NYC?
Like in any case of self-employment, becoming a realtor in New York involves several expenses. Some are obligatory and have to be paid up-front, while others are spread throughout the year or can be considered optional investments in your business. However, here are the associated costs you should prepare yourself for as a real estate agent in New York.
- Pre-licensing Education – New York requires aspiring real estate agents to complete 75 hours of pre-licensing education from a state-approved provider. The cost of these courses can vary depending on the institution or school you choose. Tuition fees may range from $300–500 to about $1000.
- Licensing Exam Fee – After completing the required pre-licensing education, you will need to pass the New York State real estate licensing exam. The exam fee is currently $15.
- License Application Fee – Once you pass the licensing exam, you’ll need to submit an application for your real estate license. The application fee for a salesperson license in New York is $65 as of 2023.
- Fingerprinting and Background Check – As part of the application process, you will need to undergo a fingerprinting and background check. The fee for this service is typically between $95 and $120.
- Continuing Education – After obtaining your real estate license, you will need to complete continuing education courses to renew your license. In New York, real estate salespersons are required to complete 22.5 hours of continuing education every two years. The cost of completing all 22.5 credits of New York real estate continuing education courses online ranges from $10 to $120+. Agents usually pay $55 to the state of New York for renewal fees, while brokers pay $155.
- Membership and MLS Fees – Joining a real estate association such as the National Association of Realtors (NAR), the New York State Association of Realtors (NYSAR), or local Realtor boards may involve membership fees, which may vary between $1600 and $2000. Additionally, local MLS providers may set a fee for accessing the Multiple Listing Service (MLS) as a real estate agent. These expenses are considered optional but highly suggested.
- Technical and Marketing Expenses: As a real estate agent, you’ll likely need to invest in technology tools, such as a reliable computer, smartphone, and professional software for managing listings, contacts, and transactions. Additionally, don`t forget marketing and advertising expenses, such as professional photography, banners, and online promotion.
Keep in mind that to become a realtor in NYC, you will have to compete with about 80,000 licensed professionals. Despite the fact that the New York real estate market is extremely lively, the competition is fierce as well. Therefore, investing in self-promotion and networking will become the keys to your success.
As for the necessary costs, such as training and licensing, the fees may change over time. Therefore, it is essential to address official sources like the New York Department of State, Division of Licensing Services, and consult with real estate schools, associations, and brokers in New York for more accurate and up-to-date information on the costs involved in becoming a real estate agent in the state.
Additional Income Streams for Real Estate Agents in NYC
- Rental Market: Assisting clients with finding rentals and earning fees from landlords.
- Property Management: Managing rental properties on behalf of landlords for a monthly fee.
- Investment Properties: Earning commissions from property investments and sales.
Real estate agents are constantly seeking new ways to boost their earnings and maximize their potential in the industry. In today’s competitive market, agents need to explore additional revenue streams that can supplement their traditional commission-based income. By diversifying their services and offering value-added solutions, real estate agents can increase their earning potential and provide added convenience and satisfaction to their clients.
One of the most effective ways for real estate agents to expand their revenue streams is by offering property management services. This involves managing rental properties on behalf of landlords and handling tasks such as tenant screening, rent collection, maintenance coordination, and lease renewals. By venturing into property management, agents can generate a steady stream of passive income through monthly management fees while still focusing on their core business of buying and selling properties.
Another lucrative avenue for real estate agents is investing in rental properties themselves. Agents can benefit from both rental income and potential property appreciation over time by acquiring investment properties and renting them out. This provides a stable source of additional income and allows them to gain firsthand experience in property investment strategies, which they can then share with clients looking to invest in real estate.
In addition to property management and investment opportunities, real estate agents can also consider partnering with local businesses or service providers that complement the home buying or selling process. This could include mortgage brokers, home staging companies, interior designers, or even contractors for renovation projects. By establishing strategic partnerships with these professionals, agents can earn referral fees or commissions for every successful transaction made through these collaborations.
Furthermore, embracing digital platforms and technology-driven solutions can open new revenue streams for real estate agents. With the rise of online marketplaces and virtual tours becoming more prevalent in the industry, there is an increasing demand for skilled photographers or videographers who specialize in capturing high-quality visuals of properties.
Agents who possess these skills or collaborate with professionals in this field can offer their services to clients, charging fees for visually appealing property listings that attract more potential buyers.
Tips for Maximizing Your Earning Potential as a Real Estate Agent in NYC
If you’re a real estate agent in the bustling city of New York, you know that the competition can be fierce. But with the right strategies and a focused mindset, you can maximize your earning potential and stand out from the crowd. In this section, we will explore some valuable tips that will help you thrive in NYC’s challenging yet lucrative real estate market.
1. Build a strong network
Networking is crucial in any industry, but it is especially important for real estate agents in NYC. Connect with other professionals, such as mortgage brokers, attorneys, and contractors, to expand your referral network. Attend industry events and join local real estate associations to meet potential clients and build relationships with fellow agents.
2. Specialize in a niche
The NYC real estate market is diverse and dynamic, offering various opportunities for specialization. Whether it’s luxury condos in Manhattan or trendy lofts in Brooklyn, focusing on a specific niche allows you to become an expert in that particular market segment. This expertise will not only attract clients who are looking for specialized services but also position you as a trusted advisor within your niche.
3. Harness technology
In today’s digital age, technology plays a vital role in every industry – including real estate. Embrace technology tools such as customer relationship management (CRM) software, virtual tours, and social media platforms to streamline your processes and reach a wider audience. Utilize online advertising platforms like Zillow or StreetEasy to showcase your listings effectively.
4. Provide exceptional customer service
Going above and beyond for your clients should be at the forefront of your business strategy. Respond promptly to inquiries, listen attentively to their needs, and provide personalized solutions tailored to their preferences. By delivering exceptional customer service consistently, you’ll earn positive reviews and referrals that can significantly boost your earning potential.
5. Stay informed about market trends
The NYC real estate market is ever-evolving; therefore, staying up-to-date with current trends and market conditions is essential. Monitor property values, rental rates, and new developments in different neighborhoods. This knowledge will enable you to provide valuable insights to your clients and position yourself as a trusted advisor.
So, is it worth becoming a real estate agent in New York
Deciding whether it is worth becoming a real estate agent in NYC, or any location for that matter, depends on various factors, including your personal qualities, skills, market conditions, and career expectations.
On the one hand, NYC probably has one of the most dynamic real estate markets in the world, which gives you great potential to earn money through commissions as a realtor. At the same time, competition between licensed real estate agents in New York is pretty fierce, and to earn your fat paycheck, you will have to invest in self-promotion, do a lot of networking and legwork to gain a name in the market, and gain the experience that will allow you to build a successful career.
Becoming a real estate agent in NYC will require some serious training and licensing and a serious investment of time, money, and effort before you will see some tangible paybacks. But at the same time, this job will give you the flexibility and independence you will hardly find in any other career path today.
But at the end of the day, the real estate industry in New York has an extremely promising career outlook. Becoming a licensed realtor will give you the skill, knowledge, and social capital that will help you build a successful career in any segment of the lucrative real estate industry in the future.
Did you find this guide helpful? Are you going to pursue a career as a real estate agent in New York now that you have found out more about this endeavor, or are you still not decided? Whatever you choose, consider all the options and have some savings to sustain yourself before diving into this business.