If you’re thinking about becoming a real estate agent in Michigan, then you’re probably curious to know how much a real estate agent makes in Michigan.
That’s fair and valid. In this article, I’m going to dive into this question and go as deep as possible to give you a solid answer for how much the average realtor earns. I will also share some practical advice for how you can beat the average and earn more.
The beauty of a career in real estate is that the income is theoretically limitless.
At times, I will go deep into statistical concepts to help you determine the reliability and validity of the real estate salary data that is around the internet. I have tried to break down these concepts into simple terms.
I considered leaving it out entirely. However, I feel like there wouldn’t be a solid grasp on the reality of how much a real estate agent makes.
Where Did The Data Come From?
A majority of the data and analysis I will share comes from the 2021 National Association of Realtors’ member profile. This data was compiled through a survey in which 10,643 members responded to the survey.
On top of the data from NAR, I will sprinkle in some basic data from sites like Zillow and my own local real estate market.
While I have been able to compile some of the results, it was impossible to obtain the raw data so that I could provide further analysis on how much a real estate makes.
How Much Does A Real Estate Agent Make?
The average Realtor earned $43,330 in 2020, according to the report published by NAR. This figure is down from a previous average real estate salary of $49,700 in 2019.
The decrease can be attributed to the changing real estate market, the Covid pandemic, and the increase in people becoming real estate agents.
Even though prices have increased, and subsequently increased the average commission check, the number of homes for sale and sold has decreased. Making it tough for the average real estate agent to complete a transaction and get paid.
Nerd Point: I’m glad NAR used the median to represent the central tendency. This helps to remove any outliers and extremes. It’s a more accurate picture of the central tendency and more closely reflects the average real estate agent income. In my experience, production and gross income numbers often have large outliers (i.e. a few agents that are producing super high numbers).
What Is The Average Real Estate Agent Salary?
Most Realtors, according to the NAR survey, work an average of 35 hours per week.
If we take our median income and translate that into a weekly income figure, we get $833.27. Take the weekly income figure and divide it by the hours worked, and we get $23.80 an hour.
So, given the median real estate agent income and hours worked, we can say that the average real estate agent is likely to make around $23.80 per hour.
That’s not a bad hourly rate. Of course, keep in mind that most real estate agents work on commission, and therefore, do not receive an hourly wage.
It’s possible to join a real estate team and receive an hourly salary, for example. If that’s the case, I would push this figure down from $23.80 and put it closer to $18.00 per hour.
Also, keep in mind that the $23.80 hourly wage likely excludes any work benefits, such as a 401(k), health insurance, or any other benefits that you may receive from a typical employer.
Be sure to factor that in if you’re comparing your current job or alternative careers to being a real estate agent.
How Much Does A Real Estate Agent Make In Michigan?
To get to the answer for how much a real estate agent makes, we have to extrapolate our data.
The typical home value in Michigan is $218,419, according to Zillow. And, the median number of sides completed by a residential real estate agent is 10.
Given an assumed standard three percent commission, each sale will produce approximately $6,552.57 in gross commission income. With a 70/30 split, that leaves $4,586.80 left for the agent.
With the median of 10 sales, the average real estate agent in Michigan makes $45,868. This places Michigan just slightly above the median published in NAR’s report.
It appears that other data sources around the web share a similar consensus for the average salary of a real estate agent in Michigan.
Years In Real Estate Makes A Difference
There is one important fact when it comes to real estate agent salaries. Years in real estate are correlated with higher incomes.
From the chart, you can see that income is distributed in such a way that there is a natural correlation between income and years in the business.
Indicating that the longer we are in business, the more we are likely to earn.
Nerd Point: You can also infer from the chart that the data set has a large interquartile range. Indicating that the data sets are spread out from the median. The implication is that the median is going to be less reliable. There is going to be a significant amount of variance around the median.
In other words, the median may not be a great figure to use when analyzing the average real estate agent salary. Instead, the data should be broken out with various variables, such as years in real estate.
NAR did make the effort to break the data out by years of experience. For real estate agents with less than two years of experience, you can be pretty confident that the average real estate agent makes less than $10,000 a year.
But, for agents with more than two years of experience, we face the same problem as the total data set. The spread is large and the reliability of the median isn’t very high.
That’s all great, but how do you increase your odds of success and earn more as a real estate agent?
How To Earn More Than Real Estate Agent Average Income
Your earnings don’t have to be average. In fact, you can give yourself a better chance at beating the averages. While the average agent under two years earns less than $10,000, there are agents out there who are earning more than $150,000 with just two years of experience.
Agents who are beating the odds and earning more have two things in common: they are great at marketing and they are partnered with the right real estate brokerage.
Partner With The Right Brokerage
There is plenty of advice around the internet about how to successfully market in the industry, so I want to focus on partnering with the right brokerage.
One way to increase your personal income is to improve your commission structure. When I broke down the average Michigan real estate agent income, I used a 70/30 split.
Imagine instead that you’re working for a brokerage that offers an 80/20 split. Your income would increase by roughly $6,550 per year.
Or, imagine if you work for a real estate broker that offers profit sharing, revenue sharing, or sponsorship income opportunities.
For example, at EXIT realty, you can earn sponsoring residuals that equate to more than 100% of your gross commission income.
The EXIT Formula
Whenever a real estate agent at EXIT completes a transaction, a bonus is paid out to the individual that sponsored the real estate agent into the company. This amount is equal to 10 percent of the gross commission earned by the recruit. This continues for as long as the recruit stays in Exit and generates sales.
The benefit is that this amount doesn’t come from the real estate agent. The real estate agent gets a favorable and competitive market commission structure and the sponsoring agent gets 10% of the gross commission income from the sale.
How is EXIT able to do this? Instead of spending hundreds of thousands of dollars running ads and taking out expensive TV ads, the company passes this money to its sponsoring agents.
Under the EXIT formula, instead of paying a marketing agency to bring in more real estate agents, EXIT pays its agents.
Residuals add up handsomely for example a recruit generating $70,000 gross in commissions will earn the sponsoring agent $7,000 in a year. If that agent stayed 9 years that would generate $63,000
And all this, with NO DESK FEES!
EXIT is one of the most cash flow friendly brokerages for new real estate agents. Lower your expenses while building your real estate career.
Isn’t it time you considered making the final business decision of your real estate career? Contact us today for detailed information on career opportunities with EXIT Realty. You’ll be glad you did!
