A real estate broker’s salary can vary greatly due to the wide range of possible job descriptions. The use of a real estate broker’s license to make deals on his own or as the manager of a brokerage, drawing a set salary with incentive compensation, is one of the key determinants of a real estate broker’s salary. Furthermore, real estate brokers can use their license for jobs that are unrelated to property sales, which can have an impact on their pay.
Whether a real estate broker works in sales or on a non-sales-related staff position is one of the most important factors in determining their salary. In a sales position, a real estate broker’s income is usually derived in part or entirely from incentive pay. A real estate broker’s salary for non-sales work is typically higher, but the broker will have fewer, if any, incentive pay opportunities, resulting in lower total compensation.
A typical real estate broker serves as both a selling agent and a sales manager. He or she usually works as a contractor, earning money for closing deals rather than being paid a salary. This arrangement can be extremely lucrative for brokers who both close their own deals and get a cut of each deal closed salespeople under them, and it is not uncommon for brokers who work as sales agents to earn six figures in 2011. Other brokers are paid a salary as well as a small commission on transactions. The smaller performance-based portion of their pay means that they frequently earn less in good years when they have good performance in exchange for the security that the salary provides.
Typically, real estate brokers work in either the residential or commercial sectors of the industry. Commercial brokers, on average, outearn residential brokers a large margin. Commercial real estate brokerage, on the other hand, is a much more difficult business to break into, whereas anyone with a license can become a residential real estate broker and open their own brokerage.
The work ethic and productivity of a broker ultimately determine his salary and other earnings. Many real estate brokers work part-time, selling houses on weekends or chasing the elusive “big paycheck” in commercial real estate, and make a pittance. Others, whether on the residential or commercial side, work consistently and have a good strategy, and can earn incomes in the high six figures, with some commercial brokers earning seven figures.