How Much Do Real Estate Agents Make In Kentucky
Kentucky is a state well-known for its unique blend of culture and rich heritage. From the Colonel’s famous fried chicken to a long history of coal mining and even a surprisingly strong college basketball scene. With cities like Louisville, Lexington, Campbellsville and LaGrange all reporting strong home appreciation figures, the property market is definitely heating up. Yet the state is often overlooked in the real estate industry.
Admittedly the housing market in the state has lagged somewhat behind the national average. However, this does not mean the property market in the state is not lucrative. Quite the opposite. Many real estate agents and brokers in Kentucky state are making six-figure incomes. For example, housing sales records in 2021 broke records with a mind-boggling $14.3 billion total revenue. This represents a 16% increase over last year and more than double the figure achieved five years ago. Obviously, the housing market in the Bluegrass State is doing just fine
Let’s take a look at how much a real estate agent makes in Kentucky, the factors affecting this figure, and how you can get your real estate license in the State of Kentucky. Keep on reading!
So How Much Does a Real Estate Agent Make In Kentucky?
There are a lot of things that affect how much real estate agents make. Factors like years of experience, education, your niche, and which area they operate within are very important. Other significant details that you have to consider are brokerage fees and commissions. Usually, this is a fixed percentage between you and your brokerage.
According to data from the U.S. Bureau of Labor Statistics, the annual mean wage of realtors in Kentucky was $46,162. However, this may vary widely even within the state, as we explain later in this article. Let’s take a closer look at some of the key factors that affect just how much real estate agents make in the state of Kentucky.
Factors Affecting How Much A Real Estate Agent Makes
Let’s take a closer look at some other important factors which may affect how much a realtor in Kentucky makes. They include:
Location
As you would expect from any job which pays on a commission basis, higher product prices mean higher earnings. In a profession like real estate, the product is property. If there’s one thing that is peculiar about property, it’s that the price can vary widely depending on location. Things such as the degree of urbanization, commercial appeal, accessibility and demand greatly affect why the prices of homes in different locales vary widely.
This probably explains why real estate agents who operate in certain neighborhoods end up making more than others. The median home value in the state is $167,586. However, the median home value in Louisville Kentucky is almost double that at $255,776. This shows how location can significantly affect home prices and in turn real estate earnings.
Your Broker
Your broker plays a key role in determining your income as a real estate agent, especially as a budding agent. In fact, brokers are so important that some states even require that you be registered with a sponsoring broker before you are allowed to take the real estate exam. Before joining an agency you will be required to sign a contract which outlines key details such as how commissions will be shared, the bonuses you’re eligible to receive for hitting certain targets and in some cases may even involve a fixed salary structure as well.
This commission is shared between you and your broker based on an already agreed ratio known as the commission split. This may differ based on several factors such as your broker, level of experience, the amount of money involved in the deal and so on. A common commission split is 70 percent to the agent and 30 percent to the broker.
While some experienced agents don’t see the need to split their commission with a brokerage firm, for new real estate agents such relationships are very important. Brokers provide you with the much-needed service of being offered prospective buyers and sellers without too much effort on your part. This gives you time to learn the ropes and further build your professional network, two factors that also contribute significantly to your income.
Years of Experience
More time put into the profession is usually a good indicator of more experience, better professional qualifications, and a stronger network. It also means more time to build your reputation and achieve stronger leverage to negotiate better deals with brokerages. This probably explains why the salaries of real estate agents vary significantly based on their years of experience.
A 2019-2020 study showed that the average income of a realtor more than tripled after the first year. The same study also showed agents with 4-10 years of experience had an average income of $63,595. Also, those with over 10 years of experience earned over $100,000 a year.
Your Qualifications
The real estate industry has moved on from the traditional role of just buying and selling property. Therefore, real estate agents also are expected to keep up with the demand from their clientele for new services. Agents with these qualifications are in higher demand and are likely to make more than their counterparts with fewer qualifications.
Property management, commercial property investment, and land consultancy are just a few of the many areas realtors can specialize in. These qualifications build your reputation, increase your expertise and allow you to provide better quality service to your clientele.
The Economy
The housing market is affected significantly by the economy at a local, state, and national scale. The pandemic illustrated this point clearly with the effect it had on the housing market. Statistics showed a drop in new home listings by over 40%, a 25% increase in delistings, and a fall in queries for agents, online search activity, and offers made – which are all important measures of demand in the housing market- during the height of the lockdown.
During times when home sales have been at their lowest – such as the 2008 housing market crash – the average salaries of realtors fell nationwide. So when the economy struggles or the housing market stagnates, it is natural that realtors should notice a dip in their income. This also means that realtors operating in cities with a thriving economy are more likely to earn a higher annual salary.
Related: How To Become A Real Estate Agent In Kentucky
Area of Specialization
Realtors may specialize in residential properties, commercial properties, or other specialized areas of real estate. With each niche comes its respective skills and peculiarities. However, these may also affect how much real estate agents within the state make.
Commercial properties are on average more valuable than residential properties. This means that realtors who specialize in commercial properties on average make more than those who specialize in residential properties. Of course, this does not mean that residential properties are not profitable.
Government Policies
Government policies on a local, state and national level have a significant impact on the housing market. Policies that encourage property buying such as low-interest rate mortgages and Government Sponsored Enterprises stimulate the housing market.
Bank interest rates and loan qualifying criteria largely determine the ease at which buyers can access the loans they need to purchase a property. Policies like restricting access to private mortgage insurance and increased interest rates restrict the housing market.
How To Get Your Kentucky Real Estate License
Getting your real estate license in Kentucky is a straightforward process. But first of all, there are several criteria you must qualify for and a few steps to follow. These include:
- Be at least 18 years of age
- Have a high school diploma or GED
- Complete 96 hours of approved Pre-Licensing education
- Pass the course final exam
- Complete the background check requirement
- Pass the Kentucky Real Estate Examination
- Complete the application
- Acquire Errors and Omissions (E&O) insurance
The entire process from starting your pre-licensing courses to receiving your license may take several months, depending on your schedule and other factors.
Sign up for real estate classes here: Kentucky Real Estate School.
In Conclusion
The real estate market in Kentucky is a lucrative industry. All you need is time, dedication, and a lot of hard work. However, with the drive and determination to constantly improve yourself and your network, you’ll be making a decent salary in no time. So what are you waiting for? Click here to learn more about the requirements needed to become a real estate agent in Kentucky and start your journey into the housing industry.