How Much Do Real Estate Agents Make In California

When it comes to real estate within the US, California has always been a powerhouse. Real estate in the Bear Flag State has always been strong, with some calling it the” gold rush” of our time. This, of course, means that being a real estate agent in California is a very lucrative career path.

Let’s look at how much a real estate agent makes in California, the factors affecting this figure, and how you can get your real estate license in the State of California.

So How Much Does a Real Estate Agent Make In California?

For obvious reasons, it’s hard to pinpoint an exact figure for annual income. Obvious factors such as the workload, popularity, property listings, location, and the local demand for a property are obvious factors. However, more silent predictors like years of experience, brokerage policies, qualifications, and even local politics can profoundly affect just how much a realtor makes at the end of the year.

According to recent data, the annual mean wage for California real estate agents was $68,860 as of March 2022. However, it’s important to remember that the average salary of a realtor in the State of California can vary widely. This article aims to give you a rough estimate and explain some of the key factors affecting this figure.

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 California makes. They include:

Location

The State of California is quite large. It is the third-largest state in the Union, with an estimated total area of 163,696 square miles. This area has urban, rural, residential, commercial, private, and public properties. So it’s expected that all these properties will have different prices based on various factors such as access to basic amenities, transportation, business environment, safety, and so on.

So why does this matter to us? Well, real estate agents are paid on a commission basis. This means that the higher the property’s value, the more you stand to gain as the realtor who facilitated the deal. Real estate agents who are more active in high-value areas are therefore in a better position to make more than their colleagues who operate in areas with a lower average property value.

Your Qualifications

The real estate industry in California is undoubtedly cutthroat. Realtors have to do their very best to compete with their colleagues. This involves being better qualified and possessing more high-quality certifications, which puts their services in high demand. Some key areas you may want to look at include 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. Most of these can be taken as post-licensing educational courses, which are usually organized by the real estate governing body in charge of the state.

Your Agency

Choosing the right agency might be one of the most critical decisions a real estate agent makes in his entire career, superseded (arguably) only by choosing a spouse. Your agency does more than determine the type of deals you may be exposed to, and they also affect how much you stand to make. They can help increase your popularity, get better deals, and expose you to much-needed hands-on training.

Usually, the commission from a real estate deal is split between the real estate agent and their agency according to a predetermined ratio known as the commission split. Some other things your agency may offer include bonuses you’re eligible to receive for hitting specific targets, and promotional material. In some rare cases, they may even provide a fixed salary structure.

Years of Experience

A study carried out between 2019 and 2020 showed that the average income of a realtor more than tripled after the first year. The same survey 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.

If you’re wondering why the results of the study showed such a skewed result between the income of novice agents and those with longer experience, it can be broken down to a few simple reasons. The most important of these factors include the fact that real estate agents who have been active participants in the industry for a long period of time have built up a strong professional network, learned the intricacies of the business, and have the leverage to negotiate better deals than their less experienced counterparts.

The Economy

The economy affects the housing market on a local, state, and national scale. The pandemic illustrated this point clearly with its effect 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 essential 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 thriving economies are more likely to earn a higher annual salary.

Area of Specialization

This factor is somewhat related to location but on another scale. 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, each of these may affect how much real estate agents within the state make.

Commercial properties are, on average, are more valuable than residential properties. This means that on average, realtors who specialize in commercial properties make more than those who specialize in residential properties. Of course, this does not mean that residential properties are not profitable sales.

Local and Federal Policies

California homeowner policies have famously been touted for years as one of the reasons for the ridiculously high property values in the state. Government policies on a local, state and national level also significantly impact the housing market. Policies encouraging 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 California Real Estate License

Getting your real estate license in California is a straightforward process. But first of all, there are several criteria you must qualify for and a few steps to follow. These include:

As we mentioned before, several key criteria must be passed before becoming a real estate agent in the State of California. These criteria were put in place by the California Department of Real Estate (DRE), the government agency in charge of licensing and regulating real estate agents within the state. In a nutshell, they include:

You must be at least 18 years old
You must have a high school diploma or its equivalent
You must either be a California resident or apply for an out-of-state license
Complete 135 hours of California Real Estate pre-licensing classes
Pass the final exams in your pre-licensing real estate courses
Submit to a criminal background check
Schedule your Real Estate Sales Associate Examination
Pass the California Real Estate Sales Associate Examination
Find a broker to sponsor you
Complete your license application

The entire process, from starting your pre-licensing courses to receiving your license, may take several months, depending on your schedule and other factors.

In Conclusion

The real estate market in California is a challenging but lucrative industry. You will need a significant amount of dedication and hard work to succeed. 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 California and start your journey into the housing industry.