Yes, real estate brokers generally earn more than agents in California. However, the increased commissions come with increased responsibilities. Is it worth getting a broker’s license in California? We’ll answer the question, “How much does a broker make a year?” and help you decide whether earning your broker’s license is worth it.
Key Takeaways
- Real estate brokers in California generally earn more than agents, with a full-time average gross income of $390,625. This is due to higher commission splits, ownership opportunities, and advanced training.
- Earnings are influenced by factors such as the number of hours worked per week, specialization in niche markets like green properties, and the broker’s location and experience in the industry.
- Brokers have higher income potential, more control over business operations, and the ability to diversify income streams. However, they also face challenges such as legal compliance, liability for agents’ actions, and less time for direct client interactions.
- Deciding to pursue a broker’s license depends on personal career goals. While brokers tend to earn more and have greater business control, the decision should be based on individual readiness to handle increased responsibilities and reduced client interaction time.
How Much Does a Broker Make Per Year in California?
According to the most recent salary guide, the full-time average gross income for a real estate broker in California is $390,625. How does that compare with what you earn as a real estate agent?
Factors Influencing Earnings For Real Estate Brokers
As someone already working in the industry, you understand that a real estate professional’s income depends on your actions and decisions and factors beyond your control. The overall state of the economy and industry can cause fluctuations in your earnings. However, working more hours or specializing in an underserved niche can boost your commissions regardless of economic conditions. Here are factors you can control that may influence how much you can earn as a real estate broker.
Number of hours you work per week
According to the California real estate salary guide, a real estate professional’s average income increases steadily with the number of hours invested in their business each week. Our income guide indicates that those who work 40 to 50 hours per week nearly double the earnings of those who work 29 to 39 hours.
Related: Can I Live on a Part-Time Real Estate Salary?
Niche or specialty
Real estate professionals who concentrate on one or more specializations tend to earn more than those who don’t focus on a particular niche. In California, the most lucrative specialization is green or eco-friendly properties.
Other factors that influence earnings
Your location and tenure in the industry can significantly impact your earnings. Building a successful real estate business takes time; salary data reflects this. Additionally, certain California markets perform better than others.
Comparing Earning Potential: Brokers vs. Agents
Why do brokers make more than agents? It’s not simply experience that automatically increases a broker’s earning potential.
It’s worth noting that real estate brokers must have either a minimum of two years of full-time licensed salesperson experience within the last five years, two years of unlicensed equivalent experience, or a four-year degree with a major/minor in real estate.
Here are a few reasons brokers typically earn more than real estate agents.
1. Brokers earn higher commission splits.
Brokers often have the leverage to negotiate for a larger percentage of their sales commissions. This is because they require less supervision and can complete transactions independently.
2. Brokers can own their own firms.
Some brokers establish their own brokerage firms or assume leadership roles in existing ones. This enables them to generate income from the business’s overall profitability, which includes fees from agents, property management, and other brokerage services.
3. Brokers receive advanced training and education.
To become a broker, you must complete pre-licensing courses similar to those you took to become a real estate agent. Here’s a list of required broker license courses:
- Real Estate Practice
- Legal Aspects of Real Estate
- Real Estate Finance
- Real Estate Appraisal
- Real Estate Economics or Accounting
- Three courses from the following list:
- Real Estate Principles
- Business Law
- Property Management
- Escrow
- Real Estate Office Administration
- Mortgage Loan Brokering and Lending
- Advanced Legal Aspects of Real Estate
- Advanced Real Estate Finance
- Advanced Real Estate Appraisal
- Computer Applications in Real Estate
- Common Interest Developments
The information you learn from these courses will enable you to complete more complicated transactions, which could also increase your income.
4. Brokers earn more income by providing additional services.
If you choose to open your own brokerage after earning your broker certification, you can diversify your income by offering diverse services, such as property management.
Advantages and Challenges of Brokerage Ownership
It’s important to note that there are advantages that come with being a broker – but there are also challenges. Here are some to consider as you decide on the course of your career.
Advantages of being a broker
Besides higher income potential, here are some additional advantages of becoming a real estate broker in California.
- Having a broker license makes you more marketable. Clients are more likely to trust brokers for commercial or luxury real estate transactions. Handling these transactions can boost your income even if you choose not to take on a leadership role in your firm or open your own brokerage.
- Brokers have more control over business operations, policies, and the brokerage’s overall direction. This includes setting commission splits, managing the company culture, and choosing marketing strategies.
- Brokers can have diversified revenue streams. Brokers can provide various real estate services, such as property management, training, and consulting. Having multiple income streams is essential during a slower real estate market.
- Running a brokerage can enhance your personal and professional development. It will also allow you to improve your leadership and management skills.
Challenges of being a broker
There are some disadvantages to becoming a broker – even during a hot real estate market.
- Brokers must ensure their brokerage complies with all local, California, and federal real estate laws and regulations. This can be stressful and time-consuming.
- Brokers are responsible for their agents’ actions. Legal issues or disputes can result in significant liability and financial consequences for the brokerage.
- Brokers spend less time “doing” real estate. If your favorite aspect of being a real estate agent is working with clients, you may have less time for this if you take on a leadership role as a broker. However, if you’re ready to spend less time with clients, becoming a broker may still be worthwhile.
Is It Worth Getting a Broker License in California?
We have shown that brokers tend to make more money, have more control of their business operations, and can enjoy diverse income streams. However, you may still wonder, “Is it worth getting a broker license in California?” While we can’t answer this highly personal question, we can tell you that Allied Schools provides all the courses and training you need to become a real estate broker.
Allied Schools offers convenient, flexible, and affordable California broker license courses for those ready to advance their careers. We offer flexible at-your-own-pace online courses and livestream courses. You’ll learn from industry leaders and can earn your broker license quickly.
Questions? Contact an Allied Schools representative today to learn more about our California broker program.
Source:
“Requirements to Apply for a Real Estate Broker License California Department of Real Estate. Accessed July 19, 2024. https://www.dre.ca.gov/examinees/requirementsbroker.html.
