U.S. News & World Report ranked real estate agent as the #4 career opportunity in the sales and marketing category. There are many factors to consider when deciding whether you should become a real estate agent. The appeal of working for yourself and scheduling your time with the potential of a six-figure income explains why so many people decide to give real estate a try.
Most real estate agents are self-employed for tax purposes. This is both the good news and the bad news. While you will be able to write off business deductions like mileage and other expenses, it will require some rigorous record keeping so that you can take advantage of these tax deductions. If the idea of preparing a Schedule C bothers you, then you may need to add a tax preparer to your new list of expenses.
Below are major considerations you should think about before deciding if a real estate
career is right for you.
Can you make good money as a real estate agent?
U.S. Bureau of Labor Statistics reports that real estate agents earned median average earnings of $48,690 based on May 2018 data. Compared to the median income of all occupations that earn a salary of $38,640, the potential to earn substantially more than the average worker is obviously a motivating force for many people. To provide more perspective, it is worth noting that the top ten percent of real estate agents earned in excess of $163,540 based on May 2018 numbers.
It takes time and money to get licensed
While getting started as a real estate agent isn’t free, compared to going to college and getting a four-year degree, the cost is relatively moderate. Granted, you can always get a job with few if any out of pocket expenses to get started. However, if you want the freedom and income potential that real estate agents enjoy, then the costs aren’t too high relative to what entrepreneurs spend to start other types of new businesses.
Realtor.com recommends preparing for the expense of a pre-licensing course to the tune of $200 to $300 and a licensing exam cost of $100 to $300. The fees vary depending on your state and the course fees charged by independent schools. Activation fees also have to be budgeted into the total, ranging from $200 to $400.
Depending on the type of course you take and when you are prepared to take the test, this pre-licensing period can easily last three to six months or even longer. Some students opt for an online course to speed things up. Given that some licensee candidates have to take the test a second time to pass it, this timeframe may be longer.
Are you a self-starter with hustle?
One of the biggest surprises that new agents run into after getting their hard-won license is that they know very little about how to get clients and start earning money. This fact becomes apparent quickly as “green” agents still need a lot of training in marketing so that they can begin to get listings and buyers.
It is no secret that you need to be a self-starter to do well in real estate. While brokers are happy to give you pointers about how to get new business, the hard work of marketing and networking will rest solidly on your shoulders as an agent. The competition is fierce but the benefits are worth it once you learn the basics and make a commitment. Self-discipline will be key to your success.
Full-time or part-time commitment
One of the first questions that many new agents must ask themselves is whether they want to start off full-time or part-time. Typically, budgetary considerations will guide you to the correct answer to this important question. You should remember that the broker you sign up with may have definite requirements relative to this question. Some brokers do not hire part-time agents, while others do.
When deciding whether to go “all in” or work part-time, you should assume that it may take a year or longer to start earning the income you need. That’s why many new agents start off on a part-time basis, so they can keep a regular part-time job to have steady money coming in.
The other fact to consider is that you will be spending money on real estate expenses. You will have to pay for a listing service and broker office fees in some cases. There will also be marketing fees and money required for car expenses.
Realtors don’t work a traditional 9-5 work schedule
While many agents love the flexibility they have as a realtor, it is something you have to grow accustomed to if you have always worked in a regular “9 to 5” job. It is common for agents to work evening and weekend hours since that is often the best time to meet with sellers and buyers. You will have to develop time management skills to juggle this new way of life.
Since there are many ways to work as a real estate agent, it will be important to find your niche so that you can also spend the time you need with your family. Agents with young children at home might decide to work as a listing agent since they might have fewer buyers expecting them to spend a lot of time looking at houses. Listing agents often have a little more control over their schedules once they get into a rhythm. Conversely, buyers’ agents may have to be a bit more responsive to buyers’ needs, striking while the iron is hot with buyers facing a strict moving schedule.
Where will you work?
Real estate agents must find a broker to hold their license. The broker is on the hook legally with the State Real Estate Commission. While you don’t work as an employee for a broker, they are the leadership that agents turn to for help with training and legal compliance.
Brokers all have their own set of rules. That’s why it is so important to meet with several brokers to discuss their expectations and see how comfortable you think you would be working with them. When you meet with a broker, it is a two-way interview. You should have questions prepared before the meeting.
Can you afford to get started after being licensed?
If you need steady money coming in and you can’t rely on a spouse with a set income, it will be critical for you to know ahead of time how you will handle this challenge. Depending on the economy, your skills, and your income requirements, it may be impossible for some people to make enough money to get started.
Some agents have to rely on savings to get started. This is not a bad idea. Be prepared to have six months to a year of savings set aside to pay bills while you get started.
Real estate agents have an attention for detail
Like so many other disciplines, real estate is a business of details. Too many new agents view real estate as fun and games, imagining their days filled with looking at nice homes and making offers. These people are in for a huge surprise.
Real estate contracts, appraisals, and lender requirements will become a big part of your life. In many cases, your clients will depend on you to help them buy or sell their largest asset. This is a big responsibility and entails understanding how to write and read real estate contracts.
Learning to review appraisal and inspection reports is also an important aspect of a real estate agent’s role. Buyers expect their agent to explain the relevant details of these reports so they can make smart decisions. For example, inspection reports can be overwhelming and kill many purchases unless an experienced agent is able to put things in perspective.
Understanding which repairs are common for homes of a particular age makes it easier for buyers to know what to expect. The more knowledge an agent has about the area and common home repair issues, the better they can truly serve their client.
Do you have a gift for sales?
You don’t have to be a natural salesperson to sell real estate. It is important; however, to understand that a successful real estate agent must be comfortable with the sales process. Since agents work in an advisory role, you must be confident and have excellent communication skills. Otherwise, it will be extremely difficult to gently nudge your clients to buy or sell when they start getting cold feet.
Can you handle negotiating between buyers and sellers?
One of the most challenging tasks that agents must master to reach their full potential is to become a fair-minded but firm negotiator. This high-level skill can make an enormous difference in your earning power. Knowing how to read people and keep the negotiation from becoming contentious is important.
While an agent generally represents either the seller or buyer, it is still important to get along with the other parties if you want to maximize your income. There is no denying the fact that negotiations can be stressful.
Agents are often negotiating with the agent that represents the other side of the transaction. Both agents need to be capable of keeping the peace while ultimately structuring a good deal that is satisfactory for both the seller and buyer.
In some of the most challenging negotiations, husbands and wives may be in disagreement over certain terms which is a tough conflict to handle without alienating either person. The opportunity for disputes is endless.
If you plan to start your real estate career based on understanding the information above, then you are more likely to succeed. With so many positive reasons to seriously consider becoming a real estate agent, it makes sense to fully investigate this career option.
One of the biggest misconceptions new agents have is that they will be able to earn a lot of money as soon as they get their license. It is important to understand that unrealistic expectations like that are certain to leave new agents disappointed and ready to jump out of the profession.
Like starting any new business, becoming a successful agent will take serious effort. There will be a steep learning curve that will last a year or longer. If you have excellent people skills, a plan for surviving for a year with limited income and perseverance, and the money and time to become licensed, then you are in an excellent position to become a successful agent.