Thousands of new real estate agents open up their businesses every year, and they have high expectations for income from helping people to buy and sell homes.
It's that high-income expectation without a lot of hard work that gets some of them into trouble. Yes, you can make good money in real estate, but the median income of a real estate agent has held pretty steady over the past few years at around $44,000.
Out of that $44,000 are subtracted their costs to get and maintain their license, errors and omissions insurance coverage, and marketing and advertising to build their business. A very high failure rate plagues the industry in the first two years of agent business. That first year or two is when the agent finds out that the business they expected from family and friends isn't as much as they need. So, here are some considerations for making the decision to take the leap to real estate as a career.
1. It's difficult to do part-time.
Yes, there are part-time agents and you can do deals when you're not at work. However, if your work schedule is like most of your customers', it's going to be difficult to hook up with them and provide the service they need. They'll want your weekends, so get ready to work seven days a week.
2. You are an independent contractor.
Though you'll have to work with a broker who sponsors your license, you are in business for yourself. This means that you'll need to keep up with laws and taxes to make sure you don't end up crossways with the IRS.
You can choose a broker who is willing to provide you with training and some leads through office duty, but if you don't hustle up your own leads, you're not going to make it.
3. Full-time is an income roller coaster.
That $44,000 figure isn't for the first year agent. So, even if you make it through that first year, that number is not evenly spread out at $3,600 per month. The income can come and it probably will, but it will be more like half in a three-month busy season and the rest sporadically over the remainder of the year.
4. Your broker doesn't care a lot about your success.
Sure, your broker wishes you well and wants you to succeed. However, the costs to a broker in adding you as a new agent are low. They already have the office and overhead, and giving you a cubicle in the corner is cheap, so they'll take a chance on you.
If you make it to "top producer" status, you'll be able to negotiate with your broker for a better commission cut and other goodies. Until then, however, you're on your own — and you better produce, or that cubicle is set to belong to someone else.
5. If you're into service and like the work, you'll succeed.
If you're into houses, showing them, the sales and transaction process and helping people to buy and sell, you're probably going to succeed and make a lot of money over time. Just get into the business with a realistic attitude and income expectation.
