When the real estate market is hot like it is today in Kansas City, it seems like that’s when everyone and their brother wants to get into real estate. If you’re looking for a career with a stable and steady income, guaranteed days off and a five-day workweek, then being a real estate agent is NOT the job for you. Selling real estate is very unpredictable and the stakes are high. You’re responsible for the biggest transaction of someone’s life, so there is a lot of pressure not to screw up. On the flip side, there’s nothing more rewarding than helping someone find their dream home. If you’re thinking about becoming a real estate agent, consider the following:
Be your own boss.
This is typically one of the top two reasons most people want to get their real estate license. They sit at their desk and dream of the day when they can sleep in late, show a few homes in the afternoon, and get paid the big bucks. Trust me, if it were that easy, everyone would be doing it. Being your own boss means paying your own taxes, insurance, advertising, signs, lockboxes, fees to the various Realtors associations and Multiple Listing Services just to name a few. It means doing all the work yourself. It means being available to pick up the phone when someone calls you or working around their schedule to show a home and that includes nights and weekends. It means not getting a steady paycheck. If you don’t close a sale, you don’t get paid; it’s as simple as that. When you first get your real estate license, be prepared because you may not get your first paycheck for another three to five months.
You’ll wear a lot of hats.
As an agent, you’re asked to do a lot of things that may fall outside your current comfort level. You’re an educator, a marketing expert, a financial advisor, a life coach, a marriage counselor, and a psychiatrist. Real estate purchases and sales are often prompted by life changes, such as marriage, new born babies, divorce or a new job in another city. Buying or selling a home is an emotional experience, so it’s your job to counsel your clients and guide them in the right direction. The job requires a personality that is flexible and adaptable to the needs of the customer. To be quite honest, expect your daily job to be an emotional roller coaster.
Competition is fierce.
If you think your current job is competitive, you ain’t seen nothing until you get into real estate. When times are good it seems like everyone is getting into the business. I can’t tell you how many people have told me they’re thinking about getting their real estate license this year. During the slow season, the job starts to feel like a grind. Agents are all scrambling for the same clients and the competition is cutthroat. Your best friend will list their home with an agent that’s only been in the business for three months because they “feel sorry for her…she doesn’t have any business and we want to help her.” Really? They want to give their biggest financial asset to a brand new Realtor with zero experience? I know, sounds crazy, but it happens all the time.
Expect your daily job to be chaotic.
One of the biggest problems with working as a Realtor is that virtually everything in the American economy is tied to the real estate industry. The employment outlook both nationally and locally can drastically affect home sales. The ups and downs of the stock market and the time of year all impact the housing market. The spring is a free-for-all, grabbing as many clients as you can, while the late fall and winter months can be pretty bleak. You’ll need to learn how to save money so you can pay your bills during the slower time of year. Also, if you need more business, just plan an out-of-town vacation with your family. The minute you’re 50 miles outside the city with the whole family packed into the car is when you’re guaranteed to get three phone calls from people that want to list their homes. It can be very frustrating at times.
Yes, but I’m going to make a lot of money.
The truth is that you’ll only make a lot of money if you sell a lot of homes. Let’s say your friend needs to sell his home because he’s taken a new job in Dallas. You list your friend’s $200,000 home at a 6% commission. SWEET! That’s $12,000. Well hold on there cowboy. Let me break this down for you. First off, that $12,000 gets split in half the minute the home goes on the market. You see, buyer’s agents are working with buyers and those buyer’s agents are not going to work for free. You will be giving up half your commission ($6,000) to entice them to show your listing to all their buyers. OK, well I still get to keep $6,000 which is a lot more than I’m making right now. When you get your real estate license, you’ll need to join a real estate brokerage. That brokerage will keep 30 to 50% of the commission on the listing side. Let’s just say it’s only 30% so after the broker takes his cut, you are now down to $4,200 in your pocket. But wait, Uncle Sam gets his cut too with federal, state, and local taxes. Now you’re piece of the pie is down to around $2,700. Hey that’s still not too bad. Well unfortunately you’re forgetting about all the additional fees just to keep your license in tact. Business insurance, licensing fees, membership fees to National Association of Realtors, Missouri Realtors Association, Kansas City Regional Association of Realtors. Oh and don’t forget about Heartland MLS fees too. After all, you want access to the MLS don’t you? What about a car, insurance, cell phone, laptop, internet service, for-sale signs, lockboxes, printer, etc? There are hundreds of dollars in monthly business expenses. By the time you sell that $200,000 home, you may actually clear $1,200. Add that up once per month and you’ve got to keep a big profit of around $14,400 per year. You think you can do better? I bet you didn’t know that the National Association of Realtors says this number is the average income of the 2 million or so Realtors in America today.
Now that you know the real facts of being a real estate agent, are you still thinking this is a good idea?