When I was having lunch with a co-worker last week, the server overheard us talking about real estate. “I am thinking about getting my real estate license,’’ she said. We just smiled. We hear this all the time.
To an outsider, selling real estate must seem like the perfect job: flexible hours, the chance for a big payout on every sale, limited training to get a license, and working with people. It certainly can be an amazing career, but being successful in real estate sales is not easy. It cannot be a side job. If you are considering a career in real estate, you must look at the whole picture.
Real estate is strictly commission, so it is not unusual to go for months without a paycheck. In fact, it’s very likely. My first sale was within a month of starting, a million-dollar home with a hefty commission, but my second was a $400,000 home more than four months later. If I had not made that first sale, I’m not sure I would have stuck around for the second.
The new-agent dropout rate is very high. Many struggle to learn the business while building their client base. In 2014, real estate coach Tom Ferry tweeted out that 87 percent of real estate agents fail within their first five years. Whatever the number is, it’s clear that making a living selling real estate is not as easy as many people think.
A National Association of Realtors posting last April noted that the median gross income of its members was $42,500 in 2016 (an increase of 8.4 percent over the year before). Of course, there are top agents that make much more, but others make much less.
Still interested? Here are suggestions to help you succeed in this industry:
1. You need to have enough financial resources to carry you through the lean times. It’s advisable to have at least six months of living expenses saved when you start. You are an independent contractor, so you must pay for everything, from business cards to your “For Sale’’ signs. There are annual association fees, monthly fees for the Multiple Listing Service, and a variety of other costs associated with this career, including covering your own health insurance.
2. You have to be self-disciplined. It takes a lot of time and effort to learn the business and build a client base.
3. You must be “all in.’’ Because it doesn’t take much to get a license, there is a lot of competition. If you want to make good money, you need to be full time, in my opinion. With real estate sales, there is always a sense of urgency. When a new home comes up, you need to be ready to get your client in immediately and write up an offer. A good agent is available to clients seven days a week.
4. There are no guarantees the deal will close. No one gets paid until the sale goes on record. At times, through no fault of the agent, a deal will fall apart, and all you end up with is more experience. If you cannot financially or emotionally handle this type of a situation, a career in real estate sales is not for you.
5. You may never get a real vacation. Real estate agents almost always end up working on vacation — even if you have told your clients you’ll be unavailable and have other, trusted agents covering in your absence. At the end of the day, you are representing the client and want to make sure everything goes right — or there will be no payday.
Selling real estate can be a amazing career with unlimited earning potential. But like most businesses, being successful is not easy. It requires commitment and time to build a client base and reputation. If you are really serious, I suggest speaking with other successful agents to understand what it really takes to make it in this industry. You may decide to stick to your day job, but if you choose real estate, a career that I love, you’ll want to jump in with your eyes open.