Realities of Being a Real Estate Agent

Thousands of people every single day in America are eagerly chomping at the bit after having taken their state real estate exams and passing them with flying colors. The sad reality is that well over half, and probably nearer to three fourths of new agents eventually drop their licenses after just two or three years. Some keep them up only to do real estate part-time while they work at another major job that pays the bills. Some get licensed just to benefit from the commissions when they buy and sell their own properties. But people who have thought about becoming agents and working that as full-time professionals need to go into that decision with eyes wide open. If they don't, they can loose some big money and a few years of their lives doing something for which they're not suited or not equipped financially to handle.

First, let me say that doing real estate full-time is very, very costly. Like any sales job, what you make on sales and service is only the "Net" and not the gross of earned commissions. An agent must work under a licensed broker, like a local agency or one of the national franchises such at Coldwell-Banker or Century 21, for instance. That broker pays for the agent's desk, carries the expenses of maintaining an office and should help the agent with disputes or problems. It's crucial to get a broker who doesn't care about managing his or her office and you're in trouble. New agents need all the help and training they can get. I found myself in trouble when I realized that my broker was actually competing with all the agents in her office. It was, in fact, a very troubling problem that caused quite a lot of muffled grumbling in our office. This broker had worked her way up, of course, and deserved the success she had earned. What she did not earn was the right to ignore her broker responsibilities to all the other agents under her, who put money in her pocket every time they made a sale. She was hard to reach. She had a slew of assistants that had to be gotten around just to talk to her. And she was generally selling her own property listings 24/7.

Next, new agents sometimes haven't really reviewed all the expenses they'll have to eat out-of-pocket before making one single penny to cover them. This is why some people quit after the first or second year as my sister did. Every real estate agent in any state must carry E&O Insurance. This stands for Errors and Omissions, and it is insurance that covers any expenses in the event they're fined or are sued by any party regarding their agency work. This insurance can cost several hundred dollars every two years, but it is necessary. In fact, most brokers and all local real estate boards require agents to be current in their carriage of insurance in order to maintain their licenses.

The agents must be members of the MLS, or Multiple Listing Services. This enables them to list their properties online and to access that service to search for property for buyers. It's an expensive service, also costing several hundred dollars every year. In addition to this, agents should be members of NAAR, the National Association of Realtors. I suppose an agent could get by without this, but he or she would hardly find an employer of broker willing to hire them without this membership-another several hundred dollars. And then, guess what? The state and local memberships require continuing education in order for the agents to be able to maintain their membership in good standing. Again, here's another couple of hundred dollars more or less, depending on where one lives.

But here's the biggie. Many people simply do not realize what it costs and takes for a new agent to get new customers. There are business cards to be printed, handouts like pens, scratch pads and refrigerator magnets with a personal logo and contact information to hand out to strangers, acquaintances and new clients. But it doesn't stop there. Once an agent gets a small client base, its important to keep contact up. Christmas cards, reminder mailings, requests for referrals-all these are almost necessary so that customers and clients never forget that you're a business professional who needs support and is willing to do what it takes to get it. Even these things pale in comparison to what it costs to advertise and market a home once a listing contract is signed. This is probably the highest cost any agent will ever incur for any one thing. A small one-time ad in a Sunday paper (maybe six short lines) can cost over $60! This is a One-day ad, you must realize. It you have 5 homes listed it will cost you over $1,200 per month to advertise these homes. This alone can completely knock a new agent out of the game in a slow market or if the commissions for the homes are small. Even buyer's agents, who aren't advertising properties for clients, can waste a huge amount of time showing homes to disloyal customers who may just turn around and buy a home from a FSBO (for sale by owner). This has happened to me more than once and it's not the greatest feeling in the world. Showing properties takes time and money in gas and lunches. And the miles it puts on the odometer are incredible.

The job of an agent doesn't stop on weekends. In fact, these can be the busiest times. I often worked almost ten hours a day on weekends, talking on the phone, showing properties, holding open houses, and working on the computer. It's an interesting profession and people who love service-oriented work and people, can do quite well in real estate. But the national figures show that the average agent makes just under about $30,000 per year. This is gross, and it's much less than a master plumber makes. So just be aware that people can make some really big bucks in real estate, but they have to have either a spouse who can carry the home expenses the first one or two years, or some very deep pockets themselves. The money has to be there to self-promote, advertise, join clubs and circulate, keep up presentable wardrobes and personal grooming, and to purchase and maintain an excellent car. If an agent is good, has done all his or her homework and has a genuinely great attitude plus a quick intelligence, this job can bring a lifetime of enjoyment and wealth.