Real estate agencies are apparently a very profitable source of income as the housing market typically enjoys a great boon. However, as with every other job, being a realtor has its peaks and valleys. That said, let’s dive into the advantages of becoming a realtor.
Table of Contents
Pros of being a Realtor
Unlimited Income Potential
Firstly, becoming a realtor is an appealing prospect mainly due to the unlimited income potential it brings to the table. Real estate agents are paid a commission on the selling price of the house they listed. This means that realtors can decide on their own how much work they can take on. To simplify, realtors earn about 4-6% commission on the selling price. In today’s market that can be translated as: If a listed property is sold for say $1,000,000, the real estate agent walks away with $25,000 – $30,000. This is for a single sale.
This means that real estate agents can decide the number of projects they take on while also negotiating a higher commission rate with the seller in some cases.
(Commission rates may vary from state to state as they are dependent upon numerous variables including the state of the market, the type of property listed, the state of the listed property as well as the value of most properties in the neighborhood).
Secondly, real estate agents are their own boss which means they can decide the hours they work at their convenience and in order of priority. This flexibility allows agents to balance their personal and work lives: For agents with children, this is an attractive and accommodating perk in the real estate industry. Parents can attend to pressing matters as well as spend quality time with their families.
A successful full-time real estate agent learns to maximize their time to increase earning potential, while part-time agents using real estate as a side hustle set flexible schedules to get the job done.
As a real estate agent, you gain the ability to work for yourself. More importantly, you have the opportunity to build your own business and brand. It also enables you to branch out and seek other niches inside and outside the real estate industry which can include a variety of job opportunities. For example, you can transition to a career as a real estate investor, or a residential appraiser, or depending on your experience you may also shift to a leasing consultant, an office manager, or even a sales associate.
The independence that comes with being a real estate agent can be further utilized in the following way: Since you’re your own boss, you gain the ability to expand your real estate business as much as you want to. Investing an abundant amount of time into your business is necessary as you have the opportunity to see it flourish.
Initially, you may begin as a one-person business however, you can grow your business by hiring assistants. Furthermore, you can also apply for a broker license and build a brokerage to help with your potential.
You are a Business Owner
Real estate agents are entrepreneurs. Building your own brokerage (as mentioned above) has unlimited potential as it frees you from the shackles of having to work under a broker to legally sell real estate. This means you will have your own legal business.
Moreover, agents can create their own schedules as well as decide what clients they work with while also deciding how much they work.
(If you do not own a brokerage and are working under one, many brokerages have resources to support their agents with marketing and lead generation. However, each agent decides how to utilize these resources in their business plan.
You Help People Achieve Their Dreams
One of the most underrated benefits of becoming a real estate agent is the power you hold as well as the reward. Realtors have the power to help people achieve their dreams by helping sellers get the best price possible for their property and often assist them with legal matters. This goes for both home buyers and home sellers, many of whom are striving to achieve an important life goal.
The opportunities available to homeowners are endless which is shown by the amount of gratitude they express when they get the keys to their first property. Of course, closing escrow is a great experience, because everyone leaves happy and full of gratitude.
It’s a People Business
Real estate is a people business and agents who enjoy working with others do their best: You meet people from all walks of life when you work as a real estate agent. From first-time homebuyers to investors, many clients have a need for real estate. For people with great social skills and the ability to network, the real estate industry is a great fit as building a professional relationship with your customers is a fundamental part of being a realtor.
Moreover, since agents can’t sell real estate without people who are ready to buy or sell, putting your clients first is imperative.
Whether or not your clients choose to use your services again, they may recommend you to their friends and family. Their goodwill can help you grow your client roster, therefore, your earnings as a real estate agent. Moreover, networking is an essential part of the real estate industry as a wide client roster means more properties which means more income.
The Real Estate Industry is not Without Its Cons
While this makes real estate seems like an extremely lucrative business, like every other investment, it has its risks and disadvantages as well.
In the current demographic, the number of jobs available is drastically low in contrast to the number of unemployed graduates across the market. The real estate market in fact is greatly saturated due to the constant increase in the number of new real estate agencies as the market is an attractive source of income for most start-up companies.
Success Requires Patience
One of the biggest cons of this job is that it requires immense amounts of patience. It may take weeks or months for a real estate agent to find their first client or close the deal. Agents need to put in a lot of work before they see profits, such as prospecting, conducting open houses, and advertising. Therefore, you should have a plan of action upon entering the industry to avoid having to quit in the first year as some real estate agents do.
You Experience Rejection
Another hurdle most realtors face is dealing with being rejected by homeowners or potential sellers. They have to deal with perfect strangers within their sphere of influence and not everyone will require or be able to afford a real estate agent. However, as long as realtors don’t allow rejections to stop them from pursuing new leads, they’ll be successful.
The Realtor Market Has Become Saturated
There are thousands of real estate agents in almost every state and especially in California, buyers and sellers will have a variety of real estate agents to choose from. This means that real estate agents have to work hard to differentiate themselves. One way to do this is to find a niche, a particular area, type of buyer, or type of property.
However, the best place to start from is to tap into your sphere of influence. Agents should get the word out to their friends and family. More often than never, many real estate agents will find that their first deal comes from those in their sphere.
The Method of Interaction is Crucial
Added to this, a major downside of working with complete strangers every few days is not easy as people are not always easy to deal with.
Being a real estate agent means agents will interact with clients, attorneys, other agents as well as third-party entities, all of who require different handling. Everyone will have individualistic ideas on ways to do business that may not be in sync with those they work with.
The Challenge of Escrow
Closing escrows are a final step in the job of a real estate agent and are often the most tedious and time-consuming as most escrows take more than 30 days to close regardless of what’s in the contract. Agents need to roll with the punches and be quick on their feet, while also tackling issues as they arrive. Among all this, they must keep their focus on closing escrow.
A real estate agent needs to do all he can to keep escrow intact and do what is best for the client. Professionalism is a key quality that all real estate agents should have, as long as agents stay professional the challenges will resolve.
While many jobs follow a standard workweek of 40 hours, real estate agents may work beyond this schedule. Not having a set schedule may mean you have to work during weekday evenings or over the weekend. While you may have time off during a weekday morning or afternoon, you may also have to miss out on time with family and friends over the weekend.
Different Personalities are Required
As a real estate agent, you have to interact with clients and other agents with varying personalities. While some people may be friendly, others may be harder to work with. In addition, some people may find it hard to separate emotions from business. If you can’t handle confrontation and remain level-headed, this can cause some unpleasant and high-tension situations.
Multiple Transactions are Highly Unlikely
Unlike other businesses, you can’t generate a lot of income from repeat customers. Many of your clients only need help to purchase or sell one home or property. While some of your clients may come to you for help in the future, they’re more likely to recommend your services to their family and friends than do business with you again.
While the real estate industry remains a profitable and ever-developing industry, aspirants should have a plan of action and realize that while the benefits may outweigh the costs, being a real estate agent is not everyone’s cup of tea.