I get this question a lot from friends who are frustrated with their current 9-5 job and looking for a change. Thanks to reality TV, a career in real estate looks fun and very profitable. What you don’t see is the struggle that occurs during the first few years of building your own business. Since I first obtained my license in 2006, I have gone from being a brand new agent in a town where I had no family and a few friends to selling hundreds of homes per year. In the early days, I was happy closing 2 transactions a month and earning a teachers salary. Now I am personally selling around 80 homes per year, managing a team that will do just under 300 transactions this year and launching a software product, Nekst.
At the age of 34 and given my current family situation, I don’t think I would get into real estate at this point in my life. So whenever I am asked ‘how can I get into real estate sales?’, I do my best to talk this person out of getting their license. Below is an email response I sent to a college buddy recently who asked me this question. Hopefully my answers will help you make up your mind as well.
HOW DID YOU GET STARTED? - I got started going to a real estate school (Hondros) that offered 2 1/2 months of weekend classes to earn a real estate license. I did this while I was working my normal marketing job, so it was miserable. Then I aligned with a local broker and just tried to figure everything out. Real Estate is pretty competitive so no one really wants to take a lot of time to train you or mentor you so you really need to take it upon yourself to self educate and learn how to both be a salesperson and run a responsible business.
WHAT ARE THE BIGGEST CHALLENGES I WILL FACE? - The biggest challenge you will face is getting your friends and family to see you as a real estate professional. No one wants to pay a 6% commission to an unexperienced newbie. Begin to accept that friends and family may choose what they feel is “best for their home sale” by going with a more seasoned agent. You’ve got to get sales under your belt and some experience to better position you to convince future buyers and sellers to want to work with you.
Another big challenge is adjusting to being on call 24/7. You will work a lot of weekends and evenings starting out since that is when buyers are available to tour homes. You will be constantly checking your phone since your business will continue to operate at all hours. You will get calls on holidays (I received calls on Thanksgiving last year) and your wife will grow to hate your profession. So having a good work life balance, being able to tell a client "no", and making time for your wife and kids will be important to establish as early as possible.
WHAT SHOULD I EXPECT TO EARN? - I have seen a lot of agents start in this business and exit within the first year. You can't expect to make any money for the first 90 days. After than, a reasonable full time agent can make somewhere in the $20-$30,000 range depending upon their success. One of my buddies made $150,000 his first year, but he was very well connected in the community. I made about $36,000 before expenses. I have been able to double my income each year thereafter though. I will gross about $800-900,000 in commissions this year but I also have a LOT of overhead. So there is definitely an upside.
HOW IS INSURANCE TYPICALLY HANDLED? - If your wife works and you can be on her insurance, fantastic! If not, there is always Obamacare or some other traditional plan. Getting into this business without a second income is very risky and hopefully you have a year of living expenses tucked away. As an agent, there is not an option to group insure with other independent contractors.
WHAT TYPE OF BROKERAGE SHOULD I WORK FOR? - I have no clue what companies are successful in Indianapolis. But go with the company that has the best agent training for new agents. Then once you have gotten the knowledge you need, you can consider joining a different brokerage that won't cost you so much to be affiliated.
Real estate is an awesome industry and the majority of agents in it aren't too bright, which is why it's not so difficult to shine. I love being my own boss. I don't have to deal with quarterly reviews or be told I can't take a vacation. Once you work for yourself, you can never go back to the corporate structure.
One last piece of advice - make sure you get complete buy-in from your spouse. It's going to be very hard on them when your schedule is not consistent. It's Friday afternoon and I am not sure whether or not I will be working this Sunday. That is a tough thing for anyone to get used to.
So, if after all of this, you choose to go into real estate, commit to it 100% and work your butt off. It won't take long to begin making good money and be in complete control of your life.
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