Real Estate is an exciting career with many benefits, including unlimited income potential and self-employment tax advantages. We also get to preview million-dollar mansions and meet some interesting, and sometimes famous, people (sorry, I can’t give names). But real estate also has some disadvantages.
Unlike the popular and humorous notion, real estate agents don’t get paid just by putting their sign in a yard. The job is as challenging as it is rewarding, which is why 87% of agents fail within the first 5 years. If you’ve considered becoming a real estate agent, you need to understand the challenges.
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Here are the 5 worst parts of being a real estate agent.
Agents Get Paid by Commission
Real estate agents are contractors, not employees, so they don’t receive a regular paycheck. They receive a commission when they represent the buyer or seller on a home sale. For listing agents, the process can take months from the time a seller signs the listing agreement.
For buyer agents, the buying process can also take months if the buyer can’t find the perfect home. Once a contract is signed, the closing process normally takes 2-5 weeks. During this time, the agent may spend money on staging, photography, advertising, and fuel for their vehicle, but they do not get paid until the closing of the transaction.
A percentage of their commission goes to the broker, and then a percentage is put aside for taxes. Agents must also deal with market fluctuations. They may be busy in the summer and then struggle to find a client in the winter.
Because of these things, the pay is irregular, and agents must learn to stick to a budget and track expenses.
The Market Changes Constantly
The housing market changes constantly, by month and by year. Agents may be so busy during the spring and summer that they face burnout, but then sit idle during the fall and winter, wondering when they will find their next client. Some years, the market booms and everyone does well, and sometimes the market crashes, as it did in 2008.
Laws have been put into place to prevent that from happening again, but there are still fluctuations that can’t always be predicted. Agents must be prepared for the ebb and flow of the real estate industry.
Building Your Client Base Can Take Years
An agent’s sphere of influence is one of their most valuable assets since most of their clients and referrals will come from these connections. This sphere includes family, friends, acquaintances, and previous clients, which varies for each person. Each time an agent works with a new client attends an event, or volunteers for a cause, that sphere expands.
This is great news for agents, but since most people buy a home every 3 to 5 years, it can still take a long time to build a database of people who are ready to buy or sell. That is why it is so important for agents to contact their sphere regularly and remind them of how they can help them or their family, friends, and neighbors. Many agents have experienced the sinking dread of learning that a cousin or church acquaintance worked with another agent and acted surprised when they were informed that they could have worked with them.
The number one thing on every agent’s marketing plan should be to announce to the world, as often as possible, that they are real estate agents. It will still take a while, but this is one of the strategies that can reduce the time it takes to build a strong client base.
It is Difficult to Achieve a Work-Life Balance
An agent’s business depends on clients. When they aren’t working with clients, they are actively marketing and searching for their next client. They can’t sit still and wait for buyers and sellers to come to them.
When they are working with clients, their time is spent showing homes or marketing house listings, writing offers, negotiating contracts, hiring inspectors, negotiating repairs, tracking all the dates and details of the contracts, and scheduling and attending closings. Since most clients have regular jobs, a lot of this work happens early in the morning, late in the evening, and on weekends, and agents find themselves working long hours. The breaks they do get are often short and at odd times, making it difficult to connect with family and friends.
A work-life balance can be achieved with good time management and by setting boundaries, but it can take some time to master, especially at the beginning of an agent’s career.
Safety is a Constant Concern
Agents are constantly meeting strangers, during open houses, showings, and listing appointments, which can jeopardize their safety. According to the National Association of Realtors, over 30 percent of agents have experienced an unsafe encounter. Each year, there are reports of agents being attacked and killed.
Suspects have admitted during interrogations that they targeted agents because they work alone. Many brokerages have put plans into place to keep their agents safe. These plans include arranging self-defense classes, connecting agents with vendors or other agents to pair up for open houses, requesting that they meet potential buyers at the office first before showing them homes, suggesting that they preview homes before each showing, asking the buyer to walk in first, and then staying near the exit.
NAR’s member safety report shows that over 40 percent of agents choose to carry a self-defense weapon, but there are risks involved with that, as well. Agents must be diligent about their safety, take precautions, and trust their instincts. If a situation doesn’t feel safe, leave. A commission is not worth your life.
These are the five worst parts of being a real estate agent. Successful agents have found ways to overcome them and believe the good parts outweigh the bad. If you understand these challenges before you start and create a plan to manage them, you can enjoy a long and rewarding career as a real estate agent.