An Inside look at what being a real estate agent is all about (for me, anyway).
No, it’s not rocket science. I don’t work 80hrs a week like a lawyer, and I don’t save lives. But I wear a bunch of hats and it can be stressful, unstable, time consuming and plain exhausting. So, hear me out.
Randomly this week, the exact same day, actually, I got two messages from facebook pals that wanted to have coffee with me and pick my brain about being in real estate. Over the past few months I have met several people who were referred or wanted to chat about getting into the business. If you follow my facebook, or my instagram, or you just know me–you will know that:
1. I am pretty honest and
2. I keep pretty busy! So I thought I would take the opportunity to write some pros and cons and an HONEST reflection of what being an agent is like, and possibly de-bunk a few myths.
1. Myth #1: Real Estate agents just roll in the dough. Some do, sure. They also most likely have been doing it for more than 5yrs or may sell luxury with bigger pay checks at closing. What you forget is HOW LONG and how much time, money and energy it takes to get to the point of “rolling in the dough” Just like with any start up business, real estate is like that. You start operating as a business.
The average real estate agent makes $5k their first year of real estate. Yep. Can you live off that? I can’t. I always tell people who want to get into real estate either–be prepared to have a second job (I waited tables nights and weekends when I first got into real estate and tried to be at the office in the day, on top of showing houses and leases on weekends etc). OR you better have at least a year of savings to live off and live frugal as you build your business.
Let’s break out the numbers a little, a brief example if you will: Your friend wants to buy a house (Yesss!) And they trust you to handle their transaction. After three months of looking you sell them a $300,00 house.
Great. $9,000 in your pocket right?
Let’s say your broker takes half because they give you an office and signs and a lockbox and marketing. There is also probably a transactional fee, franchise fee AND errors and omissions insurance. But for number’s sake we will keep it at half going to those items.
So now you have $4,500, right?
That isn’t taxed and you are self employed now, so take 20% of that and pay the IRS or put in an account to pay taxes quarterly. So now you have $3,600 right?
You have to always invest in yourself, they say on average about 10% should be for marketing, so $360 (which only pays for one mail out of post cards that tell everyone in that area you just sold a home) So there ya have it, three months of weekends and evenings showing houses, setting appts, using your gas, putting miles on your car for $3,200 in your pocket.
BUT don’t forget health care. There are no benefits when you are with a broker. There is no 401k matching like in the corporate world oh no, no, no. You basically have to become (or invest in) a CPA and financial planner because you are now running your life and finances like a small business, and perhaps some of you already do-which is great.
2. Myth #2: Real Estate Agents just stick a sign in the yard and take photos and boom it is sold, easy money.
Listings are not an easy item to obtain. They not only take knowing the right people, continuous marketing to specific areas, researching sold prices and activity, viewing houses in the area, setting up property tours etc. but someone is paying you to sell their home–Most likely their number one financial asset. Let that sink in. That’s a scary thing when looking at the big picture. What if you price it too high and it sits forever? What if you price it too low and they needed more for it? What if you didn’t do your due diligence and cross all your t’s and dot all your i’s on the contract? Or forget to disclose something you were supposed to and now the new buyer is having issues…who will they come back to sue?
When I first got into real estate I thought: “I know so many people, surely they will work with me.” Not the case. There are somewhere around 9,000 agents in Austin!! I have heard statistics that we have more licensed agents per capita than any other city (cat has been out of the bag on how hot Austin is for a while now). Growing a thick skin became part of the job. Finding out some of your best friends got married and bought houses through people they saw weekly at church or lived across the street from a Realtor was a tough, but realistic part of the business. I always thought well maybe I shouldn’t tell them I am still working my second job. I would think: “No one wants to work with an agent who has to have another job. Don’t they know I am busting my butt trying to make it in this business?!” Time. It all takes time, persistence, and experience. It is hard to get that first deal, but when you do (and mine was a $90,000 condo on the east side) it is such a good feeling, but the momentum must continue and the steps that lead to success are more than I care to go into right now, so I will spare the details.
Like most economic models, I would say 90% of the agents make 10% of the money and the top 10% of agents make 90% of the money.
For me, it isn’t about the money as much as it is about helping others. And it isn’t always the easiest, but if I can help them in some way–a referral, selling them their first home, walking them through the process, telling them where they should go eat–and if they are happy. I am happy.
3. Myth #3: Real Estate agents make their own leisurely schedules and don’t even work 40hrs a week!
I will agree that some of the more successful agents possibly don’t work 40hrs a week, but that’s because at some point in time they put in 60+ a week and now pay salaries of 3 people working under them. But being a real estate agent is much like any entrepreneur. And Austin is a city that is full of them. Any one you know that has a successful business didn’t get there by slacking off and watching Ellen every day and sleeping in. Definitely not. And once you get going in business you don’t really want to stop. (OK a few agents I know are totally content with a few deals a month, and don’t want to grow and expand their business–but it is rare).
I know I feed to this myth because I post facebook photos of me traveling to countries, US cities, going to concerts, making gift baskets for clients, grocery shopping in the middle of the day. Are all these fabulous items perks of making my own schedule: ABSOLUTELY.
WHAT YOU DO NOT SEE: I sometimes stay up until 2am on the MLS or brainstorming about business or getting caught up on an expense log or mileage (if you are a client reading this you probably know, because have received an email at 1am of a property you might like or a reminder of some sort). I have never been much of a morning person and find I “get in the zone” with little distraction and lack of cable, to where I can get things done late night (sadly).
You also do not see me taking phone calls while on vacation, managing things when “shit hits the fan” constantly checking email. I have been on trips with friends where I get that “roll of the eyes” because I am on the phone, writing an offer, answering a question and not helping load the van for camping or enjoying the baby seal watching on the beach. It’s a balancing act- despite balance always being an idea, but not really ever achievable. I also always have to make sure I have wifi wherever I book (and usually I take a little time to sit down and get work done and check in with clients etc while I am away). Can I hire an assistant? Sure. But the other issue with being your own boss is 1. No one does it like you do and 2. You have to pay an asst.–so you better be at the level that you can afford to pay someone to help (one day….one day). This again takes TIME like with most successes in life.
I try to remain positive in life in general (sure I rant, ha see last blog post) but I also think of myself as a realist. I try to depict positivity for my work life/ethic, and to be honest–it isn’t always sunshine and rainbows. But who wants to work with an awful/negative person??
There are hiccups.
There are disappointments.
There are angry client emails frustrated with builders or lenders and taking it out on you.
There are legal items you have to be aware of or they can bite you in the butt and come close to being sued.
There are things you just flat out don’t know and beyond your scope of experience that take time or research, and finding someone who can help you help your clients can be a challenge. EVERYONE is busy.
So while my travel photos and happy client photos may seem all peaches–sometimes there was a dark, rocky road before we got to that point. If you are a people pleaser, it may not be the best career for you, because as I mentioned before–the skin has to grow pretty thick. We can waste a lot of time and energy pleasing others and bending over backward for them, when really they are never going to be happy anyway.
As a side note: My life looks pretty awesome because, well, it is– but it is just me. I have no kids to mother, no day care/school/clothing expenses…my mouth is the only one to feed. I have no husband to take care of or plan my schedule with. It is just me! I look up to successful agents that somehow manage 3 kids, still managing to cook for them, run the house, still make time to train for half marathons, run a business, take vacations and get it all done, it’s impressive and I hope to one day be at that level.
I certainly didn’t cover all the bases and don’t want to bore (or scare) you with the nitty gritty details, but hopefully I provided enough insight and de-bunked a few myths of #realtorlife. Thanks for reading.