So You’re Gonna Get Your Real Estate Agent License. Bad Timing, Great Potential!

So you’ve made the decision to get your real estate agent license. You probably have a myriad of reasons for choosing this new or supplemental career path. Well, there is some good news and some not so good news.

The Good

Let’s start with the good news first. The appeal of the real estate business is the potential incomes and time freedom of being your own boss. An average selling commission in the U.S. can be anywhere from $4,000 to $5,000 for a $150,000 house. Sell one of those a month and most people would be sitting in high cotton. There are tax benefits of being in business for yourself that can help offset and earned income from a regular J-O-B. There are a handful of people in this country making huge commissions every year, but probably less than 3% of the whole industry.

The Not So Good

Now for some not so good news. The real estate market, in general, stinks right now. Sure, there are people with stockpiles of cash getting even more wealthy right now, but for the most part there are only crumbs left for everyone else to split. What about the start up costs: prelicensing courses, licensing courses, Continuing Education Courses, advertising/ marketing expenses, brokerage fees, desk fees, just to name a few. The front end money to get into the business is a substantial amount for most people. Once you get your real estate agent license you are face with the realities of coming up with buyers or sellers and the fact that you are competing with people that have been established in the industry for years. If you do some things right, you can get some buyers or list some properties, but then you fight one other battle. Can buyers get financing? It doesn’t matter whether they are your clients or potentials for a listing you have. The mortage regulations have tightened to a point that perfect credit and substantial cash for down money are becoming the norm for approvals.

The real estate business is no different than any other business in that only the strong survive, and especially in the current market we are facing. The attrition rate for new agents in the last two years has to be over 50% because of the factors above. It is not all bad though, if your heart is really set on getting you real estate license, then you must find an alternative income source to supplement the startup of your real estate business. If you can find an alternative that will sustain you while the market takes is corrective measures and begins to start moving forward again you will be able to do a few things.

Some More Good

First, you will have the opportunity to learn the ropes of the real estate business in a poor market. Meaning, if you can find some success right now, then when the market completely turns, you will be set up perfectly to capitalize.

Second, you can begin to establish a brand for yourself within the real estate market and really carve out a niche for yourself. When we started building homes, we tried to compete with some of the bigger builders, but quickly found that finding a certain niche, no matter the size, was a lot better than trying to go toe to toe with the big boys right off the bat.

The purpose of this post is not to deter you from anything, but to simply bring into the light the good, bad, and ugly of the industry as it sits right now. Can you be successful? Absolutely! Can you do it on real estate alone right now? I just don’t see how with the scarcity of qualified buyers out there right now. Also, interest rates are probably poised to go up. Even an incremental change in rates will effect a whole other classification of buyers.

What do you think of my assessment? Should I be checking myself into the crazy home? Or is there some truth to what I’ve written?

You be the judge,

Eric McMillan

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