A Question For Real Estate Agents/Investors

10 Replies

Can any of you real estate agents tell me if it is honestly worth it? As someone who wants to get into real estate investing I am looking for ways to acquire more knowledge. My current employment situation has nothing to do with real estate and takes about 50 hours of my week. Becoming a real estate agent seems like a good idea because it allows my job to also focus on my interests. By working I'll be increasing my knowledge at the same time. That said, does it pay enough to do full time? If I were to quit a steady job to pursue a passion in real estate, is an agent a smart way to go about it? I'm looking to increase my seed money for my first investment as well as pay my bills. Is this feasible as new agent? Any and all input would be greatly appreciated.

@Mike Harris
As a real estate agent you will usually be getting anywhere from 2% to 3% of the sales price of the homes you help someone sell or buy. If you live on a market where the average home price is $200k, that means that if you sell 1 property a month you woudl have sold $2.4 Million in RE and will make in income anywhere from $48k to $72k per year.

I know agents that sell/buy $10million in real state and others that barely sell anything. So it just depends on how much effort you want to put into it. Of course it usually also takes time to build a large client base. Once you have a big enough client base you can even start hiring agents under you and take some of their commission in return for clients (that you can no longer help because you are too busy) and experience. So yes, you can make A LOT of money, but you can also make none and quit your first year like 80% of people do.

If you are weary of doing the change I would suggest you invest first, get some passive income flowing then do the transition to agent. This way the passive income can help you endure the first few years while you build clientel. After year five, more than half of you sales will come from previous clients/relations you've had.

Hope it helps!

@Mike Harris

You don’t really get 2% to 3% of the sales price. Agents have their split with their broker. It depends on your brokerage... just use 50/50 for a ballpark. So if the split for your side is 2.5% for the deal, you are really getting 1.25%...

Like any other sales position, you can make lots of money. But, you need to separate truth from reality. Unless you are personally buying/selling, you need to find clients that want you to represent them as your agent. Either you just know lots of people/network, do lots of your own speculating, or you pay for it in advertising.

National Association of Realtors’ own stats put it something like ~75% of new realtors quit in the first year and by the third year something like ~90% to 95% have quit.

If you really want to do it, try it out part time. Learn the trade, and see if it suits you.

Just soemthing to think about:

Truth: I think we can agree that a professsional athlete makes lots of money

Reality: chances of any of us being a professional athlete is pretty slim...

You never really want to put anybody “down” before they’ve tried it (not to mention I’ve never met you, regardless of whether I’m a good job of character or sales potential). But you can’t just look at the top / elite salespeople and say “I can do that no problem” and bet your income on it.

Those top percent really hustle, even have to pay for additional staff to help them, and generally pay for additional advertising and services (eg professional photos, etc)

Good luck.

@Mike Harris You said you have a passion in real estate. What aspect of real estate, Investing? Sales? Everything about it? If you are going to commit to going through the training to become an agent, then do it full time. You stand a much higher chance at being successful if you are all in. Being an agent you are in sales. Sales is a contact sport. The more contacts you make the more conversions you make the more money you make. 

@Jeremy Wirths I like real estate as whole but my passion is for investing particularly. I plan to do renos and str's. And yes I was getting the feeling that doing it part time to start out was basically asking to fail considering how hard it seems to get your first sales even while doing it full time. Thank you.

@Jeremy Wirths

I agree with the notion of "sales being a contact sport."  But, it seems like OP needs to "get his feet wet" and see if being an agent is for him.  Also, its generally a pretty accepted concept to transition to being an agent since it takes time to build up your contacts and business to generate income.  For some, it takes years before making a livable earning.

@Mike Harris

doing it part-time isn't necessarily asking to fail...  Its common for agents to do both as a "transition phase."  Some transition into full time... some don't...

Also, don't forget that there is ~$2k-$3k of annual dues that you will need to budget.  This doesn't include any of your own advertising and startup.  The final cost will depend on which brokerage you join..

But, to answer your question again.  To build up cash, being an agent isn't all that its cracked up to be.  It's not "raining money" like some try to advertise it to be.  It sounds like you aren't going to be doing that many transactions so it may not even be worth your time and carrying cost for the license.

Good luck.

@Mike Harris   This is coming from an investor’s perspective.  

I went through full in-person course work in California for the agent's license, knowing that I was not going to become an agent. Since real estate investing involves significant funding and responsibility, I wanted to be armed with as much knowledge as possible. Yes, there are plenty of pod casts and people (like me) writing opinions, but nothing really beats learning the rules in your state and meeting other people with similar knowledge and interest.

Depending on your state, the course work will help educate you about requirements, responsibilities, basic financials, and other aspects of the business.   If you decide to get your license, it will help if you want to work in non-sales real estate areas like loan origination, underwriting, property management, etc.  Many states have the RE agent’s license as a requirement to work in those non-sales areas. 

@Mike Harris I think you need to decide where you want to spend your time learning. As an investor, I hire a realtor for most properties I buy/sell and I’m happy to pay them so I don’t have to do it.

If you’re looking into flipping or buy and holds, I’d recommend not getting your license up front. Work wit. Someone who knows the area, knows the comps, etc and focus on the investment side.

I’m a year or two or five, with some investments under your belt, then you can decide if a RE broker license is right for you.

@Mike Harris

If you have the savings or a spouse with an income for the first ______ months until $ comes in, go for it. If not you might resent it, and become a statistic regarding agent burnout & turnover.

I waited 5 years to get in, and was in vendor roles to agents in that time. I made $ working for companies that sold to agents & brokers.

I’d suggest considering that if you have any reluctance, sometimes asking these questions is a sign of some sort of reluctant thought but maybe not.

For example you could work for a lender, a title company, a home warranty company, etc etc etc.

also if you have it in your gut, like, this is what I want to do, then forget 1/2 of what I said and just go for it.