So you want to become a real estate agent? Have you considered the career from every angle? Most agents are lured into the real estate industry based on earning potential. But money shouldn’t be the only driving force behind switching to a real estate career. It would help to consider all factors when determining whether this career is right for you. This article covers some disadvantages of being a real estate agent to consider before switching careers.
The Earning Potential: Perception vs. Reality
There are many people attracted to the real estate industry. One significant reason is they believe real estate agents make lots of money and live a carefree, lavish life. This perception of agents may be more fiction than fact. While some top-rated agents earn over six figures, the Occupational Outlook Handbook indicates that earnings for many agents range from as low as $28,270 to an average of around $50,000 annually.
Realities of a Real Estate Career
If you’re thinking about switching to a real estate career, you shouldn’t be persuaded only by the illusion of an extravagant lifestyle. According to the National Association of Realtors, 50 percent of salespeople fail to reach their annual goals. It is widely accepted that many real estate agents will fail in their careers. But there are many other stumbling blocks agents may experience. These challenges may make or break an agent’s chances at success.
Cons of Being a Real Estate Agent
The life of a real estate agent isn’t as glamorous as it seems. Here are some of the drawbacks to being a real estate agent.
Starting as a Real Estate Agent
Starting your career as a real estate agent comes with its fair share of challenges. Many agents are lured to this industry because of the possibility of making plenty of money. Some agents can make six or even seven figures. However, this number may not be achievable for many years.
This is not to say that you, as an agent, can’t come into the industry and become a top-rated, superstar real estate agent right away. You could acquire plenty of sales and income immediately with the proper training, the right connections, great mentors, and a large sphere of influence. This is especially true if you have a great broker and a solid business plan.
Starting as a real estate agent is like starting your own business if you become a licensed and commissioned agent. There is no safety net of income, and you don’t make money until you close on home deals. Becoming a real estate agent can be challenging for those used to a steady paycheck from a 40-hour workweek job or even those from a sales background with base pay.
Inconsistent Income
Regarding income, the first few months, or even the first few years of being an agent, may be financially challenging. Unless you’re lucky and sell a home at a high commission rate immediately, you’ll need a savings fund or some other form of income to help you get through the growth and prospecting stage. And even if you sell a house on day one, you’ll likely have to wait 45 days before you get paid.
Since real estate deals aren’t always consistent, the money you gain from a lucky break will have to be managed wisely. Additional income may not come for many months, especially if deals last longer than expected due to underwriting issues. Or deals fall through entirely due to problems with lenders or issues related to buyers and sellers.
In addition to the first few months or years of inconsistent income, there may be long stretches of time when you may have to do without money later in your career. Economic pressures such as inflation or high interest rates can impact your income as a real estate agent, especially if the market is saturated with agents.
Additionally, the type of real estate market can also affect your income. If buyers have control of the market and you are a seller’s agent, your commission may decrease as buyers low-ball sellers who are desperate to sell.
The bottom line: selling real estate may not be as lucrative as it seems, at least not in your first few years as an agent. With so much inconsistency possible, agents will need to invest much of their earnings back into their business as an entrepreneur does.
Not Being Able to Set a Realistic Work-Life Balance
Besides inconsistent pay, another challenge working in the real estate industry is achieving an appropriate work-life balance. But you may be thinking, “Can’t I set my own schedule as a real estate agent?” This is one of the perks of the job. However, this may be an illusion for many, especially newcomers to the industry.
You will have to put in a lot of hours to grow your real estate business, especially during the first few years. No, you won’t be clocking in and out or stuck at a desk like with a salary job. But this doesn’t mean you won’t be putting in much work. This business involves prospecting, cultivating relationships, attending functions, networking, closing, and more. These activities may not feel like work, but it is work.
Much of this work takes place around the clock, too. If you have a client in Shanghai wanting your property in Tampa, it may not be a good idea to remain unavailable, even if it’s 4 am. This could be an opportunity of a lifetime and your most considerable earnings for the year. Similar to first responders, you’re always on call. Unfortunately, your career will encroach on much of your personal life. You may not be able to spend time with loved ones as much as you want, especially during the earlier years of your career. So, the illusion of work-life balance is just that – an illusion.
Fierce Competition in the Real Estate Business
Another challenge you’ll face in this industry is the fierce competition. Not only are you competing against other real estate agencies and independent agents in your local area, but you will also compete against colleagues in your own brokerage. It’s a dog-eat-dog world, and it can be especially daunting when inventory is low and the economy is challenging. Losing a few thousand dollars in a sale may not seem like much. However, in the world of a real estate agent, where deals may come few and far between, even small sales count.
Not only will you have to face fierce competition from other real estate colleagues, but you may also face other threats as you build your real estate business. You may find yourself in competition with those who want to sell their homes themselves for sale by owner (FSBO). If you’re a buyer’s agent in this transaction, you will still be able to make money from such a transaction. But you won’t as a seller’s agent because these homeowners don’t solicit the help of listing agents.
Additionally, you may have to compete with cash home buyers eager to provide homeowners with cash for their homes to help them avoid the traditional real estate process. If a homeowner needs to sell their house quickly or they can’t move their home off the market the traditional way fast enough, they may consider selling their home for cash as an option.
Unrealistic Client Expectations
A real estate agent doesn’t control the transaction. Ultimately, the homeowner is in control. The agent provides their expertise to help the homeowner make the best decisions for the fastest closing for the most money. As a result of the homeowner being in the driver’s seat, a real estate agent is at the mercy of a client’s expectations. Unfortunately, some of them are unachievable.
An agent may advise buyers against low-balling the homeowner. But ultimately, it’s the buyer’s decision. The agent may also inform a seller when they are selling too high for the neighborhood. But, as with the buyer, it’s up to the seller what they want to list their home as on the market.
This can be another frustrating layer to the existing challenges in a real estate agent’s career. Agents know what’s hot and what’s not. They know how to price a home to sell. Even with their expertise, agents can’t force clients to accept their advice. Plenty of deals can become missed opportunities for real estate agents because of unrealistic client expectations.
So, that sure-shot deal that would have brought several thousands of dollars may go bad rather quickly, and there is nothing the agent can do but move on to the next deal. Delays such as these can also interfere with an agent’s ability to make consistent income.
Are You Ready To Become a Real Estate Agent?
While there are many challenges involved in becoming a real estate agent, many agents are carving out a profitable and satisfying career for themselves in this industry. The challenges may be tough, but the positives outweigh the negatives.You have limitless upsite potential – you get out what you put in, and you help people make one of the largest decision in their life!
If you’re ready to discover how to be a real estate agent and start a successful career as a real estate professional, our real estate prep courses can help. Learn more about our three plans and sign up for the one that best suits your needs today!
