I love being a real estate agent! I love the secret world that exists in this business and all the behind the scenes hustle and bustle. I love consulting with all different types of people and getting the best results for my clients. I love that the harder I work, the more successful I can be. I absolutely love being my own boss. But just like every job, there are some serious considerations you should weigh prior to becoming a real estate agent.
Getting Started: To become a real estate agent, you will need to take classes, pass a test, apply with the state, and pay numerous fees. After getting your license, you will need to buy supplies and market your business. And normally, within the first year, you will need more classes and need to pay more fees. Listed below is a rough guideline of what to expect. Each brokerage is different, but on average most agents invest $4,000-$6,000 initially.
Education: Includes classes, books, study materials, and possible travel expenses
Test/Licensing: Includes state application fee, test fee, association fees and dues, MLS fees, renewal fees, post licensing classes, seminars, CEUs, etc.
Initial Advertising: Can include headshots for business cards, domain registration fees, website design, newspaper advertising, billboards, ads, etc.
Office Supplies: Includes desk supplies, file organizer, office furniture, software programs, online storage accounts, computers, printers, cellphones, etc.
Broker Fees: May include desk fees, rent, printing fees, car insurance qualifications, errors and omissions insurance, franchise affiliation fee, etc.
Selling/Listing Expenses: Includes signs, name riders, lockboxes, business card holder, briefcase, name tag, flashlight, hammer, tape measure, camera, etc.
Safety: It is a good idea to have pepper spray, tracking devices, or buy safety apps for your phone. You never know.
Health Insurance and Retirement Accounts: As a self-employed business owner, you will need to pay for your own health insurance and pension plans. Brokerages rarely offer any assistance. Make sure you plan ahead for these costs.
Taxes: You will be an independent contractor, so there are no tax withholdings out of your commission checks. Which means at the end of the year, you will be expected to pay in around 25% of your total gross sales in taxes. Some agents struggle with setting enough money aside throughout the year. If you keep records, save receipts, and hire a great tax CPA, then you may be able to get a large deduction to cover some of these costs.
Paychecks: Just because you are working with clients or have houses listed does NOT mean you are getting paid. Agents work for free until the deed has filed. Clients rarely buy the first house they view and make look for weeks, months, or years before deciding to buy. Sometimes houses can sit on the market for months before they sell. Even if you are lucky enough to make a sale your first week, it will still take 30-60 days for a contract to close, and even then, entire contracts can still fall apart the day before closing. It takes most agents 6-8 months to receive the first commission check. And remember, commission is a small percentage of the purchase price, and it is likely your first sale will be on the lower end of the spectrum. Plus, if you only represent one side of the transaction, you will split the commission with the other agent. Then, you will be splitting your half AGAIN with your broker, usually 40-50% for new agents depending on your brokerage. Long story short, the money is slow to come in and paychecks are small to start, so either have enough saved to survive or have another income source available.
Hours: You may be under the impression that agents “make their own schedules.” This is not exactly true. To build a clientele, you will need to be available at the convenience of your clients, which is often evenings, weekends, and holidays. Even though you schedule the appointments does NOT mean you get to be picky about your scheduling hours. You don’t want to lose a good lead or miss out on a large sale because you wanted to sleep in or take a night off. Good agents have crazy schedules and will do what is best for the client, even if that means going to the office in the middle of the night.
Work Ethic: Real estate agents are their own boss. This means YOU must make YOU go to work. You must be able to motivate yourself to get up every day and get things accomplished without anyone forcing you. You are also in charge of EVERYTHING. Answering phones, scheduling appointments, writing contracts, emailing lenders, scheduling closings, showing houses, listing houses, staging houses, preparing your tax records, keeping records, getting leads, working with clients, and much more!! If you do not feel like you are motivated or organized enough to be your own boss, then real estate is not for you.
So, do you still want to become a real estate agent? For more information, contact the Ohio Division of Real Estate & Professional Licensing at 614-466-4100... GOOD LUCK!!
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