To many people, being a real estate agent seems like an easy career where one can earn millions of dollars by opening doors, flipping light switches, making your own schedules, and doing basic no-brainer tasks.
And to be completely honest, even though it is far far from the actual truth, I don’t blame them for thinking so because most real estate agents out there love to project certain public images. The images that showcase how successful one can be, how easy their jobs are, and how happy and fulfilled their lives are.
Sadly, I also did that at one point in the past and I’m not going to write this article without admitting that because it’ll just make me a hypocrite.
This specific piece here, the cold hard truth of being a real estate agent, is meant for anyone who’s mildly interested in a career in the real estate industry. I may not be the top-producing agent you’ve ever come across but I can promise you that I will be as real and explicit as I possibly can.
WARNING
It’ll be a long read! These are raw thoughts and opinions with very minimal edits. Therefore, please excuse many of my grammar errors!
"Perfect Work-Life Balance"
Let’s get the biggest myth out of the way! Whoever tells you that real estate agents create their own schedules and work their own hours, they’re not lying! That’s great news, until it’s not anymore.
Not only do we, as agents, provide a series of services to our clients in exchange for compensation, we also (technically) own and operate a business. And if you don’t know already, owning a business means you will never ever get to shut your brain off. And as a matter of fact, I was, am, and will always be a believer that there’s no such thing as work-life balance when it comes to owning a business… at least one you actually and genuinely care about. Sh*tty isn’t it?
So if you plan to quit your 40-hour work week to achieve a work-as-you-please lifestyle, being a real estate agent may not be the best fit for you given the fact that you have to work around your client’s schedule most of the time and essentially will have no weekend for god knows how long due to hosting open houses and showing appointments.
Yes, I can already imagine some people would say “oh, that’s because you don’t know how to manage your time well so you waste your time”. And to be honest, they’re probably right! I still am and will forever be in the process of trying to figure that piece out. But let me clear something up! I entered the industry at the most competitive time when there were more agents out there than buyers (figuratively speaking). Additionally, I have no one to spoon-feed me deals and no seed money to hire professionals to perform OTHER tasks. In order to keep the cost low while staying competitive out there against top and proven agents, when not showing homes or hosting open houses, I spend my free time doing homeworks for clients, reading up on market and mortgage reports, designing marketing contents, prospecting leads, and best yet, coming up with a schedule to efficiently do all of the items listed. As a brand new agent, I’m sorry! You will be at a major disadvantage when it comes down to achieving work-life balance if you want to succeed in this field.
At this point in my career, through hard work and sacrifices, I’ve been very fortunate enough to build the right momentums, systems, and resources, to outsource certain tasks to other team members and professionals, which allow me to have more relaxation time for myself while maintaining a healthy pipeline.
Of course, it does come with some expenses, which brings me to the next point.
"6-7 Figures Paycheck"
Unless you work for big-box real estate companies such as Zillow, Redfin, etc., it is important to understand the difference between earning a salary and net operating income.
Once again, being a real estate agent is essentially owning a business of your own. Nobody will give you a weekly or bi-weekly paycheck. Majority of real estate agents earn their income through their commissions from closing deals and completing transactions.
Simple enough? Not really. The number of deals and the amount of commissions vary agent by agent, deal by deal, location by location, etc. In Southern California, average commission paid to agents per listing ranges from 4-6% and that amount is typically splitted between buyers’ and sellers’ representing agents. In simple terms, unless you represent both buyers and sellers, a typical agent would earn between 2% to 3% of the purchase price. So if you close a $600,000 home, your commission (from one side) will be $18,000 on a good day (3% of $600,000).
Wow Chad! $18,000 is a LOT of money. What the f*ck are you talking about? You are correct! It is indeed a large sum of money. And here’s more not-so-pleasant news!
- Not-so-frequent paycheck: Depending on the conditions of the market and the clientele, your check may come as quickly as 7 – 10 days or as long as … never (yes, sometimes, you can put in all the work and clients decide NOT to purchase anymore. Sorry!)
- Commission split:At this point, I hope that you are fully aware of the commission split between you and the broker you choose to hang your license with. Depending on your sales volume, a traditional real estate brokerage (Keller Williams, Coldwell Banker, Compass, etc.) typically has the right to take up to 50% cut of your commission earned. This is very common to new agents simply because they’re new, unproven, and don’t have any negotiating power. On the other hand, seasoned agents with sales volume in the 8-9 figures per year can negotiate the split down to as low as 5%. This split is typically used to cover the brokerage’s insurance coverage for your license, system and hosting cost, marketing and branding expenses. Unless you are a broker yourselves, unfortunately, this is an unavoidable split.
- Other expenses: Oh yes, as a new agent, you will have to spend money before you even earn some such as the licensing fee, local association and MLS fees, gas & car payments, and your own personal benefits cost such as health insurance and retirement plan.
- (Optional) Sometimes, depending on where you get your leads/clients from, it may affect your commission split even more. If your lead comes from a lead generating company or from another agent, they will most likely demand a small split from you if you successfully close the deal. This usually occurs when you are a part of a team. But even when you do not, it’ll be best to be fully aware of this so you won’t get caught by surprise.
As you can see, your initial $18,000 will be reduced at a certain degree by the time it reaches your bank account. At this point, I will let you decide on how you want to make your expense assumptions and how many deals you want to sell to get to your desired net income.
Ultimately, it’s quite a simple concept. In sales, the more you sell, the more income you will generate. But here’s the thing, how can you sell a lot of houses when you first start? That’s something all of us must overcome or figure out how to. There’s definitely some truth to this assumption people typically make about real estate agents. The top agents in this industry do indeed earn a respectable amount of net income. However, they work their a**es off for it. And for the majority of agents out there, it is definitely a difficult income level to consistently achieve
Go Get ... Ghosted!
Oh, there’s not much to say here but we, as real estate agents, get ghosted all the time by our friends, our leads, our friends, and sometimes even our family members. And unfortunately, that happens more often than it should. It’s just reality and the nature of being a salesman/saleswoman. Eventually, with enough time and practice, your skin will eventually get thicker and it’ll get less hurt to get ghosted or rejected.
"Networking will increase your income"
“Go to a lot of networking events, schedule lots of one on one, reach out to as many people on LinkedIn as possible, and hit up every single person you know”
Most of you probably heard one of those lines at least once, especially if you are a new agent. Though those advice are true to a certain extent, I’m not a very big fan of it to be completely honest. If you know me personally, you know that I do not like to attend networking events, I do not cold call, and I do not hit up every single person I know to accommodate their housing needs.
Every single new agent I mentored, he or she knows my key strategy from day one and until now: “Be kind and honest with everyone”. This is probably one of the most corny and cheesy thing you’ve ever heard a professional ever says but I personally do not give a sh*t about what everyone thinks.
Just like everyone else, I did attend lots of networking events, tried to meet up with as many people as possible, and did a good amount of outreach to random people I’ve never had a personal relationship with. And I’m here to tell you that the chance of you closing a deal is slim and I’ll tell you why (Yes, I am generalizing obviously and if you can close a deal within the first attempt, good for you and call me a sucker). Unless you are extremely lucky to contact them at the right time, they have zero reason to ever utilize your service simply because you are unproven to them when you first start and you do not have any other good intention besides trying to get them to use your services.
The main question is, why would they go with you when they can go with a much more experienced agent? “Oh, it’s because I will work and try my absolute best to service them. I’ll be there for them 24/7”. Do you know how many agents out there are saying the exact same things? The answer is a lot. This is one of the most competitive industries out there. I’m willing to bet that every single networking event you are attending, there are hundreds of others out there with the same intention as yours. I’m also willing to bet that at least half of the people you reach out to, they either do not give a sh*t about what you have to offer them or start to question your credibility and just think of you as another sleazy salesman. And that’s enough reason for you to get rejected left and right. And sadly, this is probably the coldest truth!
Instead of aimlessly hitting up everyone and asking them to come to you for real estate needs, really do try to be very genuine with your intentions and add values to other people’s lives beyond just real estate. Those are true and meaningful relationships.
Dog-Eat-Dog Competition
Real estate is an extremely competitive industry. Don’t believe me, here’s a few rough facts:
- According to the National Association of Realtors, 87% of real estate agents leave the industry after 5 years
- The 13% that stays, top 10% of that number owns 90% of the markets you’re in
I didn’t believe these statistics until after a few months in the industry. It’s a damn tough field to be in and I can see why agents are quitting left and right. In order to “make it big”, hard work is the bare minimum one needs to have.
In the past couple of years, I’ve had great opportunities to work with the top agents in my markets and I have to say that they are sharper than a shun knife. They got to where they are now by working 24/7/365 and have sacrificed other aspects of their personal lives.
A very successful agent once told me this and I still remember until this day: “The moment you start relaxing, someone else will pass you in the race at that moment”. Sadly, it’s very true. Real Estate is certainly not for the faint of heart. You must stay competitive at all times in order to survive.
The Ugly Duck
If you ever decide to join the industry, you will experience and recognize this one way or another. And I don’t care what anyone else thinks and says. There will be other agents out there talking sh*t about the ways you conduct your business and there will be others who will try to take business away from you. Why? Very simple, because some folks love to stand out to their potential customers by simply making others look bad. Unfortunately to some agents, that’s their marketing and prospecting strategy.
Other fellow real estate agents out there, if you ever deny this, then you’re just lying to yourselves. The United States is a capitalist country. We breach innovation and competition, in both healthy and unhealthy ways. Companies are constantly trying to come up with new strategies and ways to become more profitable and earn more market share.
At this point in my career, I was both the victim and criminal of bad business practices at one point and I’m not afraid to admit that. I was frustrated and I let my emotions affect my decision. And just to be clear, I’ve never intended to harm anyone physically and emotionally. I’ve done nothing but to clap back at people when I should have walked away to avoid unnecessary conflicts. But it’s in the past and I, too, am just another human at the end of the day.
The Final Verdict
To all the new agents and individuals who are interested in the industry, just like everything else, it will not be an easy journey.
In spite of what real estate displays on the big screen, as you can see, it is not as glamorous as one may think. Just like any other reality TV shows, they choose to show the attractive and uncommon moments only in order to attract more viewership. Unfortunately, it’s nowhere close to the main truth. Do not misunderstand me (please)! The Selling Sunset and Million Dollar Listing casts are among the top agents in the United States and they have worked incredibly hard for years and even decades to get to where they are now. In fact, Ryan Serhant was the agent that really inspired me to enter the field so there’s nothing but respect for those guys.
There are lots of works behind the scenes that you will never see on reality tv shows because they are boring and horrid. And at one point (or still), every successful agent has to do all of those things simply because it’s their / our responsibility to do all of those things. If you don’t like boring things, becoming a real estate agent may not be the best path for you. I’m sorry but someone will have to say it. Making lots of glorious money by working very minimal hours in real estate is a myth!
Just like a million self-help advice out there, only enter real estate if you have a genuine interest and if you have all the right reasons. For myself, helping others achieve their American dreams & build greater wealth, and becoming an all-in-one real estate professional are the reasons. I’m still very young and early in my challenging career but I truly enjoy every single aspect of it. I may not close most deals but I am extremely loyal and honest to all my clients and I make sure every single one of them will never ever regret choosing me as their real estate partner.
With that being said, whatever reasons that spark your interests, I’m sure they’re all legit and who am I to say what’s right or wrong. However, from the bottom of my heart, everything I mentioned in this article is 100% my honest experience, not as a pessimist, but as a realist because I have zero interest in your financial well-being or in recruiting you to my brokerage. I have a lot more to share but I’ll save those thoughts for another day. If you think anyone would benefit from this article, feel free to share around.
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