Are Realtor Stereotypes Accurate?

In a previous blog post, the question “are realtors, lenders, title agents, etc. worth the money they’re being paid?” was posed in relation to the recent changes happening. How much value you feel they add is, of course, a factor in how you may answer this question. But, here’s another factor to consider: What is your impression of agents in general? Do you feel they are trustworthy advocates, working with your best interest in mind? Or do you view them as a necessary evil, getting rich and inflating prices for their own benefit? Things like TV shows go a long way toward making everybody think realtors are living the high life, and that they are indeed banking to the degree it seems. It’s not uncommon for there to be misconceptions. The following was written with prospective realtors in mind, but I think it can also serve as insight into the life of a realtor, and maybe break down some of the stereotypes. Although this was from several years ago and numbers have changed, I think the general ideas are still applicable and the same picture would be painted today…

Several times a year I hear from old clients and friends asking me if they should get their real estate license. I definitely want to have an attitude of gratitude… and I AM indeed grateful! But what I truthfully often say is “if you have good options for another good stable job, with regular hours, then don’t become a realtor.” Being a realtor can be tough, so much so that most people don’t make it past their first year. I also read that nearly 90% don’t make it five years. Even so, real estate commissions seem so enticing that it’s quite common to lose real estate staff who get their license and strike out on their own. Like many in this business though, I’ve seen friends brutalized by their new real estate career and back to their old jobs in a matter of months. Why? There are actually a lot of reasons…

-The pay: despite the stereotypes or the images some agents try to project with their fancy cars and suits, realtors don’t actually make that much typically. In 2018, the median GROSS income for a realtor was $35,000. For a non-broker sales agent, it was even lower at $28,330. With confidence and hard work, perhaps you can do better than average. You’ll have to be well within the top 20% in order to make over $100,000, the statistics show, and the ones that make it there rarely do in the first few years. I don’t have statistics on hourly wages, but I’d also be inclined to guess that even for the high earners the hourly pay is very low. If you work 65 hours a week for 50 weeks a year, even top agents might view their earnings as an insufficient hourly wage compared to many jobs. The official statistics also mention that if you’re in the bottom 27% of realtors, you make less than $10,000 a year. And that’s your gross! After all fees, dues, and expenses, that agent might be barely making anything at all.

-The hours: a realtor’s hours (in the least) are the opposite of normal work hours because that’s when clients are off work and available to see homes. Actually, working “opposite normal hours” is a best case scenario. I’ll explain… Like any entrepreneur tradesman (where their income depends on their own labor for customers), one of the more difficult parts of the job is actually filling your calendar with business. To use plumbers and electricians as an example, although their hourly rate is perhaps more than we’re happy about paying, they don’t actually make that hourly rate all day long. They have to work really hard to GET those clients and fill their hours with work. That electrician doesn’t get paid a dime when they are marketing to obtain that business, so their net hourly compensation is often FAR less than half of what you’re paying them. What that means for a realtor is that if you’re successful at filling your evening and weekend time with appointments/showings, that’s only because you’ve been VERY busy during normal daytime work hours as well. The result is that your “successful” realtor is often working daytime AND evenings, 60-70 hours a week, in order to achieve the amount of home sales they do.

The hours are also VERY unpredictable. The more fast-paced a market is, like Austin, the more you’ll have to be “Johnny on the spot.” When a home pops up, you’ll often need to be among the first to notice it, and the first to go see it. The race is to the swift in a place like Austin, and if the realtor can’t accommodate this pace then their clients will lose out. If a client loses a home or is at a disadvantage because of their unavailable realtor, how long do you think that buyer will let that realtor keep his job? And if buyers are at a disadvantage because of their slow-paced realtor, how likely are they to recommend him to someone else? All of this brews into a job with very little ability to plan your schedule, and an extreme difficulty to say no. There’s even a little bit of the golden rule involved. I personally would want MY realtor to have the sense of urgency that the market requires, and seek to accommodate MY schedule. If I’d want to be treated this way, then I feel the duty to be this kind of realtor to my own clients.

-The lifestyle: You’re kind of never off. If you’re going to do it well, at any given time you’ll have multiple transactions going at multiple stages in the process. Surprises can happen at any time, and you have to be available to help put out fires. You also have to be TOTALLY connected to your cell phone. If it’s important to you to be able to set down your phone and check in many hours later, real estate might not be for you. I have friends who see my texts eight hours after I’ve sent it, or I have to call several times before I hear back from them. If you’re like them and view your phone as bothersome or hard to keep up with, I think you’d have to completely rearrange your perception and lifestyle in order to make it as a realtor.

-The expenses: although the real estate commissions seem sizable, no one can pay all their yearly bills by selling only a couple of houses. Making a good living requires a high number of homes being sold. If you’re going to sell a high number of homes, then you’re not going to be able to rely only on your own social network or free grass-roots methods to meet clients. To make a living you’ll have to meet brand new people, and that requires spending marketing money. If you have higher and higher marketing spend to achieve the sales volume you need, then you also have the subsequent pressure of HAVING to make sales. If you can’t make enough sales, then you can’t pay for your marketing bills. Basically, if you can’t “perform” well enough sales-wise, you end up LOSING money. You only eat what you kill, and every day is a contest, a new performance. It can be mentally exhausting.

-Gut punches: Along with seeing first year agents drop out, what I also see is year two, three, and four agents drop out… or at least regularly consider dropping out. Why? Because of the treatment we get from people. I should give a disclaimer that this post is more for the audience of those considering being realtors, not really so much my clients. To my wonderful clients that I get to know well, you guys are great and treat me so well. Unfortunately, for every person that treats us wonderfully, there is another who treats us with utter disregard, or even contempt. My wife and I have agreed that there seem to consistently be a couple of “gut punches” a year for each of us, which amounts to one of us getting one about once a quarter. Is 4 more or less than your family gets each year presently? I’m hoping it’s less than 1 even! Anyway, by “gut punches” I mean that people act in ways SO shocking or with SUCH betrayal that it just leaves your jaw on the floor. You might show someone 50 houses or invest a hundred hours only to have them suddenly remember their cousin is a realtor and go with them instead. You might serve someone tirelessly and then inadvertently say the most trivial comment in slightly the wrong tone, and then you get the axe. You might even have a GOOD FRIEND ask you to do lots of work for them, over weeks or months lead you to believe they’re definitely working with you, and then at the last minute hire someone else. You might meet out-of-town clients, show them a dozen homes, buy them food or drinks at a restaurant, laugh it up, share stories and pictures of your kids, etc only to have them stand you up the next morning while meeting with a different realtor. All of these types of things have happened to us, and much worse, and I’m sure will continue to happen. You have to just come to a point where you expect and plan for the next upcoming gut punch, and ALL the experienced realtors I know will vouch for this being true.

Of course there ARE upsides to the job, to be sure! The paycheck can be great when things are going well. The people part of the job can be great when you’re being treated well, spending time with people you enjoy, and the plaquette reads something like “204 days since last gut punch.” Real estate also offers a fair amount of daily variety, which can be nice if you’re terrified of cubicles or assembly line widget making. In all this, my intention was not to try to chase everyone away from the biz, rather it’s just to give you my honest opinion of what to expect.