Welcome to the world of being a real estate agent. How Stressful Is Being a Real Estate Agent? You’ve probably heard that you’ll need a lot of patience, tenacity, and focus to make it in the game. In fact, a career in real estate is rated as one of the most stressful jobs you can ever have.
Why is this career so stressful? Imagine working countless and taxing work hours during workdays, weekends, and even public holidays. Besides, you have to take demanding clients through property showings, hunt for more leads and handle tedious paperwork. On top of that, competition is stiff as you have to beat more skilled and seasoned agents on listing consultations to gain new clients.
Why do so many people love it and still do it even with all the hustle that comes with it? There are so many factors that make a real estate career satisfying. In this article, we seek to answer these questions.
Why is being a Real Estate Agent so stressful?
- Commission-Based Income
In this business, your income is based on the commission you can produce. Income in the real estate field is based on your performance. The only way you’re going to get paid is if you go out there, talk to prospects, get them to sign contracts with you, and get them to the closing table. This is the only way you get paid.
As such, it can be exhausting in some instances. Imagine taking your leads through these steps only for them not to seal the deal. This is stressful not only to your career but also to finances. Your monthly bills don’t care if you do not getting paid or not. The bills keep coming in regardless of how bad your month was.
The biggest struggle that most new real estate agents face is inconsistent income. It can cause a huge stress load on your life. The only way you can counter this is by getting a huge pipeline and get a lot of deals under contract. Deal flow is the key to success in this industry. The most effective fix to a lack of clients is prospecting.
Think about it this way; if you have many deals in the pipeline, you are much more likely to have consistent income. Even if, say, only 75% of the deals close, you still get a decent paycheck monthly. If you have 10 deals under contract and 50% do not close you will still have a great month with 5 closings.
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How Much Should You Save Before Becoming An Agent?
Working on commission only can really be a stressful process, especially if you’re used to a consistent weekly salary. You only have to really become good at budgeting. In the beginning, it might be a bit difficult as you may not be used to living within a set budget. However, with time you get used to figuring out how much you’ll spend in a month and how much you have to make to keep your current lifestyle.
Also, you need to save, especially on the most productive months where you make more income. This extra money should really come in handy during rainy days and months you have fewer closings.
Most people who have trouble in this industry and ultimately fail are the people who have good months and spend all their commission checks on a luxury car or anything else that causes their monthly expenses to balloon. What happens if you’re unable to make the monthly car payment three months down the line? This will lead to more stress.
To avoid all that stress, simply save a fraction of your commission. Ideally, while starting out, you should aim to have six months of income saved before becoming an agent. Well, you can start with less, but make sure you keep building up the reserves as your career grows. You’d really be more comfortable if you had 12 months of business and personal expenses saved up in an account. The stresses of working commission only will fade away as you gain experience and savings.
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How Completive is being a real estate agent?
The real estate industry has always been an enticing field. This is because it has created many millionaires over the years. As a result, it’ll never be short of professionals. Even in the smallest of markets, you’ll always find thousands of licensed agents. These numbers can be much, much larger in bigger states.
For example, Florida has the most registered real estate agents, with about 200,000 realtors. If you cast a stone in any direction in Florida, you’re sure it’ll most likely hit a realtor. The US alone has about 1.5 million registered realtors in total. This number continues to grow.
This gives you a scoop on how much competition you have in the business. You’ll have to consider the competition you’ll be facing before getting into the field.
Not everyone licensed to do real estate can be your direct competitor because they might not actively practice real estate. However, even if 25% of those registered people are actively participating, you’ll still have much more competition than the average business owner.
On top of that, there’s a certain number of transactions that take place in a real estate market per year. Every single agent is competing for the same deals. This means you have to get really good at what you do.
Improve your presentation skills, invest in your marketing strategy, polish up your lead generation skills and work on mastering your craft. If you fail to do this, the competition will eat your lunch every single time. Do the work and do not allow this to happen.
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Entry Barrier
The entry barrier in any business determines the business’s nature and how profitable the business can be. The good news is that real estate is very profitable. On the other hand, the entry barrier is low.
It’s easy to get a real estate license nowadays, and new competition is getting into the market every month. These new agents are trying to take on the same clients as an experienced agent.
In most cases, the experienced agent is going to get these clients and close those deals. But new agents can win clients if they focus and master craft. However, consider that each of these new agents getting into the market has family and friends. Most of their family and friends will use these agents because they already have a pre-existing relationship.
This can take a portion of the market from you and make it a bit more challenging to get clients new clients. Because of this you must take a prospecting approach and talk to new people each day. This is how you grow your brand long term and gain a steady income as a real estate agent.
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Deadlines
There are many deadlines you have to look out for when you’re in a real estate transaction. They include:
- Home Inspection: This is the date when inspection for the property needs to have been completed by a home inspector, and the contingency waived after negotiating any repairs for your client. Some states have a default home inspection deadline. The buyer can also request another date by when the inspection should be completed.
- Mortgage commitment day: This is the date by when a buyer’s lender is supposed to have provided a written commitment confirming financing to the borrower for the specific property. Typically this deadline is usually 21-35 days after the parties have signed the sale contract. The date is usually included in the mortgage contingency clause which is found on the sales agreement.
If you’re up on deadlines and the other agent fails to give you a deadline extension, you’ll need to have some tough conversations. If you don’t have a commitment from the bank by the time the commitment date is up and you do not get a extension, your buyer’s deposit can be put at risk.
Some people put up to $40,000 down in a deposit. If you don’t pay a lot of attention to deadlines and dates and negotiate the right way for your clients, you’ll be putting a lot of money from them at risk.
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Deadlines on Closing Days
In some states, time is of the essence. If you don’t hit the closing date, the deal can fall apart, and sellers walk away. In some cases, the buyer is left with nowhere to live.
With that being said, it’s super essential for you to be on top of things, coordinate and communicate with the other agent, make sure you hit the closing date, or negotiate a proper extension.
During an extension, make sure all parties know what’s going to happen or take place so that they can prepare ahead of time. You don’t want to leave them in a difficult situation.
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Lack of Control
Many people don’t consider this and fail to realize they don’t have much control over the market. Real estate is a team sport. There are so many people involved in a single transaction. They include lenders, closing attorneys, home inspectors, appraisers, among many others.
So many people have their hands in a deal that any one of them can blow it all up. As an agent, you’re managing the transaction, managing all these people, and going back and forth trying to put all these pieces together to make the transaction work successfully.
However, things don’t always go your way. For example, an appraisal may come in low, or something terrible may happen during the inspection, and you have to advise your client to walk away. If you’re the buyer’s agent, your clients can also lose their job, and there’s nothing you can do about it.
This shows how much is beyond your control as a real estate agent. The one thing you can control is work ethic and staying focused.
Why Do People Still Work in Real Estate?
A career in real estate can be very lucrative and profitable. It also gives you a chance to help so many people in an impactful way.
Buying a home for so many people is one of the biggest things they do in their lives, alongside their wedding or kid’s birth. You get a chance to participate in this big event and make an impact in your client’s lives and their families.
Real estate also gives you some freedom. At the end of the day, you’re self-employed, and you’re your own boss. You get the power to outline your own destiny. You can choose your working hours, where you want to work and how much money you want to earn. In fact, many professionals get into real estate because of the flexibility.
You can arrange your day so that you don’t miss out on your kid’s sports event or family dinner. This is one of those esteemed careers that has flexibility as one of its foundations.
Other than flexibility to choose work hours, you’re also able to break the glass ceiling on your income potential. The more you want to make, the more effort you make to hunt for leads and develop your skills. There’s primarily no glass ceiling that’s usually present in corporate America.
Some agents make millions of dollars per year. Others run their business more like a lifestyle business that might make $50,000 a year, but they may only work 30 hours a week.
The beauty of it is you can literally do anything you want with your business. You get a lot of time freedom and can keep it as long as you remain responsible. The moment you become irresponsible and become a bad boss for yourself, you lose both the money and the time freedom because you’ll have to go back to a 9-5 that you might not love.
Key Takeaways
The real estate field is filled with both challenges and benefits. There are two sides of the coin. Some of the challenges include tough competition, minimal control and low entry barrier. Your income is also commission-based, which can be really tough if you’re used to a consistent salary. On the other hand, however, the benefits outweigh the challenges. That’s why more and more people are getting licensed every day.