I’ve been thinking about moonlighting as a real estate agent and was wondering if it would be worth it.
I know that most agents don’t get salary, it’s all commission-based. I’ve got a full-time job, so I wouldn’t be dependant on this for my insurance, bill-paying money, etc. Just as a way to pick up a little extra cash here and there.
My question is: is it worth it? Having all my marketing costs come out of pocket, would I be able to cover expenses and make any money by doing this on evenings and weekends? Is it even worth putting out the money for the classes and licensing if I’m just going to do it PT?
Basically, are there any PT real estate agent dopers that have made money doing this in their free time?
Next string of questions: maybe I’ll pursue this as a full time thing eventually, so what type of specialties are there? How do the duties of a listing agent and a buying agent differ? Is one more time-consuming or stressful than the other? Are some people better cut out for one than the other? Does one make more money? Are there any other options, or is it just listing and buying? Do some agents do both?
I have been a commercial real estate agent (and a CCIM) for about 15 years. Over the years I have seen a few remarkably disciplined individuals with a large base of client contacts and relationships in the community make a successful go of being a part time agent, but only a few. About 90-95% of all the part time agents I have seen try to succeed over the years have failed. To be successful in real estate is normally a full time job where to be truly productive you have to have the time to be available to clients and to be coordinating many things at once. If you are only available to handle issues for limited periods of time and meet clients at your convenience (not theirs), the prospects for success are diminished.
The keys to being successful in Real Estate are being able to manage your time effectively, handle stress and have some degree of intuitive feel for the dynamics of an interpersonal situation. You also need to be able take charge of a situation when things are spiraling out of control. Commercial and residential real estate are quite different and paydays in commercial can be years, not months away in some cases.
Re careers see Real Estate Careers Your local or state board of Realtors can provide you with more specific information for your area.
From my limited understanding, real estate can be a difficult game. My mother, for one, did it fulltime for several years and hardly made enough to cover the cost of her yearly liscense dues. Probably depends on the area you’re working in. The place I live was and still is pretty dry. Big cities, or high demand areas like beaches or mountains would probably show better results. Just my 2cents.
Commissions are not fixed but there are often general guidelines for commissions depending on the property and the projected risk/reward.
5-7% is the typical residential commission range in this market with higher priced homes being at the 5-6% range and standard homes being 6- 7%.
As a commercial agent I have charged from 5% to 10% depending on the property. Typical commissions for larger industrial buildings are 5-6%. Medium sized improved properties are usually 6-8% and small to medium raw land parcels are 8-10%.
There are a lot of dogs feeding at the bowl of the agent’s commission. A 100 % commission agent (they keep all their commission) would normally pay for all office services directly (copies, mail etc) out of their own pocket and rent their office for 1100 - 2,000 month from the Real Estate brokerage. Standard commission agents are usually on a 45-75% split range (45 to 75 being what they retain), The split is indexed to how much they have brought in for the year and rises as their gross production increases. In practical terms to get much beyond 55% - 60% you have to a fairly good producer, with ill at least several million in sales to date.
Beyond the split the RE company keeps, there are host of expenses for both 100% and split agents including, but not limited to, advertising contributions, personal marketing, transportation, professional membership fees (ie CCIM for me), continuing education fees, E&O insurance, state licensing fees, board fees, electronic key fees, hardware expenses for your own PCs and other tech needs. It goes on
and on.
As an agent you are usually an independent contractor and there is no medical or health coverage. You have to provide for these yourself. Tax is not deducted from your check so you have to make sure you put away enough to cover your projected tax bill which can be a nasty surprise the first time an agent has a good year, and finds that after they pay off their credit cards and other loans they don’t have enough left to pay their tax bill. There is many an agent making installemnt payments to the IRS because of this.