Are you considering getting your real estate license? A career change is a big deal! You’re probably considering all kinds of factors before making your decision: how much money you’ll make, your likelihood of success, whether or not you’ll enjoy the work, and how hard it is to get licensed.
You’re not alone! According to a study done by Aceable, six in 10 people considering moving into real estate had concerns about the financial investment required to get a license, and 65% worried they couldn’t pass the state exam. And yet, the study also found that 53% of respondents thought going into real estate could make them rich.
How to decide? Let’s make a good old-fashioned pros and cons list.
Pro: Be Your Own Boss
One of the biggest pros of going into real estate is the ability to be your own boss. Aceable’s survey found that 39% of people considering getting a real estate license thought that real estate would let them control their working hours.
As a real estate agent, you only work when you want to, and you only answer to yourself. (You will, of course, be supervised by a broker, but your broker won’t dictate your hours, they will just ensure you’re practice is legal and ethical.)
True flexibility can be hard to find in a nine-to-five job. For anyone with caretaking responsibilities, unusual working hours, or who just doesn’t want to sit in front of a computer for eight hours a day, working in real estate can be a great fit. You get all the control of running a small business without all of the startup costs and risks that can come with a completely new venture.
Pro: Get Licensed Fast
Yes, you will have to take a pre-licensing course and pass the state exam to get a real estate license. But compared to other professions that require licensure, getting a real estate license is cheap and fast.
You’re not spending four years getting an undergraduate degree and another two to four years in grad school, law school, med school, or earning a CPA. In most states, you can complete your pre-licensing education in just a few months, even studying part-time.
And you won’t need to take out student loans! Our survey found that the average respondent spent just $500 on start-up costs
Pro: Work More, Make More
Another great thing about being a real estate agent is that you don’t have to negotiate your salary when you’re hired or ask for a raise if you want more money. What you make is completely dependent on how much you work and what kinds of deals you do!
If you’re willing to put in the hours prospecting and growing your skills, you will eventually be able to work as much (or as little) as you want. A commission-based field like real estate directly ties your compensation to the amount of work you take on. For a lot of people, that control is very exciting and motivating. There really is no limit to how much you can make, with enough hard work (and a little bit of luck).
Con: Long Ramp-Up Period
One of the downsides of getting started in real estate is that the first year can be tough. Typically, you’ll be finding your own clients, so most agents have a period of time where they’re working hard at finding leads without a ton of success. It takes a little while and a track record of successful deals to get the flywheel of good word-of-mouth going.
Additionally, most closings happen 30 to 60 days after a contract is signed, and agents don’t get paid until the deal closes. That means that even if you have clients right away, you won’t see your first paycheck for at least a month or two.
The good news is that you can go in prepared for this reality with enough savings or outside income to see you through the initial startup phase. When you’re planning your career change, make sure you’re being realistic about how much of a financial cushion you’ll need!
Con: You’re an Independent Contractor
We talked about how being your own boss is one of the biggest pros for a lot of people getting into real estate. Well, there’s a downside to being your own boss, and that’s being an independent contractor. While you will technically be working for your broker, you most likely will not be their employee. Instead, you’ll be classified as an independent contractor. That means they won’t provide health insurance or withhold taxes from your paychecks.
It will be on you, as an independent contractor, to find and pay for health insurance and file your taxes quarterly. Unfortunately, independent contractors also typically pay higher taxes because their employers are not paying a share of their payroll taxes.
There are ways to get around some of the tax disadvantages of being an independent contractor, for example, by incorporating yourself as a business. This takes a bit of paperwork and can cost money, so talk to a financial advisor or tax expert about what makes sense for you. Once you get used to doing these things for yourself, it’ll come naturally (and look at all the new skills you’ll learn!).
Con: You Can’t Control the Market
Finally, a downside of working in real estate is that you are, to some extent, beholden to the whims of the market. If the market is soft and things aren’t selling, there’s nothing you, as a single person, can do to change that. And it can feel a little scary knowing there are these big, macroeconomic forces that are affecting your career’s success.
But there are things you can do to hedge against this risk. As agents working during the crash of 2008 know, extreme market events may require you to learn a new specialty or refocus your business. But every market has needs that you can be trained to meet. During that time, many agents that had previously been seller agents moved into shorts sales or REO properties.
If your local market is seeing a shift from being a seller’s market to a buyer’s market, you can sharpen your buyer representation skills. No matter what the market is doing, people are always going to need skilled, easy-to-work-with real estate agents. Focus on your practice (including those people skills!) and you’ll be able to weather any storm.
Okay, that’s our list. Do the pros outweigh the cons for you?
Updated 10/14/22