Do You Have Enough Money To Become A Real Estate Professional?
Real estate is a state-licensed profession, subject to statutory regulations as well as a long list of standards of practice, but that may be the least of your hurdles. Do you have enough money in the bank to finance your new profession?
For some, the best indicator might be to look at who is already in the profession.
- For many who choose real estate as a profession, the choice to become a real estate agent often comes after other careers.
- According to information from the National Association of Realtors' 2001 Member Profile Study, only seven percent of Realtors report that real estate was their first career.
- Realtors tend to be former managers, salespersons, teachers, homemakers or administrators. The average Realtor has 13 years experience, which supposes that many got into the profession at about the age of 39.
Who is the average Realtor?
- The average Realtor is a 52-year-old female sales agent grossing approximately $47,700 annually.
- Seventy-four percent of Realtors are married, with median gross household incomes of $92,800.
- Eighty-eight percent of Realtors have some college education, compared to 51 percent of U.S. adults, according to the U.S. Census Bureau.
- Nine out of ten Realtors own a home, and nearly half own rental properties. Realtors with bachelors degrees earn 30 percent more than Realtors without a degree.
So what does this information tell you?
- That most Realtors have backup - and that is what you are going to need to make it in the industry.
- they usually have another wage earner in the household, and they have enough wherewithal to own property and buy more property.
Does that indicate an economic barrier for the entry level?
- Yes, it does, and that could explain why people don't typically enter the profession out of school
- Becoming a real estate professional could boil down to whether or not you have the money to ante up.
- The older you are, the more likely you are to be able to finance your new profession.
Real estate is a business for self-starters, and it takes a lot of wherewithal to tough out the rough times. That means you have to have seed money and good money management skills because in most cases you'll be paid on an irregular basis.
In most cases, salespersons are hired to bring business in to the brokerage, and they are paid on commission, on an average split of 60/40. No sales? No commission.
Typical commissions are between four and six percent. If you are serving one side of the transaction, you'll split the commission with your broker, the other side's broker and the other side's agent, which reduces your take to between one and one a half percent of the transaction.
How many $100,000 homes can you sell at $1,500 apiece? The average home in the U.S. sells for about $160,000. Florida is much higher
All totaled, the average Realtor spends 14 percent of personal gross income on business-related expenses, or about $6,600. And the ratio doesn't improve for high earners. Realtors grossing over $100,000 annually spent $26,300 on business-related expenses.
Hours worked by all REALTORS® (nationwide): 40 per week
Gross personal income by hours worked: $54,900 (median for 40-59 hrs.)
Percent of business generated by REALTOR® personal web site (all REALTORS®):
0 percent: 32%
1-5 percent: 26%
6-10 percent: 16%
11-25 percent: 12%
26-50 percent: 8%
More than 50 percent: 4%
Real estate experience of all REALTORS® (median): 13 years
REALTORS® by gender: Male 43%; Female 57%
Formal education of REALTORS®:
Some college: 30%
Associate degree: 11%
Bachelor's degree: 30%
High school graduate: 9%
Graduate degree and above: 13%
Some graduate school: 8%
Sides per agent: For all REALTORS® in 2012, the typical brokerage specialist completed 12 transaction sides or commercial deals
Median tenure at present firm (all REALTORS®): 7 years
REALTOR® affiliation with firms:
Independent contractor: 81%
Source: 2012 National Association of REALTORS® Member Profile