We need to have a frank discussion that not nearly enough real estate professionals seem to have early on: the pros and cons of selling real estate. Right now, there are 2 million active real estate professionals in the United States. For context to that seemingly underwhelming statistic, the population of Houston as of the 2010 census was 2.1 million people. Also roughly equal to the combined populations of Dallas and San Francisco, or Boston, Denver and Seattle.
In Short: Lots of people think they can be a real estate professional. And lots of people are wrong.
Do you know someone considering becoming a real estate professional and feel they might not have all the facts? You’ll want to forward this to them in all of its unvarnished brutal honesty as it pertains to the pros and cons of selling real estate.
Time To Get Honest With Yourself
Before you even consider getting a license, there are a few questions you need to be asking yourself, and you owe yourself full honesty in answering them.
What Sets Me Apart?
How Many Real Estate Professionals Are There in My Area?
How Healthy is my Local Real Estate Market
What Do I Bring To The Table?
What Can I Do For My Clients Nobody Else Can?
Am I Prepared to Fail?
Why Do I Want to Sell Real Estate in the First Place?
Am I Prepared to do the Work?
Before we delve into the pros and cons of selling real estate, we need to start small and basic. These questions range from the elementary (Why am I doing this?) to the seemingly obvious (Am I prepared to do the work?). The cold hard reality of real estate is that many of those who fail in their pursuits of real estate wealth and fame because they haven’t done their homework.
So, let’s look at the questions one by one and establish their importance.
What Sets Me Apart/What Do I Bring to the Table?
If you’re a white female in your 50s, you’re in for a tough time on this one. The National Association of Realtors stated, “The typical REALTOR® is a 53 year old white female who attended college and is a homeowner.” Further, women account for 63% of all REALTORS®.
While gender obviously doesn’t (and shouldn’t) dictate how successful you are in real estate, it presents you unique personal branding challenges. If you don’t understand personal branding at the time you write your licensing exams, you’re going to be fighting an uphill battle the whole way.
Conversely, if you don’t fit into this demographic segment, you’ll face significantly fewer personal branding changes.
Know your brand strategy and target market coming in or prepare for a lot of rejection.
What Can I Do For My Clients Nobody Else Can?
If you can’t answer this, your personal branding and marketing strategies (or lack thereof) will hold you back. If you can’t give yourself an answer on this question, how do you plan on conveying this to potential clients?
How Many Real Estate Professionals Are There in My Area and How Healthy is the Market?
This is basic research that should be your first question in performing your due diligence: ‘how competitive of a market am I in/do I wish to join?”, and should figure heavily while assessing the pros and cons of selling real estate.
Above is a representation of the 150 most active real estate markets by major US city. Right off the bat, if you imagine a north-south line running from Texas, through Oklahoma, Kansas, Nebraska, South Dakota and up to North Dakota, you’ll see that the vast majority of the worst real estate markets reside on this half of the country – the highest concentration being in the Midwest and Southeast.
The 5 lowest scoring cities for job opportunities, competition, and real estate market health are:
1. Jackson ,MS (26.78)
2. Shreveport, LA (28.82)
3. Fayetteville, NC (28.85)
4. Springfield, MO (28.91)
5. New Orleans, LA (29.52)
Conversely, the 5 best cities in which to be a real estate professional are:
1. Honolulu, HI (60.76)
2. Seattle, WA (60.57)
3. Denver, CO (58.30)
4. Boston, MA (55.20)
5. Aurora, CO (54.04)
If you have dreams of becoming a high-powered New York real estate power seller, not only is New York City the city with the lowest sales per agent, but the entire surrounding region (Yonkers, Newark and Jersey City, NJ) accounts for 4 of the 5 spots on the worst sales per agent.
This doesn’t mean you can’t make money, oddly enough, as both NYC and Newark tied for 5th on the highest median wage rankings, meaning that the individual sale prices keep up your earnings, but they’re spaced out. If you want fast closings, your best bets are all on the west coast.
For the full article and sortable data sets, read the full article here (and yes, you need to read it).
Am I Prepared to do the Work?
The sad reality of a group as massive as real estate professionals is that not all of them are great at what they do, and they failure rate is astronomical. Tom Ferry estimates the five-year failure rate at 87%. That’s unheard of in most other industries.
REALTORMag identifies these 5 reasons as most common for failure among REALTORS®
1. You’re “trying out” real estate.
2. You aren’t coming from a position of strength.
3. You don’t believe that you need help.
4. You don’t have a plan.
5. You get bored too easily.
Notice a trend? It’s that half-assing your real estate ambitions will leave your whole ass in a sling. Buy-in is non-negotiable; you HAVE to be committed to not only working for your listings, but doing the work that has to be done when the contracts aren’t coming.
Your first year is your ‘trial by fire’, with a large proportion of failures occurring in the first 12 months. ‘Get rich quick in real estate’ scams are a dime a dozen online, and only undermine the importance an effective real estate professional plays in the buy/sell process. YOU WILL NOT GET RICH QUICK AS A REALTOR. There’s a chance you could go half a year without a paycheck. You need to decide whether that uncertainty motivates you or frightens you. If it motivates you, you might just have a snowball’s chance in hell of sticking it out.
In the meantime, you should be conducting prospect interviews to ingratiate yourself to the local businesses in your farm. Your personal branding begins and ends with name/face recognition, and buying newspaper ads is a waste of money if you haven’t done the basic footwork to make yourself known.
Prospect interviewing is a great way to hone your interpersonal skills, get to know people in your area, and generate content for your content marketing plan (since you totally have a content marketing plan, right?)
Why Do I Want to Sell Real Estate in the First Place?
This is THE MOST IMPORTANT QUESTION. WHY do you want to sell real estate? If the answer is ‘Because I love HGTV’, or ‘I want to be rich like Tom Ferry’ – you probably won’t make it. If the answer is because you want something you can do for a hobby, or a little money on the side, you’re going to fail. Guaranteed. Even in less competitive markets, you still can’t assume that you can just skate by – you HAVE to put in the work.
Now, let’s delve into the pros and cons of selling real estate.
The Pros Of Selling Real Estate
In assessing the pros and cons of selling real estate, let’s look at the pros first. If you’re lucky enough to live in a city with low competition and a strong real estate market like Seattle or Denver, you’ve got a huge advantage over someone living in Cleveland or Detroit by virtue of where you live. If you don’t live in a place which has a strong real estate market, or has a lot of competition – and you’re not willing to relocate – you may as well give up before starting.
If you have prior business or marketing experience, you’ve got a big advantage over those who don’t. Only 17% of REALTORS® have this experience prior to entering the industry. If you don’t have this experience, you’re still right in the middle of the pack.
If you’re willing to split time with another job at first, you’ll do better than someone who isn’t. 26% of REALTORS® reported working two jobs – a future which drops to 16% among those with over a decade of experience. This is essential as you start out to supplement your income.
Also, you can make great money once you get your sales funnel up and running.
The Cons Of Selling Real Estate
You could be located in the hottest real estate market with minimal competition and it won’t matter if you’re an awful closer. The fact is that if you’re thinking it’s an easy way to make some money without trying very hard, you’re going to get chewed up and spit out. With real estate, you get out precisely what you put in.
If your plan is to get rich quick, it ain’t going to happen. Top industry experts suggest having a war chest of at least six months expenses saved in case you hit a dry spell. Can your lifestyle withstand a half a year without any new income? You might not have a choice, regardless of your answer.
Also, this is a VERY competitive industry full of people who don’t want to wait six months to get paid. Hustle is the name of the game for the once sleepy industry of real estate. If your plan is to kick back, do a couple of showings a week and wait for the checks to roll in, you may as well quit now. When looking at the pros and cons of selling real estate, if you’re not 100% comfortable having your livelihood relies on your selling ability, this is the biggest con of all.
Also, the employment status (or lack thereof) is a big deterrent for many. As an independent contractor, you aren’t entitled to benefits and hold significantly less job security than those not identified as independent contractors.
Closing Thoughts
The overwhelming theme in this article has been in reiterating that this is not an easy industry in which to work and that those who have succeeded did so by virtue of hard work and resourcefulness – NOT by ’one weird sales secret’, or some other click-bait sounding method. The pros and cons of selling real estate vary from person to person, but these themes are rigid.
If you’re lucky enough to be in a fruitful area where you aren’t hindered by competition or a weak local market, that’s still not a guarantee you’ll succeed. It’s simply showing that the pre-conditions for success are present, and that if you fail, it’s by errors of your own making.
So, if you – or someone you know – is considering a career in the real estate industry, you need to ask yourself (and answer) all of the questions outlined as honestly as you can prior to assessing the pros and cons of selling real estate. You need to be willing to sacrifice, grind and do what you have to do to build your personal brand if you want to even have a chance at success.