September 22, 2020
The question, “Where is best real estate school near me?” is less relevant now that New Jersey allows real estate licensing classes online. Just in the past month, we have had people wanting a NJ real estate license by joining our Zoom classes from as far away as San Diego, Miami and Ohio. When they do a Google search for “Best real estate school in New Jersey,” up pops Garden State Real Estate Academy! Clearly, getting through real estate classes so they can earn a real estate license is the classroom guests’ priority. Their choice of real estate licensing school is often followed by “What are the risks and rewards of a real estate career?”
Garden State Real Estate Academy is an independent real estate school. We are not owned by any real estate brokerage, so we pride ourselves on giving neutral independent training and advice; this is not a school owned by a brokerage that is a thinly disguised agent recruiting tool.
Why you should not choose a career in real estate.
National statistics show that 80% of people who get a new real estate license drop out of the business in the first two years. The top five reasons are:
- It can be expensive; expenses are all yours.
- There is no regular income; no benefits.
- It can take time to build your business.
- It can be a 24/7 job.
- Clients can disappoint you; deals can fall apart.
The cost.
The number one reason people give for not renewing their real estate license is the cost of being a Realtor®. In the first hour of each of our real estate pre-licensing seminars, we tell aspiring Realtors® to expect to pay out at least $2,500-$3,000 in their first year. They can earn twice that amount back in their first transaction, but to be a success in this profession, agents need to have the cash reserves to sustain them until their real estate commissions start rolling in.
Almost all real estate agents work as independent contractors. They are responsible for all their own expenses, from signs to marketing materials to mandatory membership fees. Just the cost of belonging to the Board of Realtors and the Multiple Listing Service—both of which are mandatory for all Realtors® can easily be $1,000 or more. Signs, a website, mandatory dues and marketing materials can be a significant cost to a person with a new real estate license.
No regular income or benefits.
As independent contractor employees, there is no “paycheck” every week. Nor does the IRS permit the employing broker to provide healthcare, retirement, or other perks that many salaried employees enjoy. The employing broker will not deduct taxes from the agent’s commission check, so the agent must be disciplined and save enough from each check to make tax payments when they fall due every quarter. Real estate can also be like a roller coaster. There are months when you have many closings–and the commissions that follow those closed sales, and there can be times when you earn nothing for many weeks at a time.
It can take time to build your business.
Some people decide to get their real estate license after watching TV reality shows that show a real estate agent showing a wonderful couple three homes and then, 22 minutes later, result in them choosing one of them. The shows end with the announcement on the screen showing the agent as having earned a $15,000 commission.
Wow! What a great job! I want a career like that!
The truth is, after getting their new real estate license, most agents will go several months before earning a commission. Imagine this scenario:
Jackie is a new agent. She builds a database, effectively markets her new career and applies the lessons she learned in training to pursue expired listings and FSBOs (For Sale By Own listings). Three weeks later, she is invited to make a listing presentation. She gets the listing, and immediately starts a marketing campaign. After three weeks, she receives an offer on the home and successfully negotiates the sale. A typical sale when the buyer needs a mortgage takes six weeks. Everything goes perfectly, and the property settles. She brings the gross commission check back to her broker, and three days later her broker gives Jackie a check for her share of the commission.
This is about as perfect a situation as an agent could expect, and yet Jackie still had no income for twelve weeks—three months—after she joined the brokerage. A more realistic time period could be much longer.
Many top agents will say 40% of their business comes from past client referrals, but it takes many years to develop such a referral network.
It can be a 24/7 job.
Brokers trying to encourage people to get their real estate license often tout such benefits as “You’ll own your own business,” and “You pick your own schedule.” Those are true statements. But you should not enter a real estate career thinking you can work a few hours of your choosing each week—and still make hundreds of thousands of dollars doing so.
In truth, you are not working for yourself, you are working for your clients. When your seller client is anxious to sell their home and asks you to hold an open house on Sunday, you are expected to be on duty there, not home watching your favorite football team play. When buyers ask to tour homes on Saturday, that is your obligation—at least, it is if you want to sell them a house.
Of course, your family comes first, but there is not a Realtor® alive who has not sacrificed numerous personal and family events because a client required their service at those exact times.
Clients can disappoint you; deals can fall apart.
It is not unusual to spend dozens of hours—or more—working on a transaction. A client choose you to sell their home. You sat open houses, spent time and money marketing it, negotiated an offer into a contract, had dozens of conversations with the client, buyer’s agent and others. You have gone through all the inspections and diplomatically negotiated all the buyer’s repair requests with your seller. You are a week away from settlement and a $10,000 commission check.
Then you get the call from the buyer’s agent: He has been laid-off from work and the mortgage company has rescinded his mortgage commitment.
All that time is for naught; it’s time to start over.
Of course—thankfully—scenarios like this do not happen in every transaction, but they are not unheard-of. Yogi Berra famously said, “It ain’t over till it’s over.” A real estate agent needs to realize that it is also never a guaranteed commission until he walks away from the closing with a check.
On the Other Hand . . .
In Friday’s blog we’ll discuss the five best reasons why you SHOULD consider a career in real estate! Then YOU decide whether this could be the right career for you—before you ever spend a dime on real estate school or getting a real estate license!
Garden State Real Estate Academy is New Jersey’s top-rated real estate licensing school. pre-licensing and broker licensing classes must usually be taken in live classroom settings, we have temporary permission to offer these classes via Zoom. We have both daytime and evening classes that start every two weeks. For more information, go to www.GSREacademy.com
David C. Forward is a licensed real estate broker and instructor and was first licensed as a Realtor® 31 years ago. During his career, David and his business partner sold more than 450 homes in South Jersey. He is now School Director of Garden Real Estate Academy, has won numerous awards for real estate sales, is a much-requested public speaker who has addressed audiences on six continents and is the author of 15 books. David can be reached at Support@GSREacademy.com
