The 90/10 Rule
In real estate, 90% of the deals are done by about 10% of the agents.
Many people study hard, ace their real estate exam, and become licensed — and then proceed to never sell a single house.
The reality is, convincing sellers to list their home with you and convincing buyers to let you show them properties is extremely difficult. Everyone and their sister is a Realtor®.
The barriers to become a real estate agent are quite low; often a 2 to 3 week class followed by passing an exam that isn’t easy but isn’t terribly difficult either. If you have a high school diploma and no felony convictions, you can probably get licensed.
What it Takes to Make It
Building your business is infinitely harder than getting licensed.
The cost of purchasing buyer leads from companies like Zillow is extremely high, often in the hundreds or thousands of dollars per deal, with no guarantees whatsoever.
Referrals are great, but generally the people getting referrals are the people that are already doing a lot of business.
Sellers have gotten more savvy in realizing that most real estate marketing is a waste and that being on the MLS is pretty much all they care about.
More and more, they look at listing presentations as B.S., and just go with the agent that has the highest name recognition (who sells houses full-time and possibly with a team of agents reporting to her or him) or some discount alternative, like a flat fee MLS entry-only listing.
Many people enter the real estate field because they realize that 6% multiplied by just about any six digit number is a huge amount of money; on the other hand, sellers and buyers are increasingly skeptical, if not flat out angry about an agent skimming that much money off a simple sale.
The bottom line is that most agents fail.
If you aren’t able, don’t want to, or are fed up with being an agent, then don’t despair. There are a variety of other things you can do with a real estate license.
– You can hang your license with a brokerage that is not a member of the MLS (to avoid having to pay MLS, Realtor Association, and lockbox fees). Then if you do have someone who is ready to buy or sell anywhere in the U.S., you can refer the business to a top agent, and most of them will happily pay you a referral fee of between 20 and 30% of the commission they earn on the deal.
2.) Buy or Sell Homes Yourself
– Even if you never represent any other buyer or seller, you can keep avoid paying a listing agent when you sell a home, and keep the buyer agent commission when you buy a home. If buying or selling a home is a rare event for you, you need to run the numbers to make sure that continuing to pay licensing and other fees makes sense if you will need to pay these fees for years between sales.
– Broker price opinions are performed by licensed agents for lenders when a property is in a pre-foreclosure status or if a borrower is trying to demonstrate having at least 20% equity so they can get their private mortgage insurance (PMI) removed. It’s a lot cheaper than an appraisal (often $50 or less compared to appraisals costing $400-$800) to find out the value of the property, the overall direction of the market, and whether repairs would increase the value of a home. Licensees can build a consistent income stream by preparing several BPOs a day, without ever having to list or sell a home.
4.) Be a Managing Broker or an Branch Office Manager
– Getting your brokers license usually requires first working as an agent for 2 to 3 years. Once you obtain your brokers license, you can manage other agents. For smaller companies, the managing broker often lists and sells properties in addition to managing the other agents. For larger companies, it is not uncommon to have a managing broker or branch office managers that don’t sell at all, and spend all their time managing other agents. Someone with good management skills that isn’t interested in spending most of their time prospecting for business, can thrive as a managing broker or branch office manager.
5.) Teach Real Estate Classes
– While some real estate instructors are full-time agents that also teach a class or two, there are other instructors that have their real estate license but don’t do any sales. They teach courses full-time to students that are obtaining their sales or broker license for the first time, and licensed agents that need continuing education each renewal cycle or are seeking to earn a designation like GRI, CRS, or CCIM. There are also some opportunities for licensees to teach as an adjunct professor at a community college or four year college.
6.) Work for an Apartment Complex
– Some states and some apartment owners require the leasing agents in the office have a real estate license. Oftentimes the larger complexes are owned by large investment funds and real estate investment trusts and offer good benefits packages and a path up the management ladder. These jobs generally have normal daytime office hours, although may also require work on the weekends.
7.) Work for the Government
– There are a number of government jobs that might not require a real estate license, but will look at having a license and real world real estate experience favorably. This might include anything from negotiating leases, disposing of unused space, office space planning, buying right-of-way, or many other jobs where the government and real estate intersect. The government agency that employs you could be anything from your state’s Department of Transportation, the Defense Department, a quasi-government utility, your county, to the Department of Homeland Security; not to mention numerous other government agencies of all shapes and sizes.
8.) Be a Foreclosure Bidder
– When properties are foreclosed in many states, they go up to trustee sale where any bidder has the opportunity to buy the property if they offer more than the minimum bid. There are foreclosure bidders that will study which properties are coming to sale and will bid on behalf of other investors for a fee. In many states, you need to be licensed in order to offer this service. You typically need to be quick on your feet and extremely organized and trustworthy, as you will be dealing with large all-cash buyer-clients.
9.) Transaction Coordinate
– Many agents hand off deals to transaction coordinators once the property goes under contract. They are responsible for obtaining all required paperwork, ensuring deadlines are met, etc. If you are a real estate licensee with great organizational skills, you can become a transaction coordinator and get paid a fee by the agent or broker to manage the file. Some transaction coordinators are employed by a single agent or team, others by a real estate firm, and still others coordinate transactions for numerous agents from numerous firms.
10.) Interpreter for Real Estate Agents
– Even if you don’t have great selling skills yourself, you might be of value to a real estate brokerage that wants to target a particular community that speaks a foreign language. To avoid unlicensed activity, it is a lot safer for that brokerage to bring along an interpreter that is also a licensed real estate agent. This skill is particularly useful in markets like Los Angeles, Las Vegas, Miami, and New York which have a lot of foreign investors.
11.) New Homes Sales Assistant
– Becoming a salesperson at a new home community is often difficult; you typically need to be licensed, have experience, and great selling skills. These sales people sometimes need a day off or a break. Being a new home sales assistant is like a substitute teacher; you keep the doors open, getting buyers through the model homes. If someone is serious about buying, you let the regular salespeople close the deal.
12.) Real Estate Consulting
– Real estate expertise can be valuable. Someone may be willing to pay for your knowledge you have gained from being a real estate licensee, knowing that you are not just a listing or sales agent that will say anything to get a listing or sale. This might be something as simple as offering your expertise to consumers on a website like Fiverr, or as complicated as doing in depth research for a major corporation.
13.) Provide Expert Testimony
– Someone who has a track record of real estate sales experience, but is no longer actively selling real estate, may be able to provide expert testimony in court cases for a fee. This is particularly true if you are still active as a real estate instructor or managing broker.
14.) Become a Landman
– As a landman, you negotiate with land and mineral owners on behalf of oil and gas companies. Depending on the state, you may need a real estate license; especially if you are start dealing in not just minerals but surface real estate, like land leases or easements.
15.) Showing Only Agent
– Tech-centric brokerages including Redfin and Offerpad pay licensed agents a flat fee of around $25 for showing properties on behalf of the buyer’s agent. Not unlike being an Uber or Lyft driver, you will have the ability to claim and then complete showings based on your availability. They do require you to hang your license with their brokerage. Other companies, including Showami, allow agents with any brokerage the ability to earn money showing properties for others. Keep in mind you aren’t eligible for a selling commission; you just earn the showing fee plus any gratuity.
16.) Real Estate Recruiter
– A recruiter with a real estate license may not be a credentialed Human Resources professional working for a big corporation. Real estate recruiters may be ordinary licensed agents working for companies like EXP Realty, Exit Realty, or Keller Williams. These companies business models are based on agents receiving a portion of the company’s commission split for any agent that agent recruits (and sometimes even for the agents that your recruit recruits). Some have been so successful at recruiting other agents to join that they sell very little real estate themselves but rely on downstream commissions as their primary income.
Want to see many more ways you can make money with Real Estate? Check out a few other opportunities.