I was recently contacted by my former college professor. He’s redesigning his Sociology of Work course and he asked me if I could submit something regarding my profession. This is what I wrote.
I am a Real Estate Adviser. There is nothing sexy about my job. This is a big ego, big money industry.
In Hawaii, there are thousands of real estate agents. When you think about it, I bet you can name at least 2-3 friends who have their real estate license. The barrier to entry is relatively easy. All you have to do it take a pre-licensing course and pass a state exam. Think of it like taking the SAT. The class teaches you how to pass the exam, but one gains very little knowledge on how to transact real estate.
From a tax standpoint, I file a 1099 form. That is, I am an independent contractor. I have to purchase my own medical insurance, I pay estimated income taxes, and the money I earn are subject to General Excise Tax. I can work when I want and wherever I want.
Real estate is hard. Very hard. I don’t get paid if I don’t sell a house or if I don’t represent a Buyer on a transaction. In my three and a half years in the industry, I’ve worried almost weekly about money. There was a time I didn’t earn any money for close to 6 months. On the flipside, I’ve found a way to pay the bills, to save, and to take my yearly trip to Vegas. Being a real estate agent is a grind. When I first got my license, I was told by my instructor that a very small percentage of people will survive. The highs are high and the lows can be low.
The industry is changing. First, commissions are being squeezed. In a real estate transaction, the Seller sets the commission rate and Seller offers a commission to the agent that brings him or her a Buyer. Before, 6% was the standard. 3% to the Listing Agent and 3% to the Buyer Agent. Now, it’s not uncommon for the commission rate to be in the 4-5% rate. There are some Listing Agents who just take a flat fee.
Second, there is a lack of inventory on Oahu. There’s less than 10% buildable space on our island. Wages haven’t kept up and property prices have skyrocketed over the past few years. The everyday working person can barely survive, let alone purchase a home.
I specialize in millennial, first-time home buyers. Most my clients have decent income, okay credit, high student loans, and very little down payment. Many take months to buy. Some have taken over a year. Since the market is so competitive, it’s not uncommon for my client to submit 5-6 offers until one finally sticks.
According to the “real estate book,” many will advise to work with Sellers. Why? If one sells their home, he or she will have to buy another home to live in. It’s double the commission. At my first real estate brokerage, nearly all our transactions were listings. Interestingly, when I switched companies two years ago, my friends started to buy. That’s when I realized I could dominate this niche market.
I don’t do it for the money. I got into the industry because I wanted to experience something new in my life. Rather than chasing a sales goal, I focus my attention on how I can help my clients achieve their home ownership dream. My heart races when I submit an offer. I get a kick when I hand the keys to my clients. I get overwhelmed with emotions when my clients tell me how much they appreciate me. If that ever went away, I’ll probably hang up the cleats.